Great diamond scam

In the second half of the XIX century it was discovered several large deposits of diamonds in South Africa, in Burma rubies, sapphires in Sri Lanka. Only North America could not boast of rich deposits of precious stones. And suddenly ... However, about everything in order.



morning in February 1871 in San Francisco arrived by train miners Philip Arnold and his cousin John Slack. They immediately went to the "Bank of California," where they were asked to take on the storage canvas bag stuffed with untreated rubies, emeralds, diamonds. Catching the look of surprise bank clerk, Arnold said: "We just damn lucky. Looking for gold and found the stones. " About unusual clients immediately reported to the president of the bank William Ralston, the largest financier of San Francisco. His fortune, he made a bold and risky investment transactions. This is one version of events. Arnold himself told me that they gave gems local businessman George Robert-su, and made him promise to keep a secret. Although the miners was well aware that Robert can not keep his mouth shut. One of the first learned of the discovery of precious William Ralston, immediately ordered to find the miners. Arnold and Slack agreed to meet immediately. Mighty banker awe inspired them.
Ralston led miners to a detailed map of America and asked to see where they found the diamonds. Arnold and Slack hesitated supposedly bad versed in geography, although the road to diamonds remembered well. In what state they made their discovery? Perhaps this Arizona, or Colorado, or Wyoming. To "Field of Miracles" about a thousand miles from here. The miners said they were not going to give up development of the field to someone's mercy, but a companion, especially with money, they can not hurt. Of course, this companion wanted to become Ralston. Slack and Arnold took the time to think. A few days later they came back and told the banker that accept his offer. For a start they are ready to show the field two envoys Ralston. The only condition: the final part of the road inspectors must be done blindfolded.
A few days later the envoys Ralston returned home, their faces glowing enthusiasm: as many gems before they see was not necessary. Scattered everywhere diamonds, emeralds, sapphires, rubies ... "There they are worth millions of dollars!" - They said excitedly.
Ralston sent an urgent message to London, where he was an old friend of Asbury Harpending engaged in stock market speculation. He has had experience in the mining business and find a better partner was difficult. After receiving a telegram, raised his eyebrows in surprise Harpending: diamonds in the western US?
I do not whether Ralston went crazy? He shared his thoughts with Baron Rothschild. "We should not be so categorical, - said the wise Baron. - America - a great country. She has presented the world with many surprises. Why would it not be the land of diamonds? If this proves true, let me know. " In May 1871 Harpending decided to return to San Francisco.
Meanwhile Ralston found that Philip Arnold and John Slack - experienced prospectors. Arnold was born in Elizabethtown in 1829 (Kentucky). He participated in the war with Mexico. Gold Rush led twenty Philip in California. Prospector returned home empty-handed, he bought a farm, started a family.
In 1870, Philip Arnold again moved to the West, where he worked as a miner and prospector. By the way, one day he was hired by George Roberts and was happy with it. Knew Arnold and Harpending. So the decency prospector no doubt. His cousin John Slack also had a reputation as an honest man. A native of the province, he could hardly embark on an adventure.
But Ralston still had doubts. What if the deposit is not very rich? In order to attract investors, he should at least know where these diamond placers. Arnold and Slack offered him a win-win situation: they bring Ralston gems for a few million dollars and the banker will tell them to their partners. Received an advance of 50 thousand dollars, promised to turn the miners as soon as possible.
A few days later, already on the way back, Arnold and Slack met returning from London Harperdinga and gave him a canvas bag with the jewels to the businessman showed them to potential investors.



