GREAT AMERICAN DIAMOND FRAUD.

New Zealand Herald, Volume X, Issue 2798, 16 January 1873, Page 3

GREAT AMERICAN DIAMOND FRAUD.

[FROM THE " NEWS LETTER."] In another column of the A'cwn Letter will bo found the report of Clarence King, of the United States Geological Survey, exposing the fraudulent character of the Harpending diamond field in Colorado Territory. He shows thn diamonds, rubies, and other precious stones, brought thence by successive exploring parties (or a portion of them) had been artificially distributed, or " suited," through the ground. Mr. King made his report to the Executive Committee of the Directors of the Sun Francioco and New York Alining and Commercial Company on the 11th Nov. The Committee immediately sent a party to the ground in charge of their general manager, D. D. Coll on, accompanied by Mr. King and Mr. Jauin, who originally reported favorably of the "find." This party returned on Sunday last, and on Monday the directors, after receiving their report, gave the full detail: of the disclosure to tUe public. It appears that the scheme had been over two full years in preparation. About eighteen months ago, Messrs. Harpending, Boberts, Arnold, Slack, Lent and Dodge, deposited confidentially witli a leading banking house, a sealed parcel eiiid to contain rough diamonds, rubies, sapphires and gurnets, which were represented to have been gathered in u neighboring Territory. It was found necessary t» secure Congressional legislation in order to acquire a title to the ground. The services of a distinguished New York lawyer and of a Republican Congressman were retained, and the requisite legislation procured. The two men who are found in active connection with Hurpending and Itoberts in these earlier steps of the development appear on the scene in the persons of Slack and Arnold, both old California miners. They had been prospecting in New Mexico and Arizona, and were familiar with the garnets which abound in that region, the ant-hills on the sides of which they are seen plentifully scattered, etc. A field of appropriate formation for the- production of diamonds was selected—apparently by some one who had become familiar, by reading or otherwise, with the diamond fields of South Africa. Mr. King's language is, " This is the worl; of one who ha? known enough to select a spot where every μ-eoiogieal parallelism added a full probability of honesty ;" imd agniii he speaks of this selection of ground as " astonishingly fraudulent." It will bo remembered that the News Letter several weeks ago, in printing both the popular descriptions and the geologic reports of the South African fields, called attention to the identity of their features with those of tho American field—extending to curiously minute particulars. There is no such identity with the diamond-bearing fields of Brazil or Ceylon : shall we not say, therefore, that the locality for the " salting" was selected by one who was acquainted with the aouth African fields ? Was that knowledge acquired in London ? Or is it tho Hue theory that there were some, stones discovered on this ground and enough others added to make it 3 " big thing ?" The Congressional legislation having been eecurud, tho nest step was to bring the scheme forward. Lai-go numbers of gems were exhibited to Tiffany & Co., diamond merchants and jewellers of Utiw York, whose interest in the affair was secured. Leading California operators were also joined to the project. These selected a mineralogist and mining engineer of highest reputation on the Pacific Coast, to make the proper examination. Before setting out he is informed that stones froin the new field, to u valuo approximating to three hundred thousand dollars, are on deposit with a bank in Sau Francisco, while a member of the firm of Tiffany & Co. informs him that certain other stones, understood to bo of the eaine find, on deposit with Duncan, Sherman, and Co. of New York, reach a value of $150,000. Thus he is successfully impressed with the idea that his mission is specially to ascertain and estimate the probable extent and value of a find of undoubted genuineness. General Dodge, of Pacific Railroad connection, with Harpcmding, Kubery, Arnold, and Slack, liecompany Mr. Jauin, the man of science, to the ground. Some very pretty quarrelling between Harpending and Dodgo ensues during the trip, which Mr. Janin accommodates at great apparent personal risk. Arrived at the ground, he finds diamonds and rubies at a number of points. The earth dug has to be transported by baud eome distance to running water to be washed. It appears that the larger part of the atones are introduced into it by the assiitante who engage in this operation. Mr. Slack is most successful in finding the stones. A large part of Mr. Janin's time on tho ground is consumed in surveying, etc. Mr. King (in his report, which must be read) alludes to the crafty way in which the gems are distributed, poked with eticke into the ant-hills, spriuklec on the ground between the richer points of deposit, carefully scattered in the stream runniog below the bluff, whore they would naturally be washed by the weather, and where

