The Great Diamond Hoax

This is one of 1122 articles in my book Now and Then Again, The Way We Were and the Way We Are, second edition. The book is available from Amazon for $20.95 print and $9.95 Kindle and also as an ebook from Apple, Kobo, and Scribd for $9.95. It's fixed format so it's better with a tablet, laptop, or computer. There are more articles from the book on another blog here. And there is a book preview website.

The Great Diamond Hoax

In 1872, two Kentucky Prospectors, Philip Arnold and Jack Slack, brought a bag of uncut diamonds, rubies, and sapphires to the Bank of California in San Francisco. The bank president, William Ralston, was alerted to this bonanza.

Two San Francisco jewelers examined the stones and judged them to be natural and of excellent quality. Ralston said he would arrange financing for a mining venture if Arnold and Slack would show two of his men the site where the gems were found.

After a 36 hour train ride to the east and two days on mules, blindfolded, Ralston’s men reached the site. They returned to San Francisco with 7000 carats of rubies and 1000 carats of diamonds.

Ralston’s jewelers appraised the stones for $125,000. Ralston then sent the gems to his New York attorney, who took them to Charles Lewis Tiffany, founder of the prestigious store., who valued them at $150,000.

Next, Ralston hired a mining engineer to inspect the site. He, too, had to submit to a blindfolded journey. He reported that there were $5000 of gemstones per ton of ore and that a 20 man crew could recover $1 million a month.

Ralston was now convinced. He started a mining company with $2 million raised from 25 people, including Civil War general George McClellan. The story appeared in newspapers as far away as London, and a dozen other companies were formed to pursue these riches. Ralston and his investors bought out Arnold and Slack for $600,000. They took the money and vanished.

Meanwhile, a government geologist, Clarence King, became suspicious. King had led the Fortieth Parallel Survey in 1867, documenting, among other things, the geology of a 100 mile wide by 1000 mile long swath along the route of the transcontinental railroad. King knew the occurrence of rubies and diamonds in the same place, and on the surface, was unlikely.

King interviewed the mining engineer about his blindfolded trip to the gemstone site and concluded that it must lie within the Fortieth Parallel Survey area, in northwest Colorado Territory, now Moffat County, Colorado, He knew he had found the site when he saw a sign nailed to a tree claiming rights to a nearby water source signed by the mining engineer.

King found gemstones everywhere, many in obviously man-made crevices. One “rough” diamond had been partially faceted. It turned out that the diamonds were African rejects Arnold and Slack had bought in London for a song. Some of the rubies were garnets and others Burmese reject rubies. The sapphires were rejects from Ceylon.

Detectives tracked down Arnold in Kentucky, where he had bought a bank. Kentucky refused to extradite him, but he repaid $150,000 in return for immunity from further prosecution. Slack was never found. He had become an undertaker in New Mexico, where he died in 1896.

Ralston paid off his investors, but he and Tiffany were seen to be fools around the world. In 1875, Ralston’s body was pulled from San Francisco Bay, a suicide.

It is still possible to find some of the salted stones at the site. Go to Maybell, Colorado and ask directions.

Copyright © Joseph Mirsky 2020