Late in the evening in the billiard Harpending on Flemont Street gathered favorites society: Ralston, London each home owner Alfred Rubery, mining industrialist William Lent, General George Dodge. Harpending untied the ribbon and bag triumphantly emptied its contents on the green cloth. All and gasped: billiard table flashed gorgeous emeralds, sapphires, rubies, diamonds. For a long time no one could say a word, so it was a fascinating spectacle.
Enjoy the works of effect, Harpending noticed that another bag with diamond miners lost during the crossing of the river, where a terrible storm unfolded. Of course, everyone wanted to participate in this win-win business. However, the true value of the stones could be determined only specialist. Ralston decided to entrust the examination of Charles Lewis Tiffany, founder of the famous jewelry company.
In October 1871 Ralston representative in New York lawyer Ca Muela Barlow gathered at his home on Madison Avenue stakeholders. Among the guests were allocated two generals in the Civil War - George McLellan and Benjamin Butler. One name Mc lellana, who had an impeccable reputation, was able to make a diamond project attractive to investors. Butler, an attorney with the name, Congressman, could push through the necessary bill if, for example, the land of diamonds will be in federal ownership. How was this company Horace Greeley, editor of the "New York Tribune" is anyone's guess.
All tensely awaited the verdict of Tiffany. Jeweler carefully examined through a magnifying glass brought Harperdingom gems. "I congratulate you, gentlemen. Stones genuine and very expensive - finally said Tiffany. - But to be sure I still have to show their diamond cutters. " A few days later sent a jeweler conclusion: these stones, the estimated cost of 150 thousand dollars.
After receiving a message from Tiffany, Ralston was stunned. After all, he sent only a tenth of a jeweler jewels. Hence, the entire collection draws on a half million! Arnold banker paid another 50 thousand dollars.
Ralston bothered to diamond mines were in his undivided ownership. He spent a lot of money to bribe lobbyists in Washington to push through the necessary bill through Congress. Ralston had invaluable help Congressman Benjamin Butler. Relevant amendments to the law were adopted by Congress May 18, 1872.
Was to conduct geological exploration of the deposit. She had to spend an experienced mining engineer Henry Jeanine, famous for the fact that is never wrong in their assessments. Henry asked for work $ 2,500.
In June 1872 the miners had to diamonds Jeanine, Dodge, Har-Pending and Rubery. They landed at the railway station Roulayns (Wyoming), and then a few more days went on horseback.
Once there, the experts immediately began to survey the territory. A few minutes later he heard a cry of joy Rubery, who found the diamond. Pebbles was very much: sapphires, rubies, emeralds, diamonds but more frequent. Henry Jeanine burning with enthusiasm. In addition to the fee he was promised 1,000 preferred shares of a new mining company at a price of $ 10. Geologist no doubt that soon podorazhayut shares to $ 40, then it will sell its stake and will receive 30 thousand dollars of net profit. Therefore, Jeanine in docking
Lada deliberately exaggerated the field area to 3000 acres, in fact jewels met within one acre.
Geological exploration area continued for eight days. Jeanine pleased investors: they became the owners of the richest deposits of precious stones in the history of America. He estimated that each ton of rocks containing diamonds, sapphires, rubies, emeralds $ 5,000. Thus, twenty miners in the past month can produce gems for a million dollars! The field's reserves are inexhaustible!
Having received the report Janine, Ralston came to a complete delight. To celebrate, he paid Arnold and Slack another 150 thousand dollars, and he started to create a grand diamond mining company. He was advised to register a company in New York, but Ralston decided immediately that the rough diamonds will be delivered in San Francisco, where experienced jewelers drawn from Amsterdam, turn them into diamonds.
Twenty-five prominent businessmen, the color of the business world of America, wanted to become shareholders, "the San Francisco and New York mining and commercial companies." Even Rothschild through his representative in California has an equity stake. The initial capital in the amount of $ 2 million was deposited in the accounts of "Bank of California." Mountain businessman Lent was elected president of the company, Willis - Secretary and Ralston - Treasurer. Gen. David Colton, leaving a high post in the "Southern Pacific", assumed the duties of general manager. In San Francisco and New York offices opened their doors diamond mining company.
Meanwhile, Arnold and Slack suddenly decided to sell its stake for 300 thousand dollars and withdraw from the case. Sharks business had nothing against: because the field will bring them a million dollars a month. Received their due amount, Arnold and Slack disappeared from San Francisco.
Everything was going fine until Henry Jeanine accidentally met geologist Clarence King. A graduate of Yale University, King worked for the government of the United States. Jeanine enthusiastically told a colleague of mine diamonds in Arizona, which can be considered the greatest in the history of America.
King was intrigued. Diamonds, sapphires, emeralds and rubies never lie nearby. Together with the topography King tried to determine where there may be "Field of Dreams", described Jeanine. Most likely, the deposit was located somewhere in northwest Colorado. The area has a group of prospecting King.
In the search field it took five days. In fact, everything around was covered with precious stones. But Clarence King immediately realized that here was not without human hands. Diamonds were slightly covered with earth or lying on the surface. His assistant found treated ruby. The rock was empty. After a few days Clarence had no doubt that he is dealing with a grand fraud. By the way, the nearest railway station Black Butts (Wyoming) was only 45 miles.
November 10, 1872, King returned to San Francisco and the first thing came to the hotel to Janine. They talked all night, and the morning appeared together in the office Ralston, where they waited anxious investors "San Francisco and New York mining and commercial companies." Clarence read them his statement to the press. It, inter alia, stated that the diamond deposit is of no value, and the management of the mining company was the victim of an unprecedented fraud.
In order to set the record straight on the «i» King agreed to lead a new expedition. It is composed of Jeanine and several experts from Ralston. Winter was approaching. The cold was such that, in the words of one of the geologists, freezing whiskey in the bottle.
November 25th expedition safely returned. Clarence King conclusions were fully confirmed. Diamond mining company, it was decided to eliminate. The next day the newspaper "San Francisco Chronicle" came out with huge headlines: "Masks torn", "reveals the grandiose scam", "striking the exposure." Most of the journalists got fooled by businessmen, over which all openly laughed.
Arnold and Slack constantly luck. They even managed to avoid punishment for fraud, in which they are received by different estimations from 550 to 660 thousand. Dollars (currently about 9.8 million dollars).
Philip Arnold returned home in Elizabethtown, bought a two-story brick house and 500 acres of land. A year later, he became the owner of the bank. Things were going well, until in 1878 in his office is not broke and bankrupt competitor discharged stake in the former miner. Arnold was wounded in the shoulder. Six months later, he died of pneumonia at the age of 49, leaving a legacy of a family of several hundred thousand dollars.
The fate of John Slack various rumors were afloat. It was said that he got a job in St. Louis undertaker, and then moved to White Oaks (New Mexico), where he opened his own funeral home. He died alone in 1896 at the age of 76 years.
Reputation banker William Ralston was hopelessly flawed. His enemies triumph: the name of a powerful financier is now associated with fraud. In 1875, the police fished body Ralston of the San Francisco Bay. The investigation found that he had committed suicide. His bank was identified shortfall of $ 5 million.
The true hero of this "great diamond scam" could be considered a geologist Clarence King. He became an international celebrity, the pride of the nation. As the newspaper "San Francisco Chronicle", "only thanks to God and King Karens we managed to avoid huge financial disaster."

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