Philip Arnold, a Kentuckian born in the same county as Abraham Lincoln, was a poorly educated former hatter's apprentice, Mexican War veteran and gold rush forty-niner. Arnold had spent two decades working in mining operations in the West, making enough money to pay for periodic visits back to Kentucky, where he bought a farm, married, started a family and perhaps stashed a little cash.

In 1870, he was working as an assistant bookkeeper for the Diamond Drill Co., a San Francisco drill maker that used diamond-headed bits. For a bookkeeper, Arnold, then just past 40, showed a surprising interest in the industrial-grade diamonds that kept the drills running. He even plowed through learned works on the subject.

He also had acquired a partner, John Burcham Slack, an aptly named older cousin from Kentucky who, like Arnold, had fought in the Mexican War and had gone after gold in 1849. Indeed, in the months ahead, as the two men hatched their scheme, Slack played the listless, taciturn foil to the voluble and cunning Arnold.

In July 1872, according to court papers, Philip Arnold bought a two-story brick house in Elizabethtown, Kentucky, and moved his family into it. After acquiring some 500 acres nearby—all of the property was in his wife Mary's name—he bred horses, sheep and pigs. A grand jury in San Francisco indicted Arnold and Slack for fraud, but the contents of the indictment were never revealed, and it is speculated that they were quashed by the investors to avoid further bad publicity. Arnold answered the news of the indictments by telling the Louisville paper that "I have employed counsel myself—a good Henry rifle." But he eventually did settle out of court with William Lent for $150,000, his only acknowledgment, though tacit, that he had planted any diamonds.

In 1873, Arnold became a banker himself by putting an unknown amount of money into an Elizabethtown bank that had temporarily closed its doors. An 1878 quarrel with another banker in town led to a shootout that injured three bystanders. Arnold took a shotgun blast in the shoulder, but was recovering when, six months later, he contracted pneumonia and, at age 49, died. Although he left his family comfortably off, several hundred thousand dollars have never been accounted for. Here's the story:

The following concerns the first cousin of Robert N. Slack, James Brown Slack and John Burcham Slack of Elizabethtown, Kentucky, son of Reubin Slack, William G. Slack's brother. (It also involves Philip Arnold, son of Penelope Slack, William G. Slack's sister, so Arnold was also a first cousin to Robert N., James Brown and John B. Slack - A Philip Arnold and Daniel Arnold from Hardin County fought in the Mexican War of 1846-48):

In 1872 two dirty, bearded and disheveled prospectors, John Slack and Philip Arnold (cousins from Elizabethtown, Kentucky), came out of the mountains and presented themselves to William Ralston, president of the Bank of California in San Francisco. They showed him a bag of diamonds which they had collected at some remote spot in the West. They came at a psychological time, for a speculative madness had taken over San Francisco after the opening of the Comstock Lode. Every day brought disclosures of new mineral deposits in the West--of gold, silver, and the baser metals. The Kimberley diamond fields had been opened in South Africa only a few years before. Could there not be similar deposits in western North America? Ralston, a great plunger and speculator who had made a fortune in the Comstock mines, was greatly excited, and made up his mind to gain control of the new diamond deposit.

The San Francisco group then organized the San Francisco & New York Mining & Commercial Co. to develop the deposit, capitalized at $10,000,000. All the stock could easily have been sold to the avid public in San Francisco, but instead it was offered to twenty-five of the outstanding business and financial leaders of the city. They filed claims, and even began lobbying to get mining laws changed in their favor. When Arnold and Slack dragged their feet, the corporation bought them out, paying $600,000 for all rights to the mine. The prospectors vanished, promptly and completely.

Under questioning, Phillip Arnold and John Slack told of long treks in the wilderness and dangerous crossings of swollen rivers, remaining reticent only about the actual location of their mine. Incredible as it may seem, their story was accepted almost without question. If Arnold and Slack said there were diamond fields somewhere in the West, people were quite willing to believe it, and to invest big money to develop them.

The group of California financiers assembled a team of experts from Tiffany's in New York to examine the diamonds and they confirmed that they were of tremendous value. When the investors were still reluctant, Arnold agreed to guide a mining engineer to the site of the claim. In two days, the party gathered over 600 diamonds.

A young government geologist named Clarance King blew the whistle. Locating the site by a masterful bit of detective work, King spent several days there. In that time, he developed ten separate reasons why diamonds could not occur naturally under such conditions.

With the publication of King's report, the "diamond bubble" collapsed. Later investigation traced the diamonds to the markets of London and Amsterdam. Arnold had visited both cities in 1871, paying cash for large numbers of low-grade or "bort" diamonds. The total purchases seem to have amounted to about $40,000.

Phillip Arnold had returned to Elizabethtown, Kentucky, his home town. He was living there in quiet respectability when detectives located him, and he had all the money paid for the claim. Slack was never found. Since Arnold had clearly held onto the loot, there was much dark speculation as to Slack's probable fate, but that mystery was never solved. (It now appears that he spent his final days making coffins in New Mexico and died there.) The investors soon learned that finding Arnold was only part of the problem. No hometown jury was prepared to convict him of anything whatever, and the prospector vigorously fought the charges leveled against him. He accused the investors of salting the mine, claiming it was perfectly all right when he sold it to them.

The investors still hadn't decided how to handle the situation when Arnold got into a business dispute with a local rival. No stickler for legalities, the rival settled the matter by shooting Arnold dead.

For many years, the diamonds lay forgotten on their mesa top. The price of diamonds increased with time, until Arnold's original purchase would have been worth almost half a million dollars. People who knew of the swindle began to realize that a small fortune remained at the site of the claim, but by that time, the exact location had been lost.

A TALL TALE FROM THE WILD WEST
George Olden reviews the new novel DIAMONDS by Sam North

Sam North’s new novel ‘Diamonds’ is a bold and ambitious western, telling the story of the long-forgotten diamond rush in California in the 1870's. The story follows the progress of the two world-weary Kentucky prospectors, Philip Arnold and John Slack, who claimed to have found the diamond fields. The two men walk into a bank in San Francisco one morning to deposit a sack of diamonds in its vault, and this sets in motion a story that focuses the attention of the world upon them. From rich Californian bankers to the European aristocracy, all are drawn by the promise of the latest, extraordinary fortune to be made in the New World, and all unable to contain their greed.

