ODDS’N’SODS — The great diamond fraud of 1872 (1)

(The following 3-part story is compiled from contemporary accounts in the “Engineering and Mining Journal” and the “San Francisco Daily Evening Bulletin.”)

It was 1870. The U.S. Civil War had been over for five years and from all over the American West, rumors of mineral wealth in the opening expanse had made their way to the frontier cities of St. Louis and San Francisco. Hordes of prospectors set out from there for the interior to try their luck. Three of them decided not to trust to luck . . .

Philip Arnold and confederates Edward Slack and J.B. Cooper were experienced prospectors who had cut their teeth in the ’49 California gold rush. In the summer of 1870, they set out to prospect around the Burri Burri gold mine in New Mexico, near the Arizona state line. Opportunities proved scarce, but one day fortune seemed to smile when, in the course of panning, they found a large number of blood-colored stones which they took to be rubies. Quickly, they dashed to San Francisco with a small sack of stones and triumphantly presented the “gems” to a jeweller for evaluation. The jeweller, however, pronounced them to be garnets and therefore worthless. (They were probably pyropes from the Navajo diatreme field.) He asked where they had come from, and added that if they were to find diamonds, well, that would really be something. Diamonds had been discovered only three short years earlier in South Africa, and a full-scale rush was on. Considerably deflated, the three retired to the nearest saloon to console themselves, and there hit upon a new scheme. If a diamond mine was what the world wanted, by George, that’s what it would get.

Cooper, who had worked for a drill manufacturer, volunteered to get some stones, and so the plan was hatched. They visited a second jeweller with a small number of diamonds mixed in with their garnets, and marched out with a certificate of authenticity in their hands.

Their first victim was the financier J.R. Roberts, whom Arnold met, as if casually, on the street, hinting he was on to a “good thing.” Roberts was sufficiently convinced by the diamonds and proof of their authenticity to generously bankroll the three for a second trip to their diamond fields. Two months later, Roberts, with theatrical flourish, pulled a cloth bag from the safe of his friend Harpending, undid the drawstring and poured some 60 lb. of precious stones onto his billiard table before the incredulous faces of his friends, William Lent and Gen. George Dodge.

Harpending had already been sold on the play; Lent and Dodge now begged to be let in. Convinced by Arnold that large sums of money would be needed for staking and prospecting, the four eagerly sought out their rich friends and unwittingly drew them into Arnold’s web.

After a short while, Slack feigned a quarrel with Arnold and offered to sell his quarter interest to the investors for US$100,000 in gold. Lent advanced them the money, using the bag of stones as security. After Slack was paid, the two agreed to return to the still-secret location of the fields in the spring, some two months hence.

With cash in hand, Arnold and Slack left town, ostensibly to the end of the rail line to await the spring thaw. Actually, they made their way to Halifax, where they boarded the first steamer to Europe. The two then went on a fantastic diamond-buying spree in Amsterdam and London to get the necessary props for their production.

The first bag of stones they had displayed was made up of inferior, rough culls bought the previous year with the grubstake money Roberts had provided. Arnold had rightly calculated that no jeweller in San Francisco was competent enough to evaluate rough diamonds, and no one seems to have questioned Arnold when he said they were worth US$650,000. Included in the batch was an impressive 103-carat monster for which Shreeve & Co. offered US$96,000. The two returned “from the field” in midsummer 1871 with a second impressive bag of stones. They didn’t

anticipate an appointment with the great diamond expert, Charles Lewis Tiffany.

— Keith Barron, a consulting geologist who lives in Brampton, Ont., will continue his story next week.