Legends of the Old West - SWINDLERS Ep. 3 | “The Great Diamond Hoax”

Episode Date: August 2, 2023

In 1872, two men devised one of the most audacious plans of the Old West era. They started a campaign to convince high-profile businessmen that a barren patch of ground was the first diamond mine in North America. It was the scam of all scams – but did it work? Join Black Barrel+ for ad-free episodes and bingeable seasons: blackbarrel.supportingcast.fm/join Apple users join Noiser+ for ad-free episodes and bingeable seasons. Click the Noiser+ banner on Apple or go to noiser.com/subscriptions to get started with a 7-day free trial. For more details, visit our website www.blackbarrelmedia.com and check out our social media pages. We’re @OldWestPodcast on Facebook, Instagram and Twitter. On YouTube, subscribe to LEGENDS+ for ad-free episodes and bingeable seasons: hit “Join” on the Legends YouTube homepage. Learn more about your ad choices. Visit megaphone.fm/adchoices

Clarence King shivered as a gust of cold air whipped around him. It was evening and the light was fading. He stood on a rocky hill, his sharp eyes trained on the ground. He turned to start walking down when something caught his eye. He bent down to see what it was and he let out a shout of excitement. He triumphantly held up a small stone that glinted and shimmered in the last rays of sunlight. It was a diamond. A group of men rushed toward King. They chattered enthusiastically as the stone was passed around. King unrolled a map which roughly charted the area around them.

In the top right corner, he drew a small circle to mark where they stood. Another shout caused the men to turn and look. They saw a man standing at the foot of the hill. He was holding something in his hand, but they couldn't tell what it was from that distance. King quickly made his way toward the man. The man was holding a blood-red gem in the palm of his hand. It was a ruby. He had found the stone in the space between two rocks. Once again, the men crowded around him. They couldn't believe their eyes. Each man inspected the brilliant stone, and King drew another circle on his map. Then there was a third shout of excitement, this time from the upper slopes of the hill.

The man punched his fist in the air gleefully. King had only clambered halfway up when there was yet another cry from a man just a few feet away. He had found another ruby at the bottom of an ant hill. Over the next hour, several other men found precious stones scattered across the bare landscape. King looked down at his map. It was filled with little circles. Dusk had fallen and the biting wind was growing stronger. King put the map away and dug his hands into his pockets. He was deep in thought, and despite the joyful chaos of the past few minutes, he couldn't shake the feeling that something was wrong. Suddenly, the answer hit him. It came to him all at once, and he realized it had been right in front of him all along. From Black Barrel Media, this is Legends of the Old West. I'm your host, Chris Wimmer, and this season we're telling six stories of legendary con artists of the Old West.

This story is about one of the all-time great large-scale scams of the West. This is Episode 3, The Great Diamond Hoax. On a late fall evening in 1870, two poorly dressed men, Philip Arnold and John Slack, walked up to the Bank of California in San Francisco. Arnold and Slack looked tired. A layer of dust and grime coated their faces. Before they could push open the door, a uniformed security guard stopped them. He firmly told them that the bank had closed an hour ago. Arnold stepped forward and told the guard that they had urgent business with the bank's founder, William Ralston.

He pointed up to the third floor of the building. The lamps in the room were lit and burning bright through the window. That was Ralston's office. The security guard sized up the strange pair. He wondered out loud what Mr. Ralston could possibly have to do with people who were wearing such shabby clothing. Offended by his words, Slack loudly protested. Arnold calmed his partner down, then stepped closer to the guard and told him that if he turned them away,

he would be costing Ralston the opportunity of a lifetime. The guard was still uneasy about letting the strangers inside, but he relented. He moved aside, and Arnold and Slack walked into the bank. There are many versions of how the story of the Great Diamond Hoax of 1872 started, and this is probably the most prominent. William Ralston was getting ready to leave when the guard told him that two strangers had an important matter to discuss with him, something that could not wait until the next morning. Ralston agreed to the meeting, and Arnold and Slack stepped into his office. Ralston was taken aback by their ragged appearance, and his surprise quickly turned to irritation.