any geologist would naturally look for them. As a result, Mr. Janin wassuccessfully deceived, and upon his report a number of leading bankers and merchants were associated in the enterprise. How successive expeditions were fitted for the field and recalled or dispersed upon one plausible pretext or another, wo need not rehearse. Two facts com e out prominently in the sequel. When the story came from Londou that dealers in precious stones had sold under incomprehensible circumstances a number of rough stones to two young Americans, the directors of the diamond company were staggered. If the London story were true, as told, the only conceivable explanation connected the purchase waa the new American find. -Per contra a large part of the American stones had been on special deposit both in the San Francisco bank and in New York a year prior to the alleged sale. The stones were at once forwarded to London for identification bv the sellers. But at this juncture General Dodge stepped forward with a portion of soil taken by him from the diamond ground, which, under the niioroecope, revealed countless minute diamonds. From that moment no iota of suspicion floated in the mind of any one of the parties interested. This was the master touch and crowning glory of the fraud. Up to this time it had been conducted with high art, but this stroke must be pronounced the touch of genius. General Dodge said that he had himself gathered the soil on the groum!. A portion of it was afterwards submitted to the California Academy of Sciences, and discussed at their public meeting. It had not occurred to anybody but General Dodge to bring in a sample for microscopical examination. And then he brought it forward in verification after a shadow of doubt had been cast on the integrity o( the discovery—a shadow which lifttil b.i'ort) his proof us a veil of mist vanishes in the rays of the rising buu. Here again we detect what seems to be n South African experience. Three microscopic diamonds are found in the diamautiferous ground. Mr. King, as a scientific man, when he suspected the fraudulent distribution of the diamonds, naturally brought his microscope to bear (as he tells ue) on the undisturbed rock. The Harpending party hud provideJ at every point against suspicion. Or are we to believe that the ground tvas, and is, diamantiferous ? The patient examination of the ground which Mr. Janin was not given an opportunity to rnnke, developed the fact which lie had no occasion to suspect, that the alleged grand discovery was, at least in part, a fraud, and the catastrophe ensued. It was then that the true sagacity and sound business principle of the gentlemen embarked in the undertaking stood up ia the wreck like a tower. They had endured heavy loss themselves, but had stood like a bulwark to ward off injury from the innocent who might have suffered through their example. It transpired that they hnd caused the whole of the incorporate stock to be locked up under the key of one of their number, and there they had resolutely retained it, resisting all cajolery to release any part of it, even after General Dodge's providential package of microscopical diamond dust had dissipated from their own minds the last flicker of suspicion that there could be anything unsound in the enterprise. Their good name was embarked in it, and that they were jealous to preserve, and have preserved " above suspicion." With all its brilliant preparation, the great diamond fraud htas proven, in the larger sense, a failure. And its failure is due sololy to the high sense of business honor on the part of the men who were embarked in it. Would as much have been done by gentlemen of the same class in New York or I/ondon ? The numes of the scores of members of parliament and Right Honorables attached to the prospectuses of a thousand British bubbles— tin) scandals even now coming over the wires from Wall-street show us that we have abundant occasion to take a pride in the conduct

of our own business men. Like Lee at Appomattox, they are greater in adversity than they could have been in success.

WnO SALTED THE DIAMOND PIELD ? A fixed instinct in human nature in every general calamity which arises in humun agency, is to find a scape-goat. The first impulse is to discover somebody who may be regarded as responsible aud to "take it, out" on him. Accordingly, when the fraudulent nature of the diamond discovery was exposed, the first question with every mind wae, Who Salted the Diamond Field ? In the earlier fltnges of the scheme we find seven men connected with it—to-wit: Arnold, Slack, Roberts, Harpending, Rubery, Dodge, and Lent. Of these, we find -Arnold and Slack to be tbo discoverers and locators, and that Harpending and Roberts had suppliod them for several years with monny and outfits as explorers and prospectors with little success. During Harpending's absence in London, they report the diamond discovery, and Lent and Dodge buy an interest for which they pay a large sum in cash. Mr. Lent then goes to London, and it is agreed that Arnold and Slack shall return to the diamond ground and dig stones all summer. Did they do this? or did they go to London, and, with the money Lent and Dodge had paid, buy atones ? We cannot tell. Lent returns to New York, where he finds Arnold with a bag of stones deposited with Duccan, Sherman & Co., which Tiffany &. Co. (the jewellers) value at a rough estimate at 5150,000. Arnold refuses to take any steps till Harpending returns, who is telegraphed for and crosses t.ho Atlantic, bringing Rubery witli him. Then the party is made up whom Mr. Janin is to accompany to the mine, consisting of Arnold, Slack, Harpending with his friend Bubery, Dodge and Janin. They visit the ground, and leaving Slack and Bubery there to await reinforcements with provisions, the others return to New York. The two men remained only two or three daye and came out —Rubery coming to San Francisco,

