October 14, 2021

FTV: Strike it Rich!

     One of my favorite displays at the Michigan Iron Industry Museum outside of Negaunee is housed behind the door of an old bank vault.  There is a graph inside showing how much money was generated by all of the big mineral rushes that swept this young nation.  Manifest Destiny compelled the government to expand the United States all the way to the Pacific Ocean, but it was the discovery of gold and silver that called loudly for Easteners to hasten to the untamed West.  The 1849 California gold rush, for example, lured some 300,000 miner wanna-bes to the gold fields, the largest mass migration in United States History.  It is estimated that some 100,000 of these migrants would be dead within 20 years of the discovery at Sutter’s Mill, with at least 4,000 murdered during this rough and tumble era.  

     Though it is estimated the 1849 rush produced some $955 million in gold*, few prospectors became as wealthy as the merchants and businessmen who gouged the newcomers for their mining necessities.  As much as I loathe reality based television shows, I will admit to keeping tabs on the Discovery Channel’s Gold Rush series (okay, The Curse of Oak Island is also on my short list).  A quick mental accounting shows the various Gold Rush operations have pulled roughly $40 million of the gold stuff out of the ground since the series debuted in 2010 (keeping in mind the price of gold is much higher now than it was in 1849).

     How do these numbers stack up when compared to the value of the copper and iron ore mined in Michigan’s Upper Peninsula?  According to the display at the Iron Industry Museum, copper extracted totalled some $9.6 BILLION*,  and iron ore an astounding $48 BILLION*.  Michigan lumber added an additional $4 BILLION* to the economy. (*Based on the period from 1833-1983 cumulative data – calculated in 1983 dollars.  Source:  Michigan Iron Industry Museum).  The focus of this article, however, is another western mineral rush that began in 1872 which I had never heard of.  In his book The Men Who United The States – America’s Explorers, Eccentrics, and Mavericks, and the Creation of One Nation, Indivisible (2014 – Harper Perennial Books), author Simon Winchester gives an account of the men who came down with ‘strike it rich’ fever, not for gold, silver, copper, or iron ore, but for diamonds, rubies, emeralds, and sapphires.

     The first chills of gem fever were felt by San Francisco banker William Ralston.  Ralston had made his fortune mining silver on the fabled Comstock lode in Nevada.  With this first hand experience, he was open to information about any newly discovered forms of mineral wealth in which he might invest.  Ralston was visited by Philip Arnold and his cousin John Slack;  two Kentucky prospectors who wanted to deposit a bag in his bank.  The cashier demanded to know what was in the sack before he would accept it for the vault.  After the pair reluctantly showed him the contents,  he quickly summoned Ralston, the bank’s founder.  When shown the previously mentioned diamonds, rubies, emeralds, and sapphires inside,  Ralston deemed the collection to be ‘quite extraordinary’, but he wanted more details.  The prospectors were reluctant when Ralson pressed them for more information, but eventually confessed the haul had been discovered a fair distance away from San Francisco.  After months of fruitless searching, Arnold and Slack had stumbled upon a hill where precious stones like rubies, garnets, other colored stones, and some diamonds could be found scattered about.  They told Ralston there were so many that a kick of the boot heel on the ground would uncover more and more precious gems buried in the dust.  They also told Ralston they had carried out only what their mules could handle, leaving at least ten times that amount behind in a secure location.

     Naturally, the pair refused to divulge the location but they did agree to take two diamond experts to inspect the site, but only if they travelled there blindfolded.  The experts returned with another large sack of gems two weeks later declaring the find was even more wondrous than they had imagined.  They described diamonds jutting out of the earth, lodged in cracks in the rocks, and glittering like ice crystals in the dry stream beds.  With two bags of these precious stones in his vault (and an estimated value of a quarter of a million dollars in mind), Rahlston took immediate action.  First, he talked twenty-five of the Bay City’s finest into capitalizing his new San Francisco and New York Mining and Commercial Company to the tune of $80,000 each ($2 million total).  According to Winchester, “The word got out:  madness erupted.  A diamond frenzy spread like a forest fire through the San Francisco financial aristocracy;  and by summer’s end, twenty-five other firms had been founded, with a total capitalization of a quarter of a billion dollars.”

     Ralston assembled a board of directors that included the obligatory lawyers, politicos, and an adventurer named Asbury Harpending.  Two of the lawyers were sent with samples in hand to have them appraised by New York’s leading jeweler at the time, Charles Tiffany.  His verdict?  The stones were all authentic, a collection of precious gems of great value.  He placed the value of the small sampling he had seen at $150,000.  Not one to take risks, Ralston then hired Henry Janin, then the foremost mining engineer in the country.  Janin was dispatched to the secret site (again, blindfolded for the final mule ride in) to further assess the value of the property.  After a day and a half train journey with the shades drawn, the pair guided the blindfolded Janin on a two day ride  through the blazing heat until they reached the claim.

     Winchester’s description of Janin’s exploration reads like a slick ad-man’s promotional:  “The diamond fields were on the northern side of an unusual cone-shaped mountain, a peak that rose quite memorably out of the scrubby landscape.  After spending the better part of twenty-four hours camped there, having walked across the prodigiously jewel-strewn hillsides, he pronounced the find entirely genuine.  He offered his professional view that the company and its backers were set to make a fortune.”  The description was perfect for stirring up even more of a frenzy.  The clamour to obtain stock in the new venture by private investors reached fever pitch.  The company was turning down offers as high as $200,000 for a share of the promised land.  Even Lord Rothschild sent emissaries from London to try and buy the company outright.  He was rebuffed but was offered a seat on the board.  Ralston opened an office in one of the impressive buildings in the city center and hired two dozen clerks to conduct the daily business.