Ralston ordered them to tell him what this was about. Arnold scarcely heard him. He was nearly overwhelmed by the opulence of the well-furnished office, but he quickly snapped out of it. He couldn't afford to get carried away daydreaming about the potential wealth that could be in his future. This meeting was huge, and he had to nail it. Arnold reached into his worn-out overcoat and pulled out a small cloth sack. It looked like it was weighed down by something heavy. Before opening it, he asked Ralston to keep this meeting confidential.

The thing that Arnold was about to reveal must remain a secret. Ralston eyed the sack suspiciously and nodded to Arnold to continue. Arnold emptied the sack onto the desk. A small fortune in uncut diamonds spilled out under the yellow lamplight. Ralston stared in amazement. He asked Arnold and Slack what they wanted from him. And secretly, of course, he wanted to know how this unlikely duo had gotten their hands on these gems.

Philip Arnold took the lead again. He told Ralston that they needed a safe place to lock up the diamonds for the night. They'd been on the road for hours and they wanted a good night's sleep, but it was far too dangerous to rest while their precious cargo lay unguarded. Ralston nodded in agreement as he absorbed the information. His mind was buzzing with possibilities. Had these men stumbled upon a diamond mine in North America? That sounded too good to be true, because in 1870, there were no diamond mines in North America. The first would be discovered in Arkansas in the early 1900s.

But Ralston couldn't see into the future, of course, so he thought the proof of the first diamond mine in North America was sitting right in front of him. Ralston tried to get more information out of Arnold and Slack, but the men were exhausted. Arnold and Slack yawned and shrugged at Ralston's questions. All they told him was that their secret diamond mine was far away, maybe somewhere in Arizona. Mine was far away, maybe somewhere in Arizona. Finally, Arnold asked Ralston to excuse them because they needed to rest. Ralston put the sack in a heavy metal vault at the back of the room. He locked the vault, slipped the key into his pocket, and handed Arnold a receipt. Arnold thanked him and told him they would be in touch with him soon. He reminded Ralston of his promise to keep the affair a secret.

As soon as Ralston shut the door behind Arnold and Slack, he broke into a wide smile. Ralston was sure the diamond field was worth millions. If he played his cards right, he stood to gain a lot. But he needed help. He sent a cable to his friend in London, the reputed banker Asbury Harpending. Ralston told him to come to San Francisco at once to help him manage the find of the century, a diamond mine. Little did Ralston know that he was doing exactly what Arnold and Slack wanted him to do. They knew that the best way to spread news

was by asking someone to keep it a secret. At a saloon just around the corner from the bank, Arnold and Slack clinked their glasses of whiskey. Their plan was finally coming together. When Arnold and Slack visited Ralston in his office again, Ralston pressed them for information about the diamond field. But all he received were vague answers. This time around, Ralston was prepared.

He knew how to sweeten the deal. Ralston told them that they were on the brink of a huge opportunity. All they needed was a little help. Ralston laid out his plan to help them develop the mine into a professional setup. Then he sat back and looked at them expectantly. Philip Arnold raised his eyebrows and glanced at John Slack. Slack nodded, and it was their turn to question Ralston. Arnold told Ralston that they were interested, but they wanted to know how much money he was offering.

Ralston's answer was ready, $100,000 in exchange for a small percentage of the business. Without missing a beat, Arnold asked him for the money up front, right then and there. Ralston admitted that he had told a few friends about the opportunity, and his friends wanted to see the land before investing. In hushed tones, Arnold and Slack discussed their options. When they turned back to Ralston, Arnold said they would take two men of Ralston's choice to the land. But they had one condition. The men would have to be blindfolded. They couldn't risk anyone finding out where the mine was. Ralston readily agreed.

