The Great Diamond Hoax

It never ceases to amaze me how many ways unscrupulous people can find to trick others. Today, I’m sharing a little piece of history along these lines.

Phillip Arnold and John Slack

In 1872 in the bustling city of San Francisco, two men by the names of Phillip Arnold and John Slack walked down Powell Street, drawing quite a bit of attention. The men were grubby, disheveled prospectors, and while California had been at the heart of one of the best-known gold strikes in America, those days were long over. San Francisco had grown up and become civilized. The filthy prospectors looked quite out of place as they traipsed to the end of Powell Street and entered the Bank of California.

After their initial awe at the fanciness of the bank waned, Arnold and Slack walked up to an available teller and asked to leave a filthy bag in the safety of the bank while they looked around town. The bank manager was called, and he informed the men that before he could take charge of the bag, he needed to see the contents. Nervously, the two men dumped the bag out, revealing hundreds of uncut diamonds, ranging in size from a tiny pebble to that of a twenty-dollar gold piece. The bank manager was in shock, but finally agreed to take charge of the diamonds for the men. With their receipt in hand, the prospectors left the bag and went to see the San Francisco sights.

Well, you know how such circumstances go. News of the diamonds traveled quickly, and within days, the whole financial community of the large city was aware of their existence. The bankers decided to find out where the two men had found the diamonds, knowing that if these were any representation, there could be even greater wealth to be had. Under the guise of wanting to invest in the diamond venture, the bankers eventually persuaded the prospectors into revealing the location of the diamond fields. The valuable stones had come from Colorado.

Immediately, a representative was dispatched to the area, accompanied by Arnold and Slack. The men blindfolded the bank rep as they neared the site, but once they arrived, his eye covering was removed, and he was allowed to look around at will. He found plenty of gemstones—lots of diamonds and even some rubies. The field was rich with gems. Meanwhile, the Bank of California contacted Tiffany’s in New York to verify the quality of the stones. Tiffany’s confirmed that if the stones were available in large amounts, it would be a royal inheritance.

The bankers quickly invested their money, to the tune of ten million dollars, into a newly formed company, the San Francisco and New York Mining and Commercial Company. They offered the old prospectors $600,000 to buy them out of the diamond fields. Poor Arnold and Slack, seeing that this was big business and they were lowly backwoods prospectors, reluctantly agreed to the deal. With the news spreading of the great find, even more banks and mining companies sprang up and attempted to get in on the historic find. All in all, nearly $200 million was thrown after the diamond fields of Colorado.

But the story doesn’t end there. A man who had recently mapped the area in which the diamonds had supposedly been found report that diamonds were not naturally found in that location. Upon further research, he found that the diamond fields had been “salted.” When the original diamonds brought into the Bank of California were examined closely, many were found to have cutter’s marks. They dug further into the history of both Arnold and Slack, and learned that these prospectors had purchased large quantities of low-quality gemstones in their native Kentucky the year before, and salted the Colorado field with those stones. These supposed backwoods prospectors had gotten the best of the bigwig bankers in both San Francisco and New York!

Of course, lawsuits were filed and restitution was sought, but because the bankers entered into these dealings after much research, there was little that could be done. One of the two prospectors made a partial settlement with the companies he’d duped, but kept enough of the money to retire quite comfortably in his native Kentucky. The other man landed in New Mexico, never repaying any of the money, and lived out the rest of his life as a coffin-maker.

It’s your turn. Have you heard of the Great Diamond Hoax? What did you think of the story?

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Jennifer Uhlarik discovered the western genre as a pre-teen, when she swiped the only “horse” book she found on her older brother’s bookshelf. A new love was born. Across the next ten years, she devoured Louis L’Amour westerns and fell in love with the genre. In college at the University of Tampa, she began penning her own story of the Old West. Armed with a B.A. in writing, she has won five writing competitions and finaled in two other competitions. In addition to writing, she has held jobs as a private business owner, a schoolteacher, a marketing director, and her favorite—a full-time homemaker. Jennifer is active in American Christian Fiction Writers and lifetime member of the Florida Writers Association. She lives near Tampa, Florida, with her husband, teenaged son, and four fur children.