     Philip Arnold and John Slack professed to not be interested in all of this ‘board room and briefcase’ business.  Their wish was to get back to their stock and trade.  They offered to cash out so (as Winchester puts it), “they could return to their artless world of pick and shovel, mule, and map.”  For their $600,000 payout ($300,000 each), they left the company with confidential directions on how to get to the diamond fields.  In what is now seen as a stroke of genius, they also demanded a continued share to be paid on an ongoing basis – a percentage of any future profits.

     At this juncture, Clarence King entered the story.  A Yale-educated, Harvard refined geologist and mountaineer by trade, King would eventually be appointed the first-ever director of the United States Geological Survey.  King first heard about the fabled diamond mountain just after he had concluded a series of surveys and explorations throughout the west.  Most recently, he had served as the geologist-in-charge of the Army’s seven year Geological Exploration of the Fortieth Parallel.  This expansive work took King’s survey team more than a thousand miles from Winnemucca to Cheyenne and all points in between.  Their final report was used as the guiding document for construction of the first trans-continental railroad.  When King heard about this unbelievable find, he didn’t believe it.  In fact, King smelled a rat.  Little did he or anyone else know his detective work would soon make him the most famous geologist America ever produced.

     Clarence King put his geological training to work and every fiber of his being told him the claims to be patently absurd:  diamonds can occur in one place, sapphires in another, and rubies in a third, but never, in his experience, were they all found in one place.  It was not an impossibility, but it was very unlikely.  He set out to put a finger on the map where this secret location might be and again used his vast experience surveying the western regions to solve the problem.  The first thing King did was ask Janin some questions about his train and mule trip to the site.  He especially wanted to know what the weather had been like during Janin’s trip and what direction Janin thought they had traveled by mule.  Janin told King he believed they had travelled south by mule and reported the weather had been hot and dry.  Henry further stated he felt he might perish from thirst and weariness by the time they reached the diamond mountain.

     Making like Sherlock Holmes, King pieced together these bits of information, and when combined with the length of the train ride it took to get there, he concluded the following:  “[King] knew that a thirty-six hour train ride out of San Francisco would take them well past Salt Lake City.  Clarence knew Utah and Nevada had been drenched with rain storms at the same time Janin and his guides had passed through which would place their destination farther east in the rain shadow of the Rockies, probably Cheyenne.  King made his way to Wyoming with an old school friend who was also the chief topographer of his last survey, James Gardinere.  Along the route East and at the small rail station in Rawlings Springs, Wyoming, they asked more questions of the train and station attendants.  King’s suspicions were confirmed by reports they heard about a mounted party leaving the station in a southerly direction.  They headed south from Rawlings Springs figuring the destination was within a fifteen mile radius of the station.  The ‘cone-shaped mountain’ they were seeking sounded familiar from their earlier surveys so they were confident they would find the site in short order.

     Upon crossing into Colorado in early October, the small party found themselves at an elevation of 7,000 feet glad for the cold weather gear they had packed for the exploration.  The wind had blown the snow off the trail allowing them to follow the visible horse tracks.  Not long after entering Colorado, the cone-shaped mountain came into view.  The crude wooden sign claiming water rights from a small stream was like a large exclamation point proving this was the right place – it was signed by none other than Henry Janin himself.  As King’s expedition members inspected the site, they began finding rubies, amethysts, spinels, and garnets, but only a few diamonds.  Finding one diamond perched on top of a small finger of rock all but convinced King that Arnold and Stack had ‘salted’ the site with enough stones to make them seem abundant.  How could a diamond remain perched on a finger of stone, and remain there over the centuries of brutal Colorado weather unless it had been planted there?  King’s suspicious mind went into overdrive when they noticed many of the ant hills had holes around their bases that had obviously been created by the hand of man (and a stick).  They found a diamond at the bottom of each hole placed there with every intent they should eventually be discovered.  The entire story was an elaborate hoax used by Arnold and Stack to become wealthy without the burdensome need to mine one solitary gem.

     The shysters had purchased $25,000 worth of off cuts and rejects from stone cutters and gem dealers in London and Amsterdam some months before they ventured west.  Seemingly, they had made a tidy gain for their modest investment but the fallout from the faux gem mine was just beginning.  Tiffany had to regain his damaged stature after declaring the gems ‘a rajah’s ransom’.  Asbury Harpending had written a book about the whole diamond adventure (exaggerating the tale even more than Arnold and Slack), and ended up being sued for libel.  Before the whole plot was unearthed, Henry Janin managed to sell his shares for $40,000 and oddly enough, he and King became life-long friends.  William Ralston framed his worthless shares as a reminder to be more careful in the future.  He also paid back his investors but three years later, a run on his bank caused his financial empire to collapse and Ralston’s body was found floating in the bay.

     Philip Arnold would later be arrested and charged back in Kentucky, but the state refused to extradite him.  He eventually paid back half of his ‘earnings’ and used the other half to open his own bank.  A bullet in the shoulder from a jealous rival (Winchester doesn’t mention if it was over a love interest or the bank) caused him a painful death due to pneumonia and complications from his wound.  His cousin, John Slack, was never heard from again.  Thus ended a tale of riches that was indeed too good to be true.

     There is a strange coda to the whole Great Diamond Fraud involving the intrepid geologist / Sherlock Holmes of the story, Clarence King.  A privileged Eastern son, he eventually returned to New York and lived a city life as a single man about town.  He eventually met a nurse maid named Ida Copeland whom he would marry and raise five children.  King’s married life was conducted secretly and separately from his other life.  He had told Ida his name was James Todd and that he came from Baltimore.  He also told her he worked as a pullman porter for the railroad, a job traditionally held by those of Negro descent.  Copeland, herself decended from a Georgia slave family, assumed he must have some percentage of ