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N0KFQ > TODAY 26.11.15 16:51l 65 Lines 2851 Bytes #999 (0) @ WW
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Subj: Today in History - Nov 26
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Sent: 151126/1543Z 75565@N0KFQ.#SWMO.MO.USA.NA BPQ1.4.65
1872
The Great Diamond Hoax is exposed
The Great Diamond Hoax, one of the most notorious mining swindles
of the time, is exposed with an article in the San Francisco
Evening Bulletin.
Fraudulent gold and silver mines were common in the years
following the California Gold Rush of 1849. Swindlers fooled many
eager greenhorns by "salting" worthless mines with particles of
gold dust to make them appear mineral-rich. However, few con men
were as daring as Kentucky cousins Philip Arnold and John Slack,
who convinced San Francisco capitalists to invest in a worthless
mine in the northwestern corner of Colorado.
Arnold and Slack played their con perfectly. They arrived in San
Francisco in 1872 and tried to deposit a bag of uncut diamonds at
a bank. When questioned, the two men quickly disappeared, acting
as if they were reluctant to talk about their discovery.
Intrigued, a bank director named William Ralston tracked down the
men. Assuming he was dealing with unsophisticated country
bumpkins, he set out to take control of the diamond mine. The two
cousins agreed to take a blindfolded mining expert to the site;
the expert returned to report that the mine was indeed rich with
diamonds and rubies.
Joining forces with a number of other prominent San Francisco
financiers, Ralston formed the New York Mining and Commercial
Company, capitalized at $10 million, and began selling stock to
eager investors. As a show of good faith, Arnold and Slack
received about $600,000-small change in comparison to the
supposed value of the diamond mine. Convinced that the American
West must have many other major deposits of diamonds, at least 25
other diamond exploration companies formed in the subsequent
months.
Clarence King, the then-little-known young leader of a
geographical survey of the 40th parallel, finally exposed the
cousins' diamond mine as a hoax. A brilliant geologist and mining
engineer, King was suspicious of the mine from the start. He
correctly deduced the location of the supposed mine, raced off to
investigate, and soon realized that the swindlers had salted the
mine-some of the gems he found even showed jewelers-cut marks.
Back in San Francisco, King exposed the fraud in the newspapers
and the Great Diamond Hoax collapsed. Ralston returned $80,000 to
each of his investors, but he was never able to recover the
$600,000 given to the two cousins. Arnold lived out the few
remaining years of his life in luxury in Kentucky before dying of
pneumonia in 1878. Slack apparently squandered his share of the
money, for he was last reported working as a coffin maker in New
Mexico. King's role in exposing the fraud brought him national
recognition-he became the first director of the United States
Geological Survey.
73, K.O. n0kfq
N0KFQ @ N0KFQ.#SWMO.MO.USA.NA
E-mail: kohiggs@gmail.com
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