und Slack going to St. Louis. Afterwards, a second visit was made to tho mining ground. A party of fourteen was organized, headed by Roberts, with Rubery as a guide. Being followed by another party of seren, four of Roberts' party, with a lot of animals, were sent off as a blind and did mislead the party following. This enabled Roberts and his party to get to the field undiscovered, where, according to the statement heretofore made public, they spent the first day preparing conveniences, and .Jevoted one hour at the close of the day to digging for stones —the balance of the time was occupied surveying the ground —when nil started for home without attempting to prospect the ground outside of what proves to be the salted locality. Thus, there is seen to be no single stage or step from the beginning to the end of this remarkable operation, in -which six ot tho men first named do not appear actively engaged and connected with tbo business —Lent and Dodge as original purchasers of an interest in the location of Arnold and Slack. It ii under-

stood that the trustees are devising ways and Bieam to ferret out the whole thing, which will be prosecuted without respect to person or persons. Thui) each of the parties named will, ere long, be required to throw his share of light upon this atmosphere, cloudy with fraud, now surrounding the tramaction in which they were jointly engaged. We may feel confident that in the end all shall be clear. The public need have no anxiety lett the question which excites its lively curiosity — Who Salted the Diamond Field? will bo allowed to remain unanswered. REPORT OF CLARENCE KING, V. S. GEOLOGIST. San Francisco, November 11, 1872. To the Board of Directors of the Sau Francisco and New York Mining and Commercial Company.—l have hastened to San Francisco to lay before you the startling fact that the new diamond fields upon which are based euch large investment and such brilliant hope are utterly valueless, and yourselves and your engineer, Mr. Henry Janin, the victim! of an unparalleled fraud. Having convinced you verbally that my investigations hare been uiade upon no other than your own ground, X beg, herewith, to give a brief statement of my mode of study, and its unanswerable retults. Feeling that so marvellous a deposit as th» diamond fields must not exist within the official limits of the geological exploration of the 40th parallel, unknown, and unstudied, I , availed myself of the intimate knowledge poisessed by the gentlemen of mj corps, not only f of Colorado and Wyoming, but the trail of ■ every party travelling there, and was enabled 1 to flud the Bpot without difficulty, reaching a there on November 2nd. After examining the

camp ground, water notices and general features of the Diamond Mesa, I next traced the boundaries of your claims and then began in earnest to Btudy the distribution and mode of occurrence of the precious stones. Our first day was devoted to the sandstone table rook, at the head of Ruby Gulch, where about all the stones collected by your parties hare been eathered, and had our critical work ended with the close of this one day, we should hare left the ground confident believers in the genuineness and value of the fields. Hy suspicions were, however, aroused early in the second day s work, and I at once determined to mako an exhaustive series of " prospects," of which the following are the results : First—a nearly numerical ratio exists between the rubies and diamonds. Second—The gems, in nine cases out of ten, lie directly upon the hard surface of rock or an indurated crust of eoil. In the exceptional case, where I found them in crevices, there was always ample evidence that the sand or soil had beeH disturbed and broken up within a year. Ihird—With the diamonds and rubies occur quartz pebbles of various sizes, and concretions of iron oxide containing crystalline pirlieles of quariz, which are found freely mingled with the soil from surface and bed rock ; hence if the gems were a natural deposit, being of specific gravity intermediate between the quartz and iron concretions, they must have iilso settled through the earth to bed-rock. I therefore selected ground on and immediately about Table Rock, where the top was more or less strewn with the so-called rubies, carefully shoveled off the surfnee—inch, of ground and gravel—and examined by meana of sieves and pan-washing, all the material down to bed-rock. About thirty of these teats were made encircling Table Rock, and in no instance was n ruby or diamond found. Fourth —Ruby Gulch, leading directly from Table Ro.k to Arnold Creek, and by necessity receiving Hie wash of the gem-bearing surface of sandstone, was found to be extremely rich in rubies at the head ; but this richness, instead of continuing down in the bed, as if genuine it invariably must bo, proved to exist only in ground directly at the foot of Table Rock, where the soil was clearly disturbed, mixed, and smoother! over. I sank a series of four