Ralston assigned two of his most trusted associates to travel to the diamond field with Arnold and Slack, and the four men embarked on a long journey through the mountains. with Arnold and Slack, and the four men embarked on a long journey through the mountains. In the midst of a barren landscape, Arnold handed the men blindfolds. They had finally reached the last leg of the expedition. The men slipped them on without complaint. They followed Arnold and Slack to the secret spot and carried out their mission. It took weeks for the four men to return to San Francisco. Ralston was obviously restless. Clearly, the expedition had gone into some remote territory if there had been no word for this long. But then the big day finally arrived. Ralston's men knocked on his office door.

He quickly let them in and ordered them to make their report without delay. He quickly let them in and ordered them to make their report without delay. His men emptied pockets full of rubies and diamonds. Ralston was overjoyed. It was even better than he had hoped. But now the secret was out, and a growing circle of powerful, wealthy men wanted a stake in the diamond field. Among them were the likes of Horace Greeley, the founder of the New York Tribune, Asbury Harpending, Ralston's banker friend, and a member of the famed Rothschild family. A meeting was organized between Arnold and Slack and all the potential investors.

The duo turned up looking as unkempt as the first time they met Ralston. This time, they were weighed down by a heavy sack. Arnold said they had made another trip to their land, and he emptied a sack full of jewels onto a billiard table. Diamonds, emeralds, rubies, and sapphires glistened under the dim lights in the room. The men jostled each other to get a better look at the stones. Ralston was the first one to speak. He thought it was high time they put pen to paper and formalized the deal. The investors nodded in spirited agreement.

After some discussion, the investors reached an agreement with Arnold and Slack. Arnold, on behalf of the two partners, signed over the rights to three-fourths of the diamond field in exchange for $600,000. By the end, all parties were smiling, and each group, the investors and the prospectors, were convinced that they had gotten the better of the other.

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face betrayed no emotion. Next, he turned his attention to a deep red ruby. Tiffany had an audience. A small group of men crowded around him as he examined the stones. Asbury Harpending was one of them. At Ralston's invitation, he left London for San Francisco as fast as ships and railroads could take him. Harpending nervously fidgeted with his fingers. He was counting on this venture to pay off. Finally, Tiffany turned toward the group and spoke slowly. He said that it was certain that the stones were of enormous value. Of course, for an exact appraisal, he would have to send the stones to his lapidary. A lapidary, he explained, was an expert in precious stones. Relief washed

over the group. The most respected jeweler in America, whose stores, Tiffany's, would become the most famous in the country, gave the stones his seal of approval. famous in the country, gave the stones his seal of approval. Two days later, Tiffany's trusted lapidary confirmed that the jewels were authentic. He placed a valuation of $150,000 on the lot of stones that he examined. The investors were thrilled. Philip Arnold and John Slack grabbed the opportunity to push the men to keep up their end of the bargain. Arnold and Slack wanted their money. But the group of investors included some of the most successful businessmen in the country.

Years of experience had taught them to be cautious. One more condition had to be fulfilled before they parted with their money. Arnold and Slack would have to lead a mining expert to inspect the diamond field. The investors hired a professional named Henry Jannin. Jannin was at the top of his game. He was known to have examined more than 600 mines, without once losing his clients a single dollar. If he could be faulted for anything, it was being too cautious.

That was perfect for the investors. They wanted to leave no stone unturned, so to speak. Arnold and Slack agreed to show Janin and a select few investors to the diamond field. Asbury Harpending was one of the chosen investors. The group took a train to Rollins Spring in Wyoming. From there, they trekked into the barren landscape with their rented pack mules. For four long days, the crew traveled along a winding route through harsh conditions. John Slack explained that the diamond field was in such a remote area

that they sometimes lost their way. It was nothing to worry about, he assured them. Arnold guided the party, but as they wearily trudged on, Asbury Harpending started to wonder if this opportunity was really too good to be true. They had walked only a little deeper into the mountains when Arnold suddenly stopped. He gestured at the mountainside ahead. It was a vast expanse of land strewn with boulders and a stream that cut through the middle of it. This was it. They had reached the diamond field. Henry Jannin dismounted and got to work at once. He picked at the ground with a heavy iron

shovel. It wasn't long before the investors joined him. Arnold and Slack calmly looked on as the members of the group spread out across their secret land armed with bulky spades and sharp picks. Harpending's eyes combed the ground for any sign of the precious stones. A few minutes later, one of the investors shouted that he had found something. He held up a glittering diamond. Over the next hour, the men found dozens of gems, diamonds, sapphires, emeralds, and rubies. Over the next couple days, Henry Jannin examined the finds and performed a variety of tests. Giddy with excitement, he told the group that in his expert opinion, this diamond field would control the gem market of the world.

This remote diamond mine in the middle of Wyoming would indeed find its place into the history books, but not for the reasons Jannin imagined. Samuel Emmons sat in a train car and read yet another newspaper headline about a diamond mine. In the article, a diamond was rumored to have been discovered that was larger than a pigeon's egg. Emmons was a geologist by profession, and these outrageous claims amused him. He wondered out loud if anyone really believed all these tall tales.

One of the men in the train compartment shot Emmons a disapproving look. The man guaranteed him that this particular diamond field was everything the newspapers described and more. He dropped his voice to an urgent whisper as he told Emmons that he had seen it for himself. When Emmons stepped onto the platform a few hours later, his mind was racing. The man he had met on the train was a well-known mine expert named Henry Jannan. Jannan had just returned from an expedition to the mine. Jannan swore Emmons to strict confidence and then showed him a few diamonds that he had brought back from the mine. Janin added that he had seen rubies and sapphires as well.

Samuel Emmons was baffled, and he was determined to get to the bottom of the mystery. Emmons was part of a team of geologists who were surveying land from California to Wyoming for the federal government. They had spent the last few years on the ground collecting samples, the very same ground on which the famed diamond mine stood. The team had not found a single gem, let alone scores of them. Emmons was at a loss. He turned to the one person he thought would be able to make sense of the problem, the leader of his team, Clarence King. When King heard the story, he, too, was mystified. Could their survey have missed such a major find? There was only one way to find out.

In October of 1872, Clarence King led a team of geologists to the elusive Diamond Field. Clarence King led a team of geologists to the elusive diamond field. Icy winds swept through the mountains as the men fanned out across the stark landscape. They worked in silence, carefully surveying the ground. Occasionally, one of them would stop to pick at the ground with their metal tools. And it wasn't long before King made the first discovery, an exquisite diamond that glinted in the dwindling evening light. His find invigorated the men. They studied the ground with renewed gusto,

eagerly bending to examine the space between the rocks. Soon enough, one of the men cried out in delight. He had found a ruby in one of the crevices. And that was just the beginning. They found gem after gem, all hidden just out of sight. King stood atop a rocky hillock and thought about the situation. His men had found rubies, sapphires, emeralds, and diamonds. It was easy to get carried away by the shiny stones, but King was a man of science. He knew that some of these gems were

rarely found in the same place. As he studied the conflicting information, he absently kicked the ground with his heavy boots. His eyes widened as he noticed something unusual. Perched precariously on a slender rock in front of him, a diamond twinkled in the last rays of light. King knew immediately that there was no natural process through which the diamond could have ended up there. That pushed his suspicion further, and over the next couple days, the team found several other scientific anomalies. They noticed a series of deep holes around a large anthill. At the bottom of each one was a ruby. On closer inspection, it became clear that the anthill itself was man-made. The last straw was a diamond which clearly bore the marks of having been cut. And now Clarence King knew the secret.

There was no way all these stones could arrive here by natural processes. It was clear that someone was salting the land, a mining term that meant someone had planted the stones to be found. The someone or someones had tried to cover their tracks, and they had clearly fooled several groups of people. But the scientists had uncovered the truth. King set off in the direction of the nearest railroad. On November 11, 1872, he wired the unfortunate news to Asbury Harpending. The investors' precious find was nothing more than a salted mine, and most of the gems they had thought were valuable were actually cheap stones that were usually sold for industrial purposes. The investors had been swindled, and they had paid $600,000 to Philip Arnold and John Slack.

Now they were left with two obvious questions. How in the world had they been fooled by two ordinary prospectors? And where in the world were those prospectors now? The house of cards had collapsed. On hearing the news, the scorned investors tried to find Arnold and Slack. After the investors had paid the prospectors, the investors busied themselves with other legal

formalities about their blockbuster venture. And during that time, Arnold and Slack had quietly slipped away. Blinded by the brilliance of the gems, none of the investors had noticed until now. The investors were among the most powerful men in the country. Newspapers claimed that they had lost almost $2 million in the venture. They vowed to get revenge, and detectives were hired to track down the thieving duo. Within a month, in December 1872, they found Philip Arnold in Kentucky. One of the investors, William Lent, packed his bags and hurried to Kentucky with his lawyers. He marched straight into the courthouse in Louisville and filed a lawsuit against Arnold. Arnold probably knew something like this was going to happen, and he had his

own cards to play. Arnold had bought a nice piece of land and settled down with his family. He had a chunk of money in the bank and several real estate investments. His neighbors thought he was a respectable man. When he was called to answer the claims in the suit, he pretended to be shocked. Arnold loudly proclaimed that both the land and the gems had been subjected to the highest levels of scrutiny. Charles Tiffany and Henry Jannin, experts in their fields, had validated the stones and the land. Arnold said that if the mine was salted, it must have been after he handed over control to the investors. And then he played the simple man card.

He was just a simple man who had seen tough times throughout his life. And this money was the result of years of hard work. And most importantly, the investors lacked solid proof that Arnold had committed fraud. For his part, Arnold refused to give in. He never admitted guilt. William Lent finally settled with Arnold out of court for a sum of $150,000. Lent reluctantly watched as Arnold went back to live off his ill-gotten gains in Kentucky. As for John Slack, he got away scot-free. The detectives were never

able to find him. It wasn't until much later that the investors fully understood how they'd been swindled. The story started when Arnold found himself working for a diamond drilling company in 1870. He was astonished to see shiny diamonds being used by the bagful on the tips of drill bits. Then he found out that they were low-grade diamonds, cheap and abundant. A light bulb went off in his head. Arnold found a partner in John Slack, who was actually his cousin. Arnold acquired a piece of barren land in a remote part of Wyoming. Then the two men set about sprinkling uncut gems across the field. The gems were worthless, but wedged between the rocks, they gleamed brightly in the sun.

Once they had the banker William Ralston on board, convincing the rest of the investors had been a piece of cake. Arnold made trips to Amsterdam and London to buy low-quality uncut gems. To avoid raising suspicion, he never bought too many from any one place. Then came the bit that baffled most of the investors, the question of fooling the experts. The truth was, very few people at the time knew about uncut gems. Charles Tiffany was second to none when it came to finished diamonds, but he lacked technical knowledge about rough stones. His lapidary also used haphazard methods of valuation when assessing the gems, so his work was not as ironclad as people thought. Henry Jannan turned out to be an expert in gold and silver mines, but he had no experience with uncut stones.

So when you put all those things together, you have the Great Diamond Hoax of 1872. And to this day, the mountain behind the salted land is known as Diamond Peak, even though not a single real gemstone has ever been found there. even though not a single real gemstone has ever been found there. Next time on Legends of the Old West, it's the story of a woman who took the gambling world by storm. Lottie Dino was one of the Frontier's premier card dealers, and her story is next week on Legends of the Old West. Members of our Black Barrel Plus program don't have to wait week to week to receive new episodes.

They receive the entire season to binge all at once with no commercials. And they also receive exclusive bonus episodes. Sign up now through the link in the show notes or on our website, blackbarrelmedia.com. Memberships began at just $5 per month. This series was researched and written by Ria Perowit. Original music by Rob Vallier. Copy editing by me, Chris Wimmer, and I'm your host and producer. If you enjoyed the show, please leave us a rating and a review on Apple Podcasts or wherever you're listening. Please leave us a rating and a review on Apple Podcasts or wherever you're listening. Check out our website, blackbarrelmedia.com, for more details, and join us on social media.

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