How two men planted a fortune in gemstones, convinced America's wealthy elite they'd discovered a diamond mine, and nearly got away with it.
In 1872, some of America's wealthiest and most influential men became convinced that an enormous diamond deposit had been discovered in the American West. There were genuine diamonds, rubies, sapphires, and emeralds to prove it. A famous jeweler had examined the stones, a respected mining expert had inspected the property, and investors were lining up for a piece of what promised to be one of the greatest mineral discoveries in American history.
There was just one little problem. The entire diamond field was fake.
The gemstones were real, but someone had put them there deliberately. And the men responsible weren't wealthy mining executives or sophisticated international jewel thieves. They were two Kentucky cousins named Philip Arnold and John Slack, who managed to convince a remarkable collection of otherwise intelligent people that they'd stumbled onto a geological jackpot.
A Bag Full of Diamonds
The story began in San Francisco in 1870, when Arnold and Slack approached a businessman named George D. Roberts with a mysterious bag of gemstones. They were reluctant to reveal exactly where the stones had come from, which naturally made the whole thing even more interesting.
Arnold had worked for a company that manufactured diamond-tipped drilling equipment, so he was familiar with industrial diamonds. He also understood something important about the mining industry: the possibility of an enormous fortune could make people remarkably willing to believe what they wanted to hear.
The cousins claimed they'd discovered a rich deposit somewhere in the American West. They weren't particularly forthcoming about its location, but they had actual gemstones in their possession. And not just diamonds. There were colorful stones that appeared to be rubies, sapphires, and emeralds as well.
For potential investors, this was irresistible. America was still experiencing the excitement of the western gold and silver rushes, and fortunes really had been made by people who got involved with the right mineral discovery at the right time.
The problem was that nobody had actually seen this miraculous deposit except Arnold and Slack.
When Tiffany Got Involved
As word spread, the scheme attracted some very wealthy attention. William Chapman Ralston, the powerful San Francisco banker, became involved, along with businessman Asbury Harpending and other investors.
Eventually, a collection of gemstones was taken to New York for examination by Charles Lewis Tiffany, the founder of Tiffany & Co.
Tiffany confirmed that the stones were genuine precious gems. An appraisal valued the sample he examined at approximately $150,000, an extraordinary amount of money in the 1870s.
This was precisely the kind of reassurance the investors wanted. If Tiffany himself believed the stones were valuable, surely the discovery had to be legitimate.
Except Tiffany had been asked to evaluate gemstones, not determine where they came from. His appraisal could establish that the stones were real. It couldn't establish that they'd been dug out of a particular hillside in the American West.
It's an important distinction, and one that apparently became considerably less important once everyone started imagining how rich they were about to become.
The World's Most Convenient Diamond Field
By 1872, the investors wanted to see the source of their future fortune. Arnold and Slack agreed to lead an expedition to the supposed diamond field, but they were understandably protective of its location.
The journey took the party into remote country near the border of what are now Colorado and Wyoming. The cousins made the route deliberately confusing, and accounts describe the visitors being blindfolded during part of the trip.
When the group finally arrived, they began digging.
And wouldn't you know it? They found diamonds.
Not just one or two, either. The visitors discovered gemstones scattered throughout the ground, including diamonds and several varieties of colored stones. Mining engineer Henry Janin, who had been hired to inspect the property, was thoroughly impressed. His enthusiastic assessment helped convince investors that the deposit was genuine and enormously valuable.
At this point, Arnold and Slack had accomplished something extraordinary. They had purchased gemstones elsewhere, planted them in the ground, and persuaded wealthy businessmen to pay a fortune for the privilege of finding them again.
The process was known as salting a mine, a mining fraud in which valuable material is deliberately introduced to make a worthless deposit appear profitable.
And it worked spectacularly.
The cousins ultimately received hundreds of thousands of dollars for their supposed discovery. Depending on how the transactions are counted, historical accounts place their proceeds at roughly $600,000 or more.
Enter the Geologist
Fortunately for the investors, although rather unfortunately for Arnold and Slack, a geologist named Clarence King eventually heard about the discovery.
King wasn't just any geologist. He was leading a major government survey of the western United States, and his team had spent years studying the region. The news that an enormously valuable diamond field had somehow escaped their attention was more than a little concerning.
King and his colleagues investigated.
Almost immediately, the supposed deposit raised questions. The assortment of gemstones was geologically suspicious, and the distribution of the stones didn't resemble a convincing natural deposit. Accounts of the investigation also describe evidence that some gems had been handled or worked before being scattered across the site.
The more carefully the geologists examined the area, the less convincing the discovery became.
In November 1872, King informed the investors that the field had been fraudulently salted.
The great American diamond discovery was nothing more than a collection of imported and purchased gemstones sprinkled across an otherwise unremarkable piece of land.
So What Happened to the Criminal Masterminds?
By the time the hoax was exposed, Arnold and Slack had already collected their money and departed.
Arnold returned to Kentucky, where he purchased property and eventually became involved in banking. His later life was hardly peaceful. He died in 1878 following a violent confrontation connected to a banking dispute.
Slack's later movements are less clearly documented. Contemporary accounts struggled to establish exactly what became of him, although later historical research places him in New Mexico, where he reportedly worked as a coffin maker.
As for the investors, they were left with an expensive lesson in the difference between finding genuine gemstones and finding a genuine gemstone deposit.
Clarence King's role in exposing the fraud enhanced his professional reputation. He later became the first director of the United States Geological Survey.
The most entertaining part of the whole affair might be how simple the deception really was. Arnold and Slack didn't need to manufacture convincing fake diamonds. They used real ones. They didn't need to persuade experts that worthless rocks were valuable. They simply persuaded everyone that valuable rocks had come from somewhere they hadn't.
And once enough influential people believed the story, their confidence became part of the evidence.
It's a wonderful reminder that even the most spectacular mineral discovery deserves a little geological investigation before somebody starts writing checks.
Especially if the diamonds seem suspiciously easy to find.
References & Further Reading
- Kevin Krajick, The Great Diamond Hoax of 1872, Smithsonian Magazine.
- Wild West / HistoryNet, The Great Diamond Hoax of 1872.
- Asbury Harpending, The Great Diamond Hoax and Other Stirring Episodes in the Life of Asbury Harpending, 1913. A firsthand account by one of the investors, best read with an awareness of the author's personal involvement.
- Sausalito Historical Society, The Great Diamond Hoax, 2024.