The Great Diamond Fraud


In previous winters when Clarence King and James Gardner finished their work in the Nevada desert and hoarded a river boat for San Francisco, they were the center of the attention of the other passengers. Clarence King was the director of a geological survey of the land along the new transcontinental railroad, and Gardner was his first assistant. They were trying to discover what minerals could he found out in the desert waste, what crops could he grown, and how much water was available.

But in October, 1872, when rains and high winds stopped the survey’s work again and King and Gardner once again headed for winter quarters, none of the other passengers paid any attention to them at all. The passengers were talking about something that thrilled every Californian. Somewhere out in the American Desert, two prospectors had stumbled across a whole mountain of diamonds.

If the story was true, the prospectors had come across something King and Gardner and all their assistants and their scientific knowledge and equipment had missed in five years of exploration and study. King had written that there were no precious gems in the American Desert.

King and Gardner listened with astonishment to the report that the project had been taken over by William C. Ralston, the town’s leading investment banker. Twenty-five of the city’s most reputable men had each put up $80,000 to form what they called “The San Francisco and New York Mining and Commercial Company.” Baron Ferdinand Rothschild of London, Charles Tiffany and Horace Greeley of New York were members of the company. Such men did not ordinarily subscribe to fairy tales.

For young men, Clarence King and James T. Gardner had come a long way. Both of them had put themselves through scientific school with little financial help from their parents. They had traveled across the continent with a wagon train. They had several years’ experience working with the great Professor Whitney and his California Geological Survey. At the age of 24, King had talked his way into the command of the most ambitious federal geological exploration survey ever undertaken.

They both realized, however, that the diamond strike could ruin them. The United States Congress would not be likely to support an expensive survey (hat supplied misinformation.

King and Gardner decided they would go immediately to the Pacific Union Club when they arrived in San Francisco. The Union was the garish, noisy rendezvous not only of the richest men in northern California, but also of the men who would know the truth about mining developments.

When their cab readied Montgomery Street and stopped in front of the Pacific Union building, the two men walked upstairs to the clubrooms. Within a few minutes, they saw a friend who could give them more than rumor. The story was a long one.

Early in February, two disreputable-looking miners had been seen in various saloons talking furtively to each other. Eventually the pair entered Ralston’s bank with a heavy bag which they asked the cashier to deposit in a vault. Before he locked up the sack, the cashier found that it contained several hundred uncut diamonds, and many raw rubies, sapphires and emeralds. In ten minutes. William Ralston had been told that someone had discovered a fabulous gem mine.

After several weeks of profitless investigation by many curious people, a former Army general, George I). Roberts, discovered that one of the miners, a southerner by the name of Arnold, was a former employee. General Roberts, of course, resolved to renew his acquaintance.

The General found Arnold almost grateful to meet an old friend whom he thought he could trust. His partner turned out to be a quiet fellow named Slack who nodded his head to agree with Arnold but never disputed the other’s leadership.

It took but gentle prodding to get the talkative Arnold to tell the story; although Arnold and the shrugging Slack seemed a Ira id to share their secret, they appeared even more frightened at the thought of not sharing it. The two miners told the General how they had happened upon a mountain filled with gems of every description. The find was so profuse that diamonds, sapphires, emeralds and garnets could be scratched out by boot heels. Although they had brought back a large sack of the stones, they were certain they had hardly touched the vast store. With this, the miners closed their mouths. Arnold and Slack hinted that the mine might be in Arizona, but beyond that they would tell no more.

When this vague information spread about the city, many parties set out for an exploration of Arizona. Finally, when the month of February was almost gone, Roberts called on Ralston, the master persuader of them all, to talk sense to the prospectors.

Whereas Roberts had been talking about taking rocks out of a hole in the ground, Ralston began to plan a whole gem industry with Arnold and Slack as key figures. Ralston promised the simple fellows lavish offices with solid walnut desks, rich homes with servants and great power. Under this strategy, the miners began to appreciate that there were many advantages to having experienced partners.

Once the miners became interested, Ralston convinced them that they should take two mining experts to the gem fields. Arnold and Slack agreed, demanding only the stipulation that the men should be blindfolded when they reached the vicinity of the field.