Late in the evening in February 1871 in the office door, George Roberts, a prominent businessman from San Francisco, knocked two men. One of them introduced by John Slack, the other - Philip Arnold. Last took out a small leather pouch and said that it contains something very valuable, so he would leave it to the store in the "Bank of California" (Eng. «Bank of California»).
Arnold and Slack initially reluctant to answer questions intrigued businessman pretending to not want to share his secret. In the end, they admitted that the leather pouch hidden "rough diamonds" found them somewhere in the West. Arnold and Slack did not name the exact coordinates of the detected field, but said that as many sapphires, emeralds, rubies and other precious stones they had never seen before!
The story sounded implausible, but when Arnold poured from the bag on the table Roberts dozens of rough diamonds, the eyes of a businessman brightened and dimmed mind.
Today Arnold and Slack many with wild laughter drove to a three neck, but in 1871, everything was different. Since the discovery of gold near Sutter's Mill and the beginning of the California Gold Rush took only twenty years. Since there were many open fields in the United States, Australia and New Zealand. In 1859 in Nevada found the famous Comstock silver mine, and after eight years in South Africa prospectors found diamonds. Deposits of precious stones and metals could be anywhere, waiting for their turn to come to become known to the world. People who missed the chance to profit during the gold rush, were eager for new discoveries. In 1869 completed the construction of the transcontinental railroad, and the crowds of prospectors rushed to the West in search of instant wealth. When Arnold and Slack arrived in San Francisco with the legend that found huge deposits of precious stones, and provided as evidence of a leather pouch full of diamonds, people could not believe it.
The secret, which everyone knew
The next morning the two men went to the "Bank of California" and was asked to take them to the storage leather pouch with precious stones. They casually show off to the clerk of its contents, and in the evening knew about everyone who worked at the bank, including William Ralston, its founder and president, who made his fortune in the gold mine Comstock. He, like George Roberts, did not hold his tongue, and soon the secret of Arnold and Slack knew the whole city.
After the visit to the bank prospectors left San Francisco. They returned a few weeks later, bringing with him another leather pouch with precious stones. When Ralston saw him, he immediately began looking for investors willing to buy back the deposit. Wanting to quite a lot. Arnold persuaded to sell his share of the diamond fields failed; Slack agreed to do so on the condition that they would give him 100 thousand dollars (millions in modern money). Half of the amount received immediately prospector, other money Ralston promised to pay after he bring with field one more bag of diamonds.
Arnold and Slack again left town. A few weeks later they are back with a new batch of gems. Ralston, as agreed, gave Slack second half of the money.
Rough diamonds, which brought Arnold and Slack, were real, but the story of the rich deposit - a lie. Prospectors managed to cheat the famous and successful banker and his friends, astute investors, and sell them for huge amounts of money is what is actually worthless.
Before you give Slack 100 thousand dollars, investors have taken some precautions that, in their opinion, should protect them from fraud. They insisted that the gems found by prospectors, appreciated the most reputable jeweler in the United States of America - Charles Tiffany. After that investors planning to send a viewing field of a mining engineer, to, firstly, make sure that it really exists, and secondly, to confirm the words of Arnold and Slack its rich reserves. These precautions would be enough, but because of the lack of foresight and bad luck they did not work.
The main thing - do not be mistaken
In October 1871 Ralston traveled to New York to show samples of precious stones found Arnold and Slack, jeweler Charles Tiffany. At that time he was actively engaged in attracting potential investors from the East Coast, so during the peer review, in addition to it, was also attended by such famous people as George B. McClellan (Major General US Army during the Civil War, participating in the presidential elections in 1864) Horace Greeley (editor of "New York Times"), and others.
In fact, Charles Tiffany, as well as his assistant, specialized in evaluating diamonds and virtually nothing is known about the raw gems. But this jeweler chose not to tell anyone. Solemnly examined the diamonds, he announced to all present: "Lord, these stones, no doubt, are real and have incredible value." Two days later the assistant Tiffany on behalf of investors, the nominal value of the given samples of 150 thousand dollars, which, of course, was not true.
A trip to the mine
After Charles Tiffany confirmed the authenticity of diamonds, Ralston turned for help to the independent expert Janine Henry, qualified and esteemed mining engineer, who was to assess the field, allegedly discovered by Arnold and Slack. Jeanine was famous for his entire career researched more than 600 mines and has never been wrong.
Arnold, Slack and Janine along with three investors hit the road at the end of May 1872. Prior to the field they get a few days, first by train, then on horseback through the wilderness. All this time, Jeanine and investors, at the insistence of miners went blindfolded. To the fields they arrived on June 4th. Looking around the site, which have Arnold, one of the investors discovered in the mud rough diamonds. In the search took him only a couple of minutes. An hour Jeanine and investors have found so many gems (including rare rubies, emeralds and sapphires), but they do not even dreamed of.
See - is believing
Ralston Reporting on the visit, Jeanine Henry told him that monthly deposit will bring millions profit because its reserves are inexhaustible. For his work he received $ 2,500. In addition, he pledged 1,000 shares of the new company at a price of $ 10 each.
After traveling to mine the miners decided it was time to do the legs. Having another 550,000 dollars for a share of Arnold, they hastened to leave San Francisco.