The two prospectors, Slack and Arnold, are two very complex men: one a rambunctious, high-living showman, the other a dour, introverted man who finds peace only when fishing or in the mountains. Their relationship is reminiscent of Butch and Sundance, but much subtler.

From two men walking into in a San Francisco bank, the story spreads out across America and even to Europe as the international and political significance of a diamond find in America is realized.

Two years later, early in 1872, King was informed of a great find of gems somewhere in the region that he was exploring. John Slack and Philip Arnold, appeared at a bank in San Francisco early and claimed they had found the gems at a site the location of which they refused to disclose. They agreed, however, to take General David Colton, a representative of the capitalists, to the place but insisted that he must first be blindfolded. They set off together on the Union Pacific Railroad to a location, after which they made a four-day journey through mountains and canyons to where they had made their discovery. There Colton also found a number of precious stones, including diamonds and rubies. Colton was extremely cautious, however, and brought Arnold and his diamonds to New York City to the firm of Charles Tiffany.

He confirmed the authenticity of the gems and declared them to be "a rajah's ransom." One of the newspapers wrote that they had discovered "the American Golconda—a vast field of gems untouched by the hand of man, just waiting to be exploited by sound business enterprise. If they succeeded Amsterdam itself might well move West."

A nationwide syndicate was immediately organized, called the New York and San Francisco Mining Company, which purchased the rights to the mining fields from Slack and Arnold for about $600,000. They then went on to make preparations to float a public stock issue of $12,000,000. To ensure that everything would be absolutely safe and certain, the firm hired Henry Janin, considered to be the most cautious mining engineer in the West. He was taken out to the diamond field and was dazzled by it and reported in the public press that he had personally invested in it, and that he considered that "any investment at the rate of forty dollars per share or at the rate of four million dollars for the entire property be a safe and attractive one."

Without going through the channels and first informing General Humphreys, King proceeded to confront the mining engineer Janin with his evidence, then met with the Company directors to whom King presented a letter with his findings. Ralston and Company tried to stall for time and begged King to delay his report until they could sell out, but he refused. A postponement of several days was gained, however, by having King take Janin and the others return to the diamond site for a final verification. The tycoons of San Francisco had no alternative thereafter but to reveal the entire story. Ralston and his partners published King's letter, assumed responsibility, and repaid the stockholders. Many continued to blame the syndicate for the hoax, as the two would-be prospectors who had originated the scheme disappeared from the scene. Later it was discovered that Arnold had returned to Kentucky and purchased a safe in which he had stored his ill-gotten gains, but that in 1879 he had been shot in the back and his loot had disappeared.

Once having made up his mind, King traveled night and day to San Francisco and demanded of Ralston and the Bank of California that sales of stock be stopped at once, announcing that he intended to publish his findings. All Hell must have broken loose over the head of this young government geologist, for he was facing up to some of the richest and most powerful men in California. But he stood his ground and the company collapsed.

That was the beginning of the end for poor Ralston, whose bank failed in the panic of 1875, and he ended as a suicide in the waters of the Golden Gate. The prospectors disappeared, but Arnold was eventually traced to Kentucky where, on threat of lawsuit, he surrendered $150,000 of his ill-gotten gains.

Ralston and his syndicate, which included an agent of the Rothschild's and former Union general and presidential candidate George B. McClellan, invested $10 million to move the world's diamond capital from Amsterdam to San Francisco. The diamond craze of 1872 created and destroyed fortunes long before anyone figured out if there was any real money to be made. The Kentucky prospectors walked away with some $600,000 (worth $8 million in today's dollars) for rights to their find.

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PROFESSIONAL SURVEYOR MAGAZINE 2002

History Corner: The King of Diamonds: Clarence King and the Survey of the 40th Parallel, Part I
Silvio A. Bedini
Clarence King (1842-1901), although he was a geologist and not a surveyor, was responsible for the survey along the 40th Parallel from eastern Colorado to the California boundary.
King was described as being of medium size, perpetual cheerful disposition, and a great conversationalist filled with the exuberance of success. He was born in Newport, Rhode Island of an aristocratic but almost penniless family, the son of James and Florence (Little) King, grandson of the artist Samuel King, who was a friend of Benjamin Franklin and great-grandson of Benjamin King, the eighteenth-century maker of mathematical instruments in Newport.

Following family tradition, his father was a merchant in the family China trade and had sailed for China as a merchant of the East India firm. He died while in Amboy in 1842. His fortune having been invested in the family China trade which went bankrupt in 1857, left his wife with a young son, almost penniless. Young King clerked for a commercial house for a time, then his mother married a Brooklyn factory owner.

A Natural Leader
From early boyhood King had demonstrated an interest in the sciences, and when he was fifteen, his mother took him to New Haven, where in 1859 he was enrolled in the Sheffield Scientific School of Yale University. There he proved to be a natural leader among the students and graduated three years later in 1862 with a bachelor of science degree with honors. Thereafter he read intensively on geology in New York City and took time to attend lectures by Louis Agassiz at Harvard on glaciology.

Meanwhile, California had become a subject of scientific interest, and in May 1863, a year after his graduation, and in the hope of gaining practical training in geology, he volunteered to work without pay as an assistant field geologist for the Geological Survey of California. He accompanied the geologist James T. Gardner in crossing the American continent on horseback, continuing as far as the Comstock Lode in Nevada. There they spent some time for the purpose of studying the mine, but were forced to remain longer because a fire destroyed all of their equipment. They had no recourse but to seek employment at the mine until they had accumulated sufficient capital to continue on their journey.

Crossing the Sierra Nevada on foot, they traveled down the Sacramento River to San Francisco by boat. It was during this trip that King met W. H. Brewer, an assistant of the geologist and chemist, Josiah D. Whitney, who were engaged in the state-sponsored geological survey of California. King volunteered his services and remained with Whitney's survey for nearly three years. During that period he was concerned chiefly with exploratory duties, and during the winter of 1865-1866 he was employed as a scientific assistant to General McDowell exploring southern California's desert region.

It was during his exploration of the California wilderness with Whitney that King conceived of the idea that would was to make him famous, to undertake a scientific survey entirely across the cordilleran ranges from eastern Colorado to the California boundary. This involved a swath of about a hundred miles in width centering along the 40th parallel and extending from the Colorado Rockies to the Sierra Nevada. The object of the expedition, King explained, was ". . . to examine and describe the geological structure, geographical condition and natural resources of a belt of country . . . along the 40th parallel . . . with sufficient expansion north and south to include the line of the ‘Central' and ‘Union Pacific' railroads . . . [and] collect material for a topographical map of the regions traversed."

By 1867 King was back in Washington trying to convince Edward Stanton, the Secretary of War, that "the deserts are not all desert; the vast plains will produce something better than buffalo, namely, beef; there is water for irrigation, and land fit to receive it. All that is needed is to explore and declare the nature of the national domain."

Stanton was charmed by the young geologist and Congress was so favorably impressed with the plan that it made the necessary appropriations without delay. Stanton promptly appointed young King chief in charge of the Geological and Geographical Exploration of the Fortieth Parallel, subject only to administrative control by General A. A. Humphreys, chief of engineers. The expedition was staffed entirely by scientific specialists including mineralogists, botanists and geologists. It was the first major expedition under the command of a civilian, although he was required to report to the Secretary of War. Stanton warned King to get started on the work as soon as possible, however, because "you are too young a man to be seen about town with this appointment in your pocket—there are four major generals that want your place." King was twenty-five years of age at the time.

It was King's mission to map the topography and to survey the geology and natural resources of the region flanking the transcontinental railroad between the Sierra Nevada and the Great Plains. He sailed to California with his capable corps via Panama in the summer of 1867, crossed the Sierra Nevada and then began their fieldwork. In June a base camp was established near Sacramento, California, and the hand-picked crew began a process of hardening up before venturing out to engage in the rigorous enterprise ahead. One of the botanists who made a practice of taking a short ride on mule back every day, later wrote, "I am at present afflicted with a most grievous tail!"

Hardening Up for the Work Ahead
The first excursion into desert country was made in July, and it would be ten long years before the survey ended. Studies in depth were made of mineral deposits, flora and fauna, rainfall and topography. In the first summer malaria struck down so many of the party in the Nevada country around Humboldt Sink and Truckee Canyon that they were forced to retreat into the mountains to recuperate. It was reported that on one occasion King himself was struck by lightning, causing parts of his body to turn brown temporarily.

Although it had been generally believed at that time that no glaciers remained in the United States, when the party crossed Utah's Wasatch Range in 1869, King scaled Mount Shasta and discovered three active glaciers.
Drifters and Diamonds

Two years later, early in 1872, King was informed of a great find of gems somewhere in the region that he was exploring. One day two dirty, bearded and disheveled prospectors, John Slack and Philip Arnold, appeared at a bank in San Francisco early in the morning and attempted to deposit a small leather pouch full of uncut diamonds. After they had managed to do so, they disappeared. The diamonds were shown to officers of the bank, who in turn showed them to William Ralston, a director of the Bank of California and then to other capitalists in the city. All were intrigued concerning their origin and after a search was made for the two drifters, they were found and questioned. They claimed they had found the gems at a site the location of which they refused to disclose. They agreed, however, to take General David Colton, a representative of the capitalists, to the place but insisted that he must first be blindfolded. They set off together on the Union Pacific Railroad to a location, after which they made a four-day journey through mountains and canyons to where they had made their discovery. There Colton also found a number of precious stones, including diamonds and rubies. Colton was extremely cautious, however, and brought Arnold and his diamonds to New York City to the firm of Charles Tiffany.

He confirmed the authenticity of the gems and declared them to be "a rajah's ransom." One of the newspapers wrote that they had discovered "the American Golconda—a vast field of gems untouched by the hand of man, just waiting to be exploited by sound business enterprise. If they succeeded Amsterdam itself might well move West."

A nationwide syndicate was immediately organized, called the New York and San Francisco Mining Company, which purchased the rights to the mining fields from Slack and Arnold for about $600,000. They then went on to make preparations to float a public stock issue of $12,000,000. To ensure that everything would be absolutely safe and certain, the firm hired Henry Janin, considered to be the most cautious mining engineer in the West. He was taken out to the diamond field and was dazzled by it and reported in the public press that he had personally invested in it, and that he considered that "any investment at the rate of forty dollars per share or at the rate of four million dollars for the entire property be a safe and attractive one."

Meanwhile, the syndicate had managed to keep the location of the site strictly secret, but the news of the find leaked out and many went wild in their efforts to locate the Golconda; some claiming they had found it in Arizona, others in Nevada, and almost every day some prospector wandered into Denver claiming he had found gems. Western newspapers published every rumor as soon as they heard it, and from May until November 1872 the diamond frenzy mounted. Spies watched the trains all along the transcontinental railroad looking for suspicious prospecting parties that might be on their way to the site.
(Continued in the October 2002 issue)

Silvio Bedini is an Historian Emeritus with the Smithsonian Institution in Washington, D.C., and a Contributing Writer for the magazine.

The Geological and Geographical Exploration of the Fortieth Parallel undertaken under the geologist Clarence King was the first major expedition to be run by a civilian, although it was totally staffed by scientific specialists who had to report to the Secretary of War.

King and other members of the survey party were fascinated by the rumors of the discovery of a great find of gems, because the site where the find was made most probably lay at the very heart of the country in which they had been working. King remained skeptical; he realized, however, that if the gems proved to be genuine, he and his crew would become the laughing stock and appear foolish in the extreme for not having discovered them. Even more seriously, it would place the professional reputations of the government geologists in jeopardy. He had no recourse but to investigate the matter and set about to do so, but despite his efforts, he was able to obtain very little information. In all their investigations of the one-hundred mile strip along the lines of the Union Pacific and the Central Pacific railroads, neither he nor his assistants had seen the type of formation in which such gems were likely to occur, but they could take no chances. What if they had missed it? Knowing the region, however, he was able to make some shrewd guesses about the probable location of the site. He knew that the diamond field could not be in Arizona, as some claimed, because the flooded condition of the Snake [Little Snake], Bear [Yampa], and Green Rivers precluded any venture into that direction during the past summer. Recalling Janin's description of the location of the field "upon a mesa near pine timber," King was aware that there was only one place in the region that complied with that description, and that it had to be within the limits of the Fortieth Parallel Survey.