pits to bed-rock down the gulch at intervals, excavating probably a couple of tons of material, and although, as in every other instance, quartz, and even concretions were distributed throughout all the gulch soil, not a ruby or diamond was found. Fifth—ln the top of Table Rock and in the midst of thickly-sown rubies are certain crevices not opened by your parties. They are fi led with soil and pebbles, and moro or less overgrown with grass, eagebrush and small cactus plants. We carefully removed the tap inch, dugout the whole crack, finding no trace of diamonds or even rubies. In the crevice:! which bore uuinislakablo evidence of liariug been tampered with, we never failed to find rubies, un<i often simll diamonds. Sixth—Upon raised dome-like portions of Table Bock, rubies and diamonds lay upon the summits and inclined sides in positions where the storms of one or two winters must inevitably have dislodged them,and where, moreover, they were unaccompanied by quartz or concretions. Seventh—An exhaustive examination of the rock material of itself with a field microscope, revealed no grain, however minute, of either gem. Eighth—lα the ravines and upon the mesa nearly, are numerous ant-hills built of small pebbles, mixed by the ants, and which we found to bear rubies on their surface. A still closer examination showed artificial holes, brokea horizontally with some stick or small implement, through the natural crust of the mound ; holes easily distinguished from the natural avenues made by the insects themselves. When traced to their end, each artificial hole held one or two rabies. Moreover, about these " salted" hills were the old stormworn foot-prints of a man. Many outside ant-hills were studied, but there were neither artificial holes piercing them, rubies within nor -without, nor human tracks. Ninth—l discovered in the Table three small emeralds. Summing up the minerals, this rock hm produced four distinct types of diamonds, Oriental

ibies, garnets, spinels, sapphires, emeralds

and amethysts— an association of minerals I believe of impossible occurrence in Nature. Tenth—ben altogether satisfied that the gems had been " enlted" on or about the Table, our party sel. out upon a serie3 of outside prospects, which were curried on over all the mesa and its flanking canons until the absolute valuelessness of the property was finally ascertained. The results of these ten links of proof are: That the gems exist in positions where Nature alone could never hare placed

them; that they do not exiet where, had the occurrence been genuine, the iut-vitabie lawes of Nature r.iust have curried them. Finally, that some designing hand has " salted" them with deliberate fraudulent intent. ■ Furthermore, this is the work of no common swindler, but of one who has known enough to select a spot where every geological parallelism added a fresh probability of honesty. The selection of the geological locality is so astonishingly considered, the " salting" itself so cunning and artful, the filling of all the con. lit ions so fatally well done, I can feel no surprise that even so trustworthy and cautious an engineer as Air. Janin should have brought home th<* belief he did, especially when, as his report stutej, he was not allowed to prospect exhaustively ; nor do I wonder that your second party of ten men brought back a confirmation of llr. Janin'a opinion, since they, too, were hurried from the ground without actually testing it. I -hould add that on the evening of Wednesday, November sfb, when leaving the ground for the last time, I met Mr. J. F. Berry, of Salt Lake, who had arrived with a, prospecting parly. I honestly expressed my conviction to him, detailed minutely my mode of investigation, and ended by urging him to remain and satisfy himself by personal examination, since he seemed to accept my result

without question. A eenee of mj duty as a publio officer hns impelled me to come directly and frankly to you, gentlemen. In answer to your request that I accompany General Colton back to the ground, while lie and hid party investigate for themselves, I place myself, my camp, men and field outfit at his disposal for two weeks, believing that in 60 doing I shall act as my chief, ilujor-Q-eneril A. A. Humphreys would order, were it possible at this sudden emergency to communicate with him.