Diamond hoax of 1872

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The diamond hoax of 1872 triggered a brief diamond craze along the borders of Wyoming and Colorado, USA.

In 1871, veteran prospectors and cousins Philip Arnold and John Slack traveled to San Francisco. They reported that they had found a diamond mine and produced a bag full of diamonds as a proof. They deposited the diamonds on the vault of the Bank of California.

Prominent financiers heard about the find and convinced the two to speak. Arnold and Slack were at first reluctant, but eventually offered to lead investigators to the field in Wyoming. Investors hired a mining engineer to accompany investors to examine the diamond field. Arnold and Slack led the inspection party from a railroad stop in western Wyoming to a huge diamond field with various gems on the open ground. One could scoop up gems with his bare hands.

When the engineer made his report, more businessmen expressed interest. They included William C. Ralston, Horace Greeley, George McClellan, Baron von Rothschild, General George S. Dodge and Charles Tiffany of Tiffany and Co. Tiffany's evaluated the stones as being worth $150,000. They convinced the cousins to sell their interest for $660,000 and formed their own mining company. Financiers sent mining engineer Henry Janin, who had also bought stock in the company, to reevaluate the find, and he sent wildly optimistic reports to the press.

US government geologist Clarence King, along with two other geologists heard about the find and decided to inspect the unusual field. King uncovered a stone that was partially polished and definitely not natural. He also noticed that the field had diamonds, rubies, emeralds and sapphires in the same area and many of the gems were clearly in places they could not have reached in any natural means. King contacted the investors, who had to face the fact they had been defrauded.

Further investigation showed that Arnold and Slack had bought cheap cast-off diamonds, refuse of gem cutting, in London and Amsterdam for $35,000 and scattered them to "salt" the ground. Most of the gems were originally from South Africa.

Arnold returned to his home in Elizabethtown, Kentucky and became a successful businessman and banker. Would-be investors sued him, and he settled the cases for an undisclosed sum. Years later he died of pneumonia after he was wounded in a shootout with a rival banker.

John Slack dropped from public view. He moved to St. Louis, where he owned a casket-making company. He later became a casket maker and undertaker in White Oaks, New Mexico, where he lived quietly and died in 1896 at the age of 76.