King succeeded in locating it near where the three states of Utah, Colorado, and Wyoming came together. Meanwhile, other members of the survey had engaged in detective work, and when they all met together on October 18th, they compared notes and concluded that the site in question was where King had designated.

Gems and Ant Hills
There, in a small sandstone mesa stained with iron deposits at the foot of a pine-covered mountain which had snow on its slopes as late as June, just north of Brown's Hole, he was amazed to find a variety of gems, just as had been reported. On their hands and knees they probed until dark, each of them finding one diamond before darkness set in. That night they all dreamed of untold wealth that waited to be gathered.

The next day, in spite of the extreme cold and sweeping wind, they covered the entire area, and found quantities of precious stones. Realizing that the diamonds did not occur anywhere else except in that mesa, King became increasingly suspicious, and concluded that the gems always occurred in a ratio of one diamond to twelve rubies, and most of them were in ground that had been only slightly disturbed, such as ant hills. When one diamond was found perched atop an ant hill, which would have been washed away if it had been there any length of time, they were almost certain that the site had been salted, and when they found evidence that gems had been pushed into ant hills with a stick, with human footprints nearby, no further question remained. King verified that the site was not a natural one, and that indeed it had been salted. With this knowledge he rode back to San Francisco to expose the fraud before speculators cashed in.

Without going through the channels and first informing General Humphreys, King proceeded to confront the mining engineer Janin with his evidence, then met with the Company directors to whom King presented a letter with his findings. Ralston and Company tried to stall for time and begged King to delay his report until they could sell out, but he refused. A postponement of several days was gained, however, by having King take Janin and the others return to the diamond site for a final verification. The tycoons of San Francisco had no alternative thereafter but to reveal the entire story. Ralston and his partners published King's letter, assumed responsibility, and repaid the stockholders. Many continued to blame the syndicate for the hoax, as the two would-be prospectors who had originated the scheme disappeared from the scene. Later it was discovered that Arnold had returned to Kentucky and purchased a safe in which he had stored his ill-gotten gains, but that in 1879 he had been shot in the back and his loot had disappeared.

Meanwhile, King emerged as the hero of the hour. The San Francisco Bulletin wrote that he was "a cool headed man of scientific education who esteemed it a duty to investigate the matter in the only right way, and who proceeded about his task with a degree of spirit and strong common sense as striking as his success." According to the editor, the Fortieth Parallel Survey as a scientific endeavor had proven its practical value. An article that appeared in the Nation in December 1872, stated that King's exposure "alone more than paid for the cost of the [entire] survey."

Unbelievably, however, his superior, General Humphreys, was displeased. After reading King's official report, he replied soberly, "As these Fields are situated within the limits of the Survey you have charge of, it was eminently proper that they should be included in your operations and an exhaustive examination of them be made." He then added, "The manner of publicly announcing the results of the examination should I think have been different."

King's deflation of one of the most disastrous swindles ever perpetuated was called the most dramatic incident in the history of the great Western surveys, a sensational event that glamorized King's personality and earned him a reputation of impeccable integrity. For this he achieved the title in some quarters of "The King of Diamonds."

First to Use Contour Lines for Topography
King's Fortieth Parallel Survey was described as an epic feat of exploration, surpassing all that had been done to date in the latter day West except for John Wesley Powell's descent of the Grand Canyon. The corps of the Fortieth Parallel Survey was the first of the four Western surveys to complete its fieldwork, and it was partly for that reason that its successful methods in the field, its exacting standards, and its distinguished publications were used as models for the other three surveys. The most important result of King's adventures in the field was the monographs that were produced by King and his staff with great diligence and insight. In 1878 King published a work on the landforms of the West, titled Systematic Geology, which was the first volume in the series of seven volumes of reports of the survey, Report of the Geological Exploration of the Fortieth Parallel 1870-80. King was the first to introduce into mapping the system of denoting topography by contour lines worked out by Hoffmann. He was also among the first to make use of the laboratory in the solution of geophysical problems.

King assisted in the campaign of the National Academy of Sciences to spur the Congress to authorize the establishment of the United States Geological Survey to supersede and consolidate the work of the Western surveys on a national basis. After Congress had authorized the USGS in March 1879, King was appointed its first director, from which position he resigned in 1881, to be succeeded by John Wesley Powell.

In size King was a relatively small man, but he was robust and capable of great endurance. He was subject to periodic serious breakdowns, however. After having experienced heavy financial losses in the business depression of 1893, he suffered an attack of nervous prostration. He was mentally incapacitated for several months and confined to an asylum. In 1901, after suffering an attack of pneumonia, tuberculosis ensued. He refused to allow his friends to be inconvenienced by his illness, however, and he died alone in 1901 in far-off Phoenix, Arizona.

King was described as among the most companionable and charming of men. He numbered among his friends, Henry Adams, John Hay, John La Farge, Theodore Roosevelt, and William Dean Howells. Many honors came to him but he remained remarkably unobtrusive. He was a member of the National Academy of Sciences, the American Institute of Mining Engineers, and the Geological Society of London. His Boston friend Henry Adams idolized him and called him "the most remarkable man of our time." Perhaps King's finest acknowledgment came in the autobiography of Henry Adams:

"King has moulded and directed his life logically, scientifically. . . He has given himself education all of a piece, yet broad. Standing in the middle of his career . . . he could look back and look forward on a straight line, with scientific knowledge for its base . . . King's abnormal energy has already won him great success. None of his contemporaries has done so much, singlehanded or were likely to leave so deep a trail . . . He had organized . . . a Government Survey. He had paralleled the Continental Railway in Geology; a feat as yet unequaled by other governments . . . Whatever prize he wanted lay ready for him—scientific, social, literary, political . . . So little egoistic he was that none of his friends felt envy of his extraordinary superiority . . . [They] worshiped not so much their friend, as the ideal American they all wanted to be."

The Ralston Fraud taken from "The Evolution of North America" by Philip B. King, 1991, Princton University Press, p. 94-95.

"GEOLOGICAL EXPLORATION OF THE FORTIETH PARALLEL (KING SURVEY).

Clarence Rivers King proposed to Congress that the resources along the line of the new transcontinental railroad ( the Union Pacific and Central Pacific) should be explored and studied. This survey was intended to cover a belt of country on each side of the railroad, approximately along the Fortieth Parallel from Wyoming to California.

