Philip Arnold and John Burcham Slack

(Cont'd from Bio) - Ralston determined to get the diamond fields on a business basis. For that purpose he called a meeting and outlined his plan of action.

First, a large supply of the precious stones would be sent to Tiffany & Co, in New York, the greatest authority on precious stones in America, for examination and appraisal. If their value were proved beyond peradventure, then a mining expert would be chosen to whom Arnold and Slack would be required to exhibit the diamond fields and permit a full examination. Those would be the only conditions upon which Ralston would be willing to handle the situation.

To Ralston’s preamble Arnold and Slack readily agreed. Pending the favorable reports of Tiffany & Co. and the mining expert, Ralston agreed to take care of al incidental expenses, which already amounted to several hundred thousands. Then Ralston looked up government laws governing diamond fields. There was no existing one under which diamond lands could be located and held. Therefore a title must be procured and a law gotten through Congress. It would take plenty of money. But, as usual, Ralston shouldered it. Immediately a prominent Washington lobbyist was secured to engineer and pass an act through Congress that would cover the grounds on which their wonderful discovery had been made. After considerable delay and difficulty a bill was finally drafted, introduced, and passed. It was known as “Sargent’s Mining Bill,” and appeared May 18, 1872. In it the following passage was inserted, purposely to cover the field of precious stones: “Including all forms of deposits, except veins of quartz or other rock then in place.”

In the meantime Harpending, who had taken a little bag of the gems to Tiffany & Co., New York, displayed the stones in the presence of Mr. Tiffany, Horace Greely, General George B. McClellan of Civil War fame, and General Benjamin Butler, a lawyer of repute as well as a United States Congressman. Butler had been included because it was thought that he would be of aid in the legislation needed to acquire the diamond fields, as later proved to be the case.

“Gentlemen,” said Mr. Tiffany, with the air of a connoisseur, as he picked up a huge gem from one of the piles of stones he had been building in front of him, and held it up to the light, “gentlemen, these are beyond question precious stones of enormous value. But before I give you the exact appraisement, I must submit them to my lapidary, and will report to you further in two days.”

Within those limits, Tiffany presented his report before the aforementioned men. The stones were genuine. The lot was worth about $150,000. Ralston was stunned on receipt of that information, as the stones sent to Tiffany were a fair sample of the lot, but composed only about one tenth of those still in Ralston’s possession. It argued a total value of $1,500,00 for the whole.

All that remained now was the choice of an engineer. The name of Henry Janin suggested itself. Henry Janin was one of the best known mining engineers then living. The John Hays Hamond of his day. As a consulting engineer he was without a peer in the world. His ultra-conservatism was his only known fault. He had experted something over six hundred mines. Never once had he made a mistake. Some complained that he never took a chance. He had not an iota of gambling instinct. That was just the kind of man he wanted to expert the diamond fields, Ralston explained. One couldn’t be too careful with other people’s money. Janin valued his services at $2500, an expense that Ralston readily shouldered.

So Henry Janin was dispatched to the region of many-colored gems and made an extensive examination. His report confirmed all that had been claimed for the field of precious stones.

Gems were so plentiful, Janin averred that twenty rough laborers could wash out a million dollars’ worth of diamonds a month.

At least, the uncut jewels were worth the value of all of “Crown Point” and “Belcher” stock combined. Some $65,000,000.

Ralston was so enthused over Janin’s report that he telegraphed Harpending that he was ready to make the initial payments of $300,000 as per agreement, to Arnold and Slack. Not having ready cash, he made immediate arrangements to sell 100 shares of “Crown Point,” which was then bringing $300 a share on the San Francisco stock market.

Ralston now cleared the deck for the formation of his great diamond company. After Janin’s return from the diamond fields there was some talk of incorporating in New York, but Ralston would not listen to such heresy. “San Francisco stood ready to furnish any amount of capital required,” he wired. Moreover, all gems should be brought to San Francisco. In San Francisco they must be cut. Ralston intended to move the great lapidary establishments of Amsterdam [sic] to San Francisco, a decision which caused the Low Countries “no small concern.”

San Francisco was ripe for the new company: "The San Francisco and New York Mining and Commercial Company.” It was capitalized at $10,000,000. Twenty-five gentlemen, comprising the cream of San Francisco’s financial element, men of national reputation for high-class business standing and personal integrity, were permitted to subscribe for stock to the amount of $80,000 each. This initial capital of $2,000,000 was immediately paid into the Bank of California.

The London Rothschilds cabled that they were interested in the diamond discovery. As a result, A. Gansl, the Rothschilds’ California representative, became a member of the company. Among other directors were: Samuel Barlow and Major-General George B. McClellan of New York, who were the resident directors there, where a transfer office was to be maintained. Among San Franciscans, the directorate included: William M. Lent, Thomas Selby, whose daughter had married Ralston’s brother; Milton S, Latham, Louis Sloss, Maurice Dore, W.F. Babcock, William C. Ralston, William Willis. Lent was chosen president; Ralston treasurer; Willis secretary. David D. Colton resigned his substantial position with the Southern Pacific Railroad to become general manager. Such were the men behind the diamond fields. The biggest names in California’s Blue Book. The last word in the commercial and financial world. Men who only allowed their names to be used in 100 per cent concerns.

Handsome offices were engaged in San Francisco. Two or three secretaries were engaged to handle the voluminous correspondence.

The interests of Arnold and Slack were extinguished by a final payment of $300,000, making with what had been already allocated $660,000 in all. The capitalists congratulated themselves that $660,000 was an exceedingly small sum to pay for property capable of producing a million dollars a month, to say nothing of a million and a half dollars in value already in their possession. Without more ado, the honest prospectors received their money and faded into invisibility.

Not only in Ralston’s office in the Bank of California but in nearly every financial center in the world, the public was keyed up to a point of high speculative craze. “Crown Point,” “Belcher,” Sutro, Mackay, Fair, and O’Brian retired to the region of limbo.

Suddenly, like a thunderbolt from the blue, came a telegram from a small Wyoming station. It was signed by the name of Clarence King, the noted scientist, head of the Fortieth Parallel Survey.

Taking assistants, King had visited the diamond fields in order to give official national significance to a notable local discovery. Readily he had located the fields and found diamond, rubies, sapphires, and emeralds aplenty, scattered over a wide terrain. Immediately his admiration had been aroused by the sheer beauty of the ant-hills. Some were powdered with diamond and ruby dust, while others were sprinkled with pulverized sapphire and emerald particles. There were gorgeous things to behold. In the heart of every ant-hill he found a gem corresponding in color to the dust sprinkled over its surface.

On looking about more closely, King found diamond and sapphires in rock crevices where nature alone could not have placed them. Several times he ran into rubies and emeralds in the forks of trees; but not a gem could he unearth in the underlying bedrock, where, had their occurrence been genuine, the inevitable laws of nature must have placed them.

But when he uncovered a large diamond with the marks of the lapidary’s art still upon its face, he realized the moment had come to explode Ralston’s bubble and he had sent his telegram: “The alleged diamond fields are fraudulent. Plainly they are salted. The discovery is a gigantic fraud. The Company has been pitifully duped.” But how could Arnold and Slack have told that the expert King would examine their diamond field? With any number of unskilled workmen it would have passed muster.

Subsequently some of the “jewels” reached London, where they were recognized as South African. When Arnold’s picture was displayed, there were those who remember him as a buyer of low-grade diamonds and other jewels in the big centers of London and Amsterdam. Thus beyond a doubt the fraudulent nature of the jewel fields was exposed.

Cruel as the blow was to Ralston, as soon as he had been convinced that he and twenty-five members of the high lights of the city’s financial firmament had been duped, he called a meeting of the “San Francisco and New York Mining and Commercial Company.” The Tiffany appraisement and the reports of experts Janin and Clarence King were both examined. Then a complete recital was prepared for the public, bringing out the confidence that Ralston and his trustees had reposed in Tiffany and Janin. In conclusion, a complete acknowledgement was made of the fact that every one had been cleverly duped. Ralston intended that not the least of his enemies should ever connect his name with a fraudulent procedure. Then he made up his mind that rather than endure the whinings of faint-hearted partners he would assume the burden of expense himself.

Philosophically he accepted the loss of his own investment. With magnanimity he restored dollar for dollar the twenty-five stockholders, who had subscribed to the $2,000,000 capital funds. And they allowed him to do so. There remained incidental expenses for lobbying, experting, etc., and the $300,000 he had paid out of his own pocket to Arnold and Slack; an aggregate loss of no less than $500,000. Thus was expended a half million dollars of his “Belcher” bonanza. This sacrifice Ralston cheerfully assumed. No person should ever even whisper that Ralston had gulled his friends. He would rather sacrifice his last dollar than let any man look him in the face and say: ”I suffered through you.”

At long last Ralston had the receipts-in –full framed. These he hung upon his office wall, where he might have a continual reminder alike of the faith and duplicity of man.

Harpending did not get off so easily. Because of innocent activities in London, he was loudly denounced in San Francisco as having “put up the job” on Ralston and others. Already his real estate block had burned. He now decided to leave San Francisco. One after the other he liquidated his valuable assets. His interests in the New Montgomery Real Estate Company he sold to Ralston and Sharon. With a million dollars in his possession he made up his mind to return to his old home in the South. But before he could get away, friendship would extract another sacrifice.

Sharon was no longer on the Comstock. Ralston’s brother and adviser, Sam Ralston, had died. Mills was going to Europe. Harpending was leaving the West for good. Thus Ralston, at a crucial time in his career, was left without the steadying influence of those ballasting men who could do him the greatest amount of good when emergency required. More locked within himself now than ever, Ralston faced the future with his inscrutable, debonair smile.

Photo 4/2013

Thesis Paper, Brigham Young

Continued from Biography - Page 2

Continued from Biography - page 1

Home was built by William Wilson and was bout in 1872 by Philip Arnold. He paid 17875 cash in full for the home 34 acres of land and livestock.

Philip Arnold was shot by H. N. Holdsworth in 1878 and he died of a pneumonia in 1879.