After Arnold and Slack left the city, William Ralston set about creating ten-corporation under the name «San Francisco and New York Mining and Commercial Company» (eng. "Mining and Commercial Company of San Francisco and New York City"). He managed to attract 25 investors (including the editor of "New York Tams" Horace Greeley and the British financier Baron Ferdinand de Rothschild) who have invested in the case on 80 thousand dollars each. Ralston had to find another $ 8 million.
Rothschilds owned the world famous banking firm. Projects in which they invest, always proved profitable and successful, so it is not surprising that the interest around the future of the company Ralston grew at an impressive pace. Besides Arnold and Slack, nobody knew where the diamond field, but what of that? When rumors began to circulate that it is in the territory of Arizona, where hundreds knocked seekers of wealth and adventure.
The emergence of Clarence King
Because of fraud Arnold and Slack would suffer far more people, if not one accident: the miners themselves about not knowing, chose the location of the "diamond fields" at the site, which is being developed by a group of government geologists.
Its leader, Clarence King heard about where the field is located, could not believe his ears. He has over five years was researching this area and no deposits of precious stones on it not found. King's professional reputation was at stake: if there really find "Diamond Field", what will be known immediately to Washington, it will consider for an incompetent employee and stop funding the project, in which he participated.
Too good to be true?
King decided to meet for dinner with Henry Jeanine and learn firsthand about the history associated with the diamond field. Once a mining engineer began to describe the details of the trip to the field, he immediately sensed something was wrong. Janine continued to talk about how they were able to find an hour in one place hundreds of diamonds, rubies and sapphires. As an experienced geologist, King knew that this is impossible. Processes of natural diamond formation, rubies and sapphires are very different from each other, so find them in the same field is not feasible.
After talking with Janine, King knew about any field in question. He invited the engineer to go there the next day with him and his team.
A trip to the "diamond field" took several days. Upon arrival, they set up camp and began to explore the site. To find rough diamonds, rubies and sapphires, it took them quite some time (as in the case with Jeanine). King could not believe his eyes, looking at dozens of gems lying in his hands. The idea of these if they do not leave it overnight. King doubts vanished with the coming of the morning.
• Shortly after sunrise, one of the members of his research team discovered a partially sanded and polished diamond. It was clear that the jeweler has worked on it. • King noticed that in the place where he found the diamonds, he also falls and other precious stones - and almost always in the same quantities. In nature, this does not happen. • In addition, holes and depressions in which the team found King gems appear to have been made by hand or with the help of special tools. • On the other sites in the same area King and his assistants discover anything failed.
King known that if a field was present, the diamonds can be found not only on the surface but also deep in the earth. Together with his colleagues he is an unspoilt area dug a trench three meters deep. Sift fresh ground through a sieve, they did not find any precious stone. There was no doubt: Arnold and Slack all fooled.
King sent a telegram Ralston saying that he had been deceived. The banker, having learned about a scam, was furious. He had to close the company and to preserve the reputation of return of the money ($ 250,000) to investors out of pocket. As it turned out, Ralston went bankrupt not only in diamonds: he has invested millions in the construction of the hotel «Palace Hotel», already invented for him a logo, and even get a few unprofitable projects that turned out for him in bankruptcy. In 1875, his body was found in the San Francisco Bay.
Exposing the deception
The history of the great diamond fraud in 1872 was widely publicized, not only in the US but also European publications. Once this business took journalists to the surface immediately began to surface some interesting details of fraud.
[/ I] • Arnold worked as an accountant in the company «Diamond Drill» (San Francisco), which is engaged in the production of drill bits of industrial diamonds. Apparently, these stones (mixed with cheap raw rubies and sapphires), he used to collaborate with Slack scam.
• Part of the money from the amount that Ralston Slack paid as an advance, prospectors spent on the purchase of a London dealer has one batch of rough diamonds. It is these stones Tiffany and his assistant was estimated at 150 thousand dollars. [I]
The fate of scams and Clarence King
Philip Arnold and John Slack was able to earn a scam 650 thousand dollars. Money they would be enough until the end of life, they are divided in half and on the left. Arnold moved to Kentucky, where he bought 200 acres of land for farming. When the authorities finally tracked him down, for the settlement of all claims against him, he paid 150 thousand dollars. The remaining money from the scam Arnold opened his own bank. Six years later he was wounded during a shootout with a rival banker. Six months later, Arnold died from pneumonia.
About Judge Slack little is known. Its part of the money he pulled into the wind, and then was forced to work at first undertaker in Missouri, and after - the funeral director in New Mexico. Slack died in 1896. His acquired property was estimated at $ 1,600.
Thanks to expose deception Clarence King made significant progress on the career ladder; in 1879 he became deputy head of the US Geological Survey (Eng. US Geological Survey). A few years later, King decided to leave this position and do herding. Unfortunately, his business failed. He died in 1901 without a penny to his name.
The most successful of all the characters of this story appeared mining engineer Henry Jeanine. Scam is not particularly hard hit by its reputation. Moreover, to expose her he could sell their shares to another investor for an amount four times their real value - 40 thousand dollars. Jeanine was not a crook, he was just lucky.