King's organization was the aristocrat of the Surveys. It was staffed largely by men trained at Yale or Harvard, many of whom had gone on for advanced study in German universities. It is related that, later on, when all the Surveys had been combined into a single U.S. Geological Survey, the men of the former King Survey would not speak to those of the former Powell and Hayden Surveys if they met them on the street--these were too plebeian to be noticed.

King himself, in his day, must have been a very dynamic and charming man. His enthusiasm for geology and his way of presenting the facts of science to laymen made him the friend of important people in Washington--Senators, Congressmen, and many others. King's most spectacular achievement was really a side issue of the Fortieth Parallel Survey itself, and had to do with the "great diamond swindle."*

In 1872 two weatherbeaten prospectors, Philip Arnold and John Slack, came out of the mountains and presented themselves to William Ralston, president of the Bank of California in San Francisco. They showed him a bag of diamonds which they had collected at some remote spot in the West. They came at a psychological time, for a speculative madness had taken over San Francisco after the opening of the Comstock Lode. Every day brought disclosures of new mineral deposits in the West--of gold, silver, and the baser metals. The Kimberley diamond fields had been opened in South Africa only a few years before. Could there not be similar deposits in western North America? Ralston, a great plunger and speculator who had made a fortune in the Comstock mines, was greatly excited, and made up his mind to gain control of the new diamond deposit.

After some persuasion the prospectors consented to have their find examined on the spot, provided the inspectors were brought to it blindfolded. The inspectors came back even more impressed than Ralston--diamonds were all over the place, as well as rubies, sapphires, and emeralds--on the surface of the ground, in ant hills, in crevices in the rocks. A sample of the stones collected by them was submitted to Tiffany's in New York and Mr. Tiffany personally valued the sample alone as worth $150,000. The prospectors reluctantly sold their claim for $360,000, with a stock interest which they sold in turn for $300,000, a return of $660,000 in all.

The San Francisco group then organized the San Francisco & New York Mining & Commercial Co. to develop the deposit, capitalized at $10,000,000. All the stock could easily have been sold to the avid public in San Francisco, but instead it was offered to twenty-five of the outstanding business and financial leaders of the city.

It was at this point that Clarence King entered the picture. Returning from field work in Nevada in the fall of 1872, he learned of the new discovery which rumors placed at such widely separated points as Arizona, New Mexico, and Utah. He wondered whether the deposit lay within the area covered by his Fortieth Parallel Survey, and whether it had somehow been overlooked during investigations of the survey.

"Feeling that so marvelous a deposit as the diamond fields must not exist within the official limits of the Fortieth Parallel Survey, unknown and unstudied, I availed myself of the intimate knowledge possessed by the gentlemen of my corps, not only of Colorado and Wyoming, but of the trail of every party traveled there, and was enabled to find the spot without difficulty."

This turned out to be in the northern foothills of the Uinta Mountains, only a short distance south of the Union Pacific Railroad. Going to the place, King observed that it lay in a region of tilted sedimentary rocks without any evidence of igneous intrusion or mineralization; besides, the association of diamonds, rubies, sapphires, and emeralds seem incongruous. He found that most of the stones lay on the surface; none were embedded in the rocks themselves, and some even bore marks resulting from the work of jewelers! Tiffany's appraisal to the contrary, the stones were very inferior--mere jewelers' waste that had been bought up and planted for purpose of fraud. Bit by bit, contrary to his expectations, King was forced to conclude that Ralston and his friends had fallen into a trap.

Once having made up his mind, King traveled night and day to San Francisco and demanded of Ralston and the Bank of California that sales of stock be stopped at once, announcing that he intended to publish his findings. All Hell must have broken loose over the head of this young government geologist, for he was facing up to some of the richest and most powerful men in California. But he stood his ground and the company collapsed.

That was the beginning of the end for poor Ralston, whose bank failed in the panic of 1875, and he ended as a suicide in the waters of the Golden Gate. The prospectors disappeared, but Arnold was eventually traced to Kentucky where, on threat of lawsuit, he surrendered $150,000 of his ill-gotten gains.

*Many accounts of this famous incident have been published, each varying somewhat in details. In order to make a consistent story I have had to pick and choose from several sources."

Great Diamond Hoax: Harpending, a swindler or entrepreneur?

One of the most fantastic incidents in the history of the west was the "Great Diamond Swindle" of the early 1870's. Several members of the Caldwell County Middle School Historical Society were impressed with this infamous event and its connection to Princeton. After researching the subject, club members wrote essays about what they discovered.

The great diamond swindle and Princeton are two things that you may think are completely unrelated. However, one man, Asbury Harpending, is the connecting link.

Harpending was born in southwestern Kentucky in 1846. In 1857, after Harpending turned 16*, he went to San Francisco. There also the diamond swindle coincidentally took place.

Harpending is accused of being the "brain" that conceived the "diamond swindle." The swindle, allegedly happended as follows:

In 1871, on a sunny summer day, late in the afternoon, the great scam of San Francisco was begun. Two men, Philip Arnold and John Slack, stepped up to a teller window of the Bank of California. They claimed to have discovered a diamond field.

The news soon spread and Henry Janin, the main mining authroity, was hired to examine and diamond field. After being led blindfolded to and from the mining site, Janin verified the strike as genuine. To supprot Janin's judgement even further, Charles Lewis Tiffany examinded the stones and pronounced them to be precious.

After this finding, the diamond field was bought from Arnold and Slack for $700,000. Soon a mining company was formed with Harpending as chief promoter. However, it wasn't long before the scam was exposed.

Allen D. Wilson was the first to suspect that the strike was a hoax. Wilson was traveling through southern Wyoming, making a topographical survey of the Fourteenth Parallel for the United States Geological Survey. After returning from the expedition, Wilson heard that a diamond field had recently been discovered in southern Wyoming. However, he had not seen any diamonds or geological formations in which diamonds would occur.

Wilson then told Clarence King, the geologist in charge, of his suspicions. Wilson King, a German immigrant and third geologist formed a search team and set out for the so-called diamond field.

On Nov. 2, 1872, King and his team discovered the field was man-made. Several things led to this conclusion. The first was when King kicked over a "glistening" anthill and found it had not been constructed by ants.

After King reported the evidence, an investigation was made. The investigation revealed that Arnold and Slack punched holes into the ground, dropped jewels in each hole, and then covered the holes with dirt. Rain then destroyed all evidence of tampering.

They also sprinkled diamond and emerald dust over the anthills and pressed gems into rock crevices. However, by the time the discovery was made, Arnold and Slack were long gone.

Slack dropped entirely out of sight; it seems that he was used only for "atmosphere." Arnold returned to his home in Elizabethtown. So, with Arnold and Slack gone, the blame was shifted to Harpending's shoulders. He consistently claimed though, that he was innocent and that he had lost over $400,000 in the scheme.

In 1873, Harpending, at age 31*, returned from San Francisco to Princeton with his wife, Ira Anna, and his children, Lucille and Mary Genevieve. In 1874, Gertrude was born. When Harpending, at age 31, moved back to Princeton, his account was worth $1.5 million. He bought an 800 acre tract of land on which he built a $100,000 mansion.

The house was built to form a "T." Living rooms, parlors, and bedrooms formed the top and the kitchen and pantries formed the "upright leg." A porch wrapped around the house and the second floor was converted to a chapel. Plus, to make the house even more extravagant, each bedroom had a lavatory and running water, and the house had a gas heating and lighting system.

The house had also had amazing exterior features such as a swimming pool, fish ponds, three fountains and a green house.

However, Harpending and his family lived in their beautiful home for only three years. During that time two of his children sickened and died. Plus, Harpending still faced many accusations. Although there were several trials, Harpending was never charged with a crime (in the swindle).

In 1876, Harpending, his wife and remaining daughter mysteriously left Princeton, the mansion, and many stories for the townspeople to tell for years to come.

--Laura Wurts

Clarence King (1842-1901), a California geologist, in 1869 began a geological survey across the west along the 40th parallel. Gilbert Munger (1837-1903) was the expedition's guest artist. Due to his knowledge of geology, Clarence King is today remembered as the one who exposed one of the great business frauds of the 19th Century. The fraud also left one of the great unsolved mysteries of Wyoming.

To the west of Baggs and southwest of Rawlins in southeastern Sweetwater County lies a desolate area known as the Washakie Basin. Today most of the area is accessible only by occassional Jeep trails, and those are few and far between. The appearance of the area can be pictured in the mind's eye by the place names of the Basin: "Washakie Badlands," "Poison Draw," "Hells Canyon," "Poison Basin," "Colloid Draw, and "Poison Buttes." In 1872, in this area, John Slack and John Arnold reported the discovery of a rich diamond field. In order to convince potential investors of the legitimacy of the find, a well-known and respected engineer and some of the investors were brought to Rawlins and taken on a three-day trek, blindfolded so that would not know where they were, to a lonely butte. There they were shown the diamond field with diamonds everywhere, under the ground, in rock crevices and on the surface waiting to be picked up. The engineer reported that $1,000,000 a month could be expected from a mining operation. Stock was sold. Unfortunately for the investors, Clarence King, due to his knowlege of the area, was able to deduce the location, examined the site, and, with his knowlege of rocks, determined that some of the diamonds were cut and polished. Investigation found that the year before Arnold and Slack had purchased some $40,000 worth of low grade diamonds in London. Arnold was arrested in Kentucky where he was found with the proceeds of the stock sale. Slack was never found, leading to the suspicion that he may have been done in by his partner. The site of the diamond mine and the balance of the $40,000 worth of diamonds has never been found. Some believe that the location may be near Vernal in Utah, others believe it to be in northern Colorado, and yet others contend that it is not more than 40 miles from Rawlins. The irony is that the state geological survey reports that there is a very real possibility of diamonds in the state, but as a result of Slack and Arnold's fraud any interest in diamond exploration in the state had been deterred for over 100 years.

THE SALT LAKE CITY TRIBUNE
Sack of Gems Made Fools Out of Many
Will Bagley Date: 08/06/2000
Edition: Final Section: Utah Page: B1
Around 1870, two ragged prospectors made an odd deposit of "precious gems" at an assay office in San Francisco. The miners quickly vanished, but the hoard they left behind triggered a financial frenzy that generated the equivalent of $3 billion in capital investment. Even before the strike could be verified, men made fortunes investing in an astonishing rumor that "blossomed into a craze of speculation worthy of the Arabian Nights."The prospectors, John Slack and Philip Arnold, were Kentucky cousins whose 19th-century economic wonder rivaled the Internet. Historian Peter DeLafosse has noted the parallels between today's cyber-excitement and the fiscal furor generated when Arnold and Slack arrived in San Francisco with their sack of diamonds, rubies, emeralds, amethysts, garnets and spinels. The gems came to the attention of William Ralston, president of the Bank of California and the Bill Gates of his time. He tracked down the prospectors in Wyoming and tried to all but swindle them out of control of their discovery. Slack and Arnold agreed to take Ralston's scout to their secret site. Four days' ride south of Fort Bridger, they removed the blindfold from the banker's agent and showed him where they had dug diamonds and rubies out of anthills. The "discovery" came in the wake of diamond finds in South Africa. Charles Tiffany certified that one sack of these Rocky Mountain gemstones would be worth "a rajah's ransom." Ralston and his syndicate, which included an agent of the Rothschild's and former Union general and presidential candidate George B. McClellan, invested $10 million to move the world's diamond capital from Amsterdam to San Francisco. Like the Internet with its promise of easy riches, the diamond craze of 1872 created and destroyed fortunes long before anyone figured out if there was any real money to be made. The Kentucky prospectors walked away with some $600,000 (worth $8 million in today's dollars) for rights to their find. Soon after, geologist and explorer Clarence King deduced the location of the purported diamond fields near Brown's Hole, the remote spot where Utah and Colorado meet Wyoming. At the site, King noted that the only anthills containing the precise 4-1 ratio of rubies to diamonds were those surrounded by boot tracks. The mines were "salted" frauds. Private investigators learned that Slack and Arnold had bought $35,000 in low-grade diamonds in London. Some of the sample gems were cut diamonds. Instead of being remembered as one of the most spectacular mineral discoveries of all time, the scam is now called the Great Diamond Hoax. The deceit probably inspired the names of Utah's Diamond Mountain and Diamond Gulch, located close by the purported mines. Ironically, brilliant crystals found five miles south of Eureka, Utah, sparked a boomtown named Diamond in 1870, and may have inspired the entire con. Some say Slack disappeared. Others maintain he made coffins in New Mexico during his last days. Arnold returned to Kentucky to live in splendor, but ultimately coughed up $150,000 to pay off angry investors. Arnold lost a gunfight in 1878 and died of pneumonia. Ralston, the financial genius who sparked the great excitement, lost his job in 1875 following a run on his bank. He took a swim in the San Francisco Bay and didn't come back.

Will Bagley is a Western historian with absolutely no financial expertise. For more on the hoax, see Thurman Wilkins' biography, Clarence King.

In 1871 two prospectors, Philip Arnold and John Slack, appeared in San Francisco with quantities of diamonds that they had found in Wyoming. After depositing their stones in the vault of The Bank of California, they sat back and let the news of their find spread through the city. Tiffany valued the stones at $150,000. Soon investors were approaching Arnold and Slack to develop the claim. Reluctantly, the miners finally agreed to discuss their prospects with San Francisco's most prominent financiers. The money men hired a mining engineer and the claim holders agreed to take the whole party out to examine the diamond field.

After a train ride that was followed by four grueling days of traveling blindfolded, the party arrived at the richest gem field they had ever seen. Diamonds, rubies and emeralds were peppered across the bare ground. There were even "small glittering piles resembling anthills . . . encrusted with diamond dust". The mining engineer wrote a glowing report. Some of the most astute business men of the day, General George S. Dodge, William C. Ralston, Thomas S. Selby and Baron Von Rothschild, invested in the project. Arnold and Slack reluctantly sold their interest for $660,000.

Not long after, Clarence King. a U.S. government geologist, went out to inspect the gem field. The precious stones were so thick, all you had to do was bend over to pick one up. Much to his surprise, however, King and his companion found one stone that was partially polished. Immediately, King contacted the investors and the whole illusion collapsed. Not even the mining engineer had questioned the probability of finding diamonds, rubies, emeralds and sapphires in the same place. In retrospect, Ashbury Harpending, one of the initial investors wrote, "Why a few pearls weren't thrown in for good luck, I have never yet been able to tell." When the truth came out, it was revealed that Arnold and Slack had paid $25,000 to salt the area with second-rate diamonds and gemstones.

Whether some of these salted stones are still in the area along the Colorado/Wyoming border is hard to say, but if you are in the area and find something that looks like a diamond, it just might be.

Narrative : The Great Diamond Hoax of 1872

The following is a narrative account of the “Great Diamond Hoax”. It gives a somewhat embroidered and romanticized version of the story and lacks historical accuracy in some points. Especially the analysis of the involvement of Clarence King and his survey colleagues. It is Chapter XXIV in George D. Lyman’s book “RALSTON’S RING – California plundders the Comstock Lode, published by Charles Scribner’s Sons, New York. In 1937. This particular chapter is based on many of the flourishing accounts and stories appearing in the popular press at the time of the hoax. Many of the misconceptions were carried on, partly because they make good press. It also reflects the interest in stories like these of the “Old West” some sixty years after the facts. The focus of the book, however, is more on the way the silver mines of the Comstock Lode and mining and milling operations in the Washoe (Virginia City District in the Nevada Territory) were exploited by San Francisco business interests, and basically is not flattering to Ralston. It is therefore even more remarkable that in this chapter he is described as to live up to his financial commitments to business partners and friends. Relations with competitors in the mining district were much more ruthless.

The chapter nevertheless gives a reasonable narrative account of the basic story. Some more accurate versions will be given in the press reports that follow later.

A SACK OF DIAMONDS
May, 1872

Diamonds! Rubies! Sapphires! Emeralds!

A dazzling cataract of flashing stones poured, pell-mell, out of the mouth of the open sack which Harpending was holding upside down, and spilled themselves in shimmering pools of green, red, blue, and white upon his sheet covered billiard table.

It was an amazing, unforgettable sight! Phosphorescent pools of liquid fire glimmering and glowing in the dim light of Harpending’s billiard room.

The stones were of different sizes. Some yellow, black, and white diamonds were small, others were larger than dice. For one of the latter, one of 103 carats, Shreve and Co. of San Francisco had already made an offer of $96,000. Besides that huge jewel, there was a sapphire as large as a pigeon’s egg; emeralds as round as gooseberries; a ruby that might have fallen out of a heathen idol’s eye. All too valuable for anything but a royal crown. All these gems were lying on Harpending’s billiard table, flashing, glowing, burning, in luminous splendor. Ralston and Roberts, Harpending, Rubery and Lent, stunned at the spectacle of so much wealth, looked in open-mouthed amazement.

One day back in 1871, Philip Arnold and John Slack, two weather-beaten prospectors, had wandered into the Bank of California. With them they had carried several sacks, which they told the bank clerk, contained property of great value. For safekeeping they wished to deposit them in Ralston’s bank. In making arrangements it was necessary to state what the sack contained. “Diamonds, rough diamonds,” the duo blurted out. They had found them in a deserted mountain section of the West. As soon as the receipt was in their possession the prospectors shambled out of the bank.

Somehow or other news of those sacks of diamonds, reposing in a dark cranny of his vaults, reached Ralston’s ears. Immediately his interest was stirred. With mines of gold, silver, and refineries bulging with bullion, the thought of diamond fields stayed Ralston’s attention. Look what the Comstock had done for SF. With a diamond mine what might he not accomplish for his beloved city? Ralston saw another chance to invest his Comstock wealth in something spectacular, and he sent for Arnold and Slack to come to his office. A day came when the two roughly clad prospectors shuffled up to Ralston’s desk. They seemed bewildered in his presence. Their attitude said plainer than words that accidentally they had stumbled upon a windfall. A windfall so monstrous that they did not know how to proceed. Being in doubt, they intended to remain silent. Arnold had made it especially evident that he did not want to talk to Ralston. He was afraid of him, he claimed.

Ralston asked the bewildered duo where they had found the sacks of diamonds.

But the prospectors were ignorant of the United States geography. Accidentally they had come upon them somewhere out in the great American desert. Arnold pointed a rough thumb towards the East: “ Out there”. Perhaps it was Arizona, or Colorado, or Wyoming. He didn’t know. Anyway it was about 1000 miles to the east of Ralston’s office. Who knew, out in the great desert, where one wandered? Who cared? And the old prospector laughed. They were mining explorers. They had been looking for gold. By chance they had stumbled upon diamond.

No! They did not want to sell out their rights. True: they had no resources. To get a start, perhaps they would be forced to dispose of a small interest. But only perhaps. On no account would they part with the whole. They did not have money enough to secure title or develop their discovery. Perhaps on that account they would have to take a third party in with them. But they didn’t want an outsider.

Ralston could make nothing of the two shy, cautious, bewildered men before him. So afraid were they of making some regrettable mistake that they didn’t know what to do themselves.

Several days passed and the miners, more amenable to reason, returned to Ralston’s office. They would part with a half interest in their diamond fields, they told him, to men in whom they had implicit confidence. Patiently Ralston pointed out that negotiations were impossible unless the location of the fields were disclosed and some sort of inspection permitted.

Then Slack and Arnold proposed a strange arrangement. On its face it seemed fair enough to Ralston. If anything, it made it the offer more alluring.

They would conduct two men, to be selected by Ralston, to the diamond fields, and allow them to satisfy themselves of their extent but only on one condition: when these men had reached the wild, uninhabited district where the diamond fields lay, they must submit to being blindfolded, both going and coming back.

Full of the adventure of the thing, Ralston agreed. For one of the proposed inspectors he selected David C. Colton of the Southern Pacific, one of the most prominent and level-headed men of big affairs in San Francisco. Ralston acknowledged that he would have absolute faith in Colton'’ conclusions.

One day Colton departed with the two prospectors. After some time he was back in Ralston’s office. He had been to the marvelous diamond country. Both going and coming back he had been blindfolded; but there he had unearthed more diamonds than he ever knew existed. There was no doubt of the genuineness of the fields or of their fabulous richness. There were acres and acres of precious stones: diamond, rubies, sapphires, emeralds. The whole terrain sparkled with them. On hearing this rose-colored report from a sane official of the Southern Pacific, Ralston went absolutely wild. There was one spot to invest his ”Belcher” millions. There million would beget million. There would be no end to what he could accomplish for San Francisco. Straightway he cabled his old friend Harpending, who was in London on mining business, regarding the diamond discovery. The first telegram was so explanatory that it cost Ralston $1100. But he did not care. Ralston wanted Harpending for his general manager. Would he catch the next boat? Harpending demurred. Ralston burned up the cable with messages. Harpending, an unbeliever in American diamond fields, “felt assured his old friend had gone mad.” Finally, at great personal sacrifice he gave up several lucrative London deals to go to his old friend’s assistance. In the meantime rumors of Ralston’s vast diamond field leaked out in London. No less a person than Baron Rothschild sought an interview with the departing Harpending. But the latter was non-committal, although he was still scouting the idea of diamond fields in his country.

“Do not be so sure of that,” commented the baron, “America is a very large country. It has furnished the world with many surprises already. Perhaps it may have others in store. At any rate, if you find cause to change your opinion, kindly let me know.”

When Harpending saw those sacks empty their contents on his billiard table he kept his promise.

Being a cautious investor, Ralston started an investigation. Who were these two prospectors? Philip Arnold, he discovered, was an old California miner. Originally a California pioneer of ’49, he had come from Hardin County Kentucky. Ever since his arrival he had been mining. Several times George D. Roberts, one of the best mining men in the West and a close friend of Ralston’s had hired Arnold to investigate mining properties for him. Never had he been dissatisfied with the honesty of his work. He was and honorable old-timer.

Harpending, too had known Arnold, and had always found him reliable. As for Slack, he was a plain man-about-town of fair repute. In Ralston’s mind there were no longer any doubts as to Arnold and Slack. They were well-known and honest prospectors, “Old Forty-niners.” Still, all that hocus-pocus coming and going to and from the diamond fields deserved attention.

He decided to proceed carefully. The supply of diamonds might be quickly exhausted; only a “flash in the pan” as it were. That was not the sort of investment Ralston wanted for his Comstock winnings or for investors. Sensing Ralston’s lack of enthusiasm, Arnold offered to go back to the diamond fields, collect a couple of million dollars’ worth of diamond, bring them back to San Francisco and allow Ralston to keep them in his possession as a guarantee of his good faith.

That was fair enough. Ralston accepted. Slack and Arnold left San Francisco promising to be back in record-breaking time.

One night, shortly thereafter, Ralston received a telegram from Arnold. He was at Reno. He and Slack were on their return journey to San Francisco. He urged Ralston to have reliable persons meet them at Lathrop: “ to share the burden of responsibility.” The next morning, after a hurried conference, Harpending, who had just arrived from London, set out for Lathrop to meet the diamond emissaries and accompany them back to San Francisco. Before leaving, it had been agreed that Ralston, Rubery a London friend of Harpending, William M. Lent, and several others interested in the fields would await Harpending that evening in the billiard room of his home on Fremont Street to examine the diamond collateral.

That night an eager group assembled about Harpending’s billiard table. Along about nine o’clock the rumble of carriage wheels and the crunching of gravel on the driveway could be heard.

A moment later they heard the turning of a key in a lock and the shutting of a door. Then, all excitement, Harpending entered the billiard room. Under his arm was an awkward buckskin-covered bundle. He placed it on the table. He had a lurid tale to tell.

Ralston and Lent drew closer as Harpending began: When Arnold and Slack had reached the diamond fields they had struck and enormously rich deposit. With no trouble at all they had filled two packages, such as the one he laid upon the table, with diamonds, sapphires, emeralds, and rubies. Then they had started on their return. On their way they had been overtaken by a violent rainstorm. They had been compelled to ford a river on a raft. The river had been greatly swollen. Accidentally one package had been washed overboard and was irretrievably lost in the flood. But that had been no loss to the prospectors. There were millions of precious stones on the fields. But time was pressing. They could not go back for more, so they had brought only one sack with them – the one on the table.

No time was lost in preliminaries. A sheet was spread out over the green-baize covering. Ralston, Roberts, Dodge, Rubery, and Lent drew closer about the table. Harpending snipped the elaborate cord-fastenings around the bundle. Taking hold of the lower corners of the sack he turned it upside down. Out gushed a cascade of many-colored stones. How they flashed and scintillated in the dim light! As fiery as pieces of stars! They looked as if they would burn holes through the sheet. There lay at least a