By Larry Clinton, Sausalito Historical Society
A cover of one edition of Asbury Harpending’s memoir.
We recently profiled Asbury Harpending, the boy wonder who was an early investor in Sausalito’s Northwestern Pacific Railroad. Harpending went on to become a successful real estate magnate and respected capitalist. But in 1872 even his keen business sense failed him, as he detailed in his memoir The Great Diamond Hoax and Other Stirring Incidents.
The gold rush that began in 1848 and the Comstock silver lode discovered in Nevada in 1859 “filled the West with people hooked on the Next Big Thing,” according to an article in Smithsonian Magazine. “From grubby prospectors washing dirt in a thousand Western streams to bankers and speculators in San Francisco, New York and London, everyone, it seems, embraced the idea that the West’s mountains and riverbeds held an abundance of mineral wealth there for the taking.”
In 1870, two cousins, Philip Arnold and John Slack, walked into a San Francisco mine broker's office, reported a diamond mine and produced a bag full of gems. They stored the diamonds in the vault of the Bank of California, founded by William Chapman Ralston.
Word spread, and prominent financiers convinced the prospectors to document their find. The cousins offered to lead investigators to a remote location in northwest Colorado Territory.
The group finally reached a huge field with various gems on the ground. A mining engineer, Henry Janin, evaluated the find and submitted a highly optimistic report, which worked its way into the press. After that, more businessmen expressed interest. They included such luminaries as banker Ralston, General George S. Dodge, Horace Greeley, Harpending, George McClellan, Baron von Rothschild, and Charles Tiffany of Tiffany and Co. Tiffany's evaluated the stones as being worth $150,000.
As Harpending wrote: “In fact, after the Tiffany valuation, the personal examination of the mines and the statements of Mr. Janin before he promulgated his famous report, every suspicion gave way to an unbounded enthusiasm.”
And so, the stage was set for the Great Diamond Hoax, described by the San Francisco Chronicle in 1872 as “the most gigantic and barefaced swindle of the age.”
San Francisco was a city of some 150,000 souls in 1870. One of them was Philip Arnold who was working as an assistant bookkeeper for the Diamond Drill Co., a San Francisco drill maker that used diamond-headed bits. Arnold had acquired a bag of uncut diamonds, presumably taken from his employer, and mixed them with garnets, rubies and sapphires that he likely bought from Indians in Arizona.
When Harpending learned of the find during a business trip to England, he swallowed the bait as hungrily as everyone else. He made his way back to San Francisco as fast as he could to get in on the action.
The investors offered to buy out the two prospectors. At first, they appeared to resist a quick payday. But then Slack asked for $100,000. With that seed money, he and Arnold headed off to England to buy uncut gems. In July 1871, under assumed names, they bought $20,000 worth of rough diamonds and rubies, thousands of stones in all, from a London diamond merchant. Upon return, they led investors to believe that they had made another visit to the diamond field and had returned with 60 pounds of diamonds and rubies said to be worth $600,000.
And then the pair offered to make one more trip to the diamond field, promising “a couple of million dollars’ worth of stones,” which they would allow the businessmen to hold as a guarantee of their investment. Off they went, to salt the fields rather than mine them.
What finally led to the hoax’s collapse was a chance encounter between Janin and members of a government survey team led by geologist Clarence King. When Janin showed them some of the diamonds, King decided that they had better inspect the diamond fields as soon as possible. After five days of hard travel, they set up camp and soon began finding gems sitting on anthills, as promised. But the next day, King noticed that wherever he found a diamond, he also found a dozen rubies, too neat a scheme for a natural deposit.
Harpending’s book describes what came next: “One of King’s men came on a stone that caught his eye and filled him with wonderment. It bore the plain marks of the lapidary’s art. He took it immediately to his principal. ‘Look here, Mr. King,’ he said. ‘This is the bulliest diamond field as never was. It not only produces diamonds, but cuts them moreover also.’
“King grabbed the half-cut diamond. Everything was clear as day. Beyond a doubt the fields were salted.”
On November 26 The San Francisco Chronicle stacked headlines that began with “UNMASKED!” followed by “The Great Diamond Fiasco,” “THE MAMMOTH FRAUD EXPOSED” and “Astounding Revelations.”
Harpending was blamed for abetting the hoax, but maintained his innocence while rebuilding his fortune, and eventually retired to New York where he wrote his memoir and died in 1923 at age 83.
The Historical Society has a leather-bound copy of his memoir in its rare book collection, and various soft cover editions can be ordered through the Internet.