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 a diamond mine and produced a bag full of diamonds. They deposited the diamonds in the vault of the Bank of California.

Prominent financiers convinced the reluctant Arnold and Slack to speak. The cousins offered to lead investigators to the Wyoming field. Investors hired a mining engineer to examine the field. From a railroad stop in western Wyoming, Arnold and Slack led the inspection party to a huge field with various gems on the ground. Tiffany's evaluated the stones as being worth $150,000.

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 convinced the cousins to sell their interest for $660,000 and formed their own mining company. Financiers sent mining engineer Henry Janin, who bought stock in the company, to reevaluate the find, and he sent the press wildly optimistic reports.

Government geologist Clarence King and two other geologists decided to inspect the unusual field. King uncovered a stone partially polished and definitely not natural. He noticed the field had diamonds, rubies, emeralds and sapphires in the same area and many of the gems were in places they could not have reached by any natural means. King notified investors.

Further investigation showed Arnold and Slack 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. Diamond-company 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.