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September 07, 2010

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The Moffat County "Diamond Fields" hoax
Moffat County in Colorado's northwest corner is home to one of gem collectings most notorious gemstone mining frauds. The Great Diamond Hoax a notorious frontier gemstone mining fraud that made scandalous headlines across the country in 1872.

The 1860's and 1870's saw many exciting foreign discoveries of diamonds, rubies, and sapphires. It seeme4d the Untited States had a precious gemstone bonanza of its own in the 1872 when two prospectors arrived at the Bank of California in San Francisco. Philip Arnold and Jack Slack, cousins and native Kentuckians, deposited a canvas bag containing the purported fruits of their latest prospecting venture... uncut diamonds, sapphires, and rubies. A bank officer dutifully alerted bank president William C. Ralston, one of San Francisco's top investment bankers.

Two San Francisco jewelers pronounced the stones genuine and of excellent quality. Ralson, always alert for a mine speculation opportunity, informed Arnold and Slack that their discovery had great potential and he could arrange the necessary financial backing. But as a prudent financier, he insisted that two of his trusted associates first inspect the gemstone site.

Arnold and Slack took Ralston's men on a thirty six hours east bound train journey, then blindfolded them and set off again on mules. Several days later they reached the site and Ralston's men greedily scrambled about filling a sack with rough diamonds, rubies, and sapphires. Back in San Francisco, they dumped 7,000 carats of rubies and a 1,000 carats of diamonds onto William Ralston's desk.

Ralston's jewelers appraised the stones for at least $125,000. Wary of "salted mine" frauds, the cautious Ralston sent the stones to Samuel Barlow his New York attorney. Barlow personally took them to Charles Lewis Tiffany, founder and president of the nation's most prestigious jewelry firm who appraised them at $150,000.

Next, Ralston hired respected San Francisco mining engineer Henry Janin to inspect the gemstone site. The engineer proclained the gem fields authentic and offered two professional estimates: First, that the "dirt contained $5000 in gemstones per ton. Second, that a crew of twenty five men could wash out a million dollars worth every month.

Convinced William Ralson founded the San Francisco and New York Mining and Commercial Company funding it with $2 million dollars raised from twenty five personal friends and wealthy contacts. Notable investors included General George McClellan, the Civil War General and unsuccessful presidential candidate, and Senator Ben Butler, who immediately began cutting through federal red tape to speed acquisition of the site.

The story hit the newspapers from San Francisco to London. In Wyoming Territory, the Laramie Daily Independent called the discovery site "The Great Diamond Fields of America." A dozen other companies quickly incorporated and raised another $2 million to get in on the action.

Meanwhile, Ralston's elite circle of investors, eager to get rid of those two Kentucky bumpkins, bought out Philip Arnold and Jack Slack for $600,000 in cash and a percentage of future profits. Arnold and Slack took the money and promptly vanished into the footnotes of history.

A thirty year old government geologist mamed Clarence King was next to appear in the drama. King a United States geologist, headed the Fortieth Parallel Survey in 1867, compiling cartographic records and detailed reports on everything from mineralization to vegetation within a 100 mile wide 1000 mile long survey tract along the proposed transcontinental rail road route.

In 1872 King was deeply troubled by the purported discovery of "The Great Diamond Fields of America". King knew that the simultaneous natural occurrence of diamonds and rubies was very unlikely. He wondered why relatively dense gemstones would concentrate on the surface and not in deep placers. King even suspected the site was possibly within the limits of his own Fortieth Parallel Survey and that was particularly disturbing to King who had not published any findings of precious gemstones in the survey report.

After interviewing Janin about his blindfolded journey he was able to piece together the location from "my knowledge of the country there was only one place that fit the description, and that place lay within the limits of the Fortieth Parallel Survey."

King traveled to Rawlings Springs, near the Green River in Wyoming in October of 1872, then followed a circuitous 150 mile route into northwestern Colorado Territory. Finally, King knew he had found "The Great Diamond Fields of America" when he saw a sign nailed to a tree, claiming the water rights from a nearby wash, it was signed "Henry Janin".

Gemstones were everywhere, King noted, especially in crevices that had apparently been made with sharp instruments. Later investigation revealed the diamonds were African refects called "niggerheads", which Arnold and Slack had purchased in London and Amsterdam for practically nothing. King even found one "rough" diamond that had partially been faceted. Some of the rubies were actually red garnets, others were real Burmese rejects, the sapphires were Ceylonese rejects.

Private Detectives tracked down Philip Arnold in Elizabeth town Kentucky, where he had used his share tof the profits to buy his own bank. Although Kentucky refused to extradite Arnold, he returned $150,000 for the promise of immunity from further prosecution. Jack Slack was never found, he had taken up a quiet career as the undertaker in White Oaks, New Mexico, where he died in 1896. Ralston, Janin, and Charles Lewis Tiffany, were made the butt of jokes around the world in spite of their having made good on the debts and paying off the investors. Just 2 years later in 1875 Ralston's body was pulled from San Francisco Bay an apparant suicide.

From Maybell and U.S. Hwy. 40, follow Colorado Route 318 northwest for 34 miles. Then take Moffat County Road 10N north for eighteen miles to a point one mile south of the Wyoming line, follow Road 167 three miles west to Diamond Wash Draw, the flat topped Mountain to the south is Diamond Peak and the Diamond field is a one square mile plain just to the north. It is still possible to find some of the salted gemstones for your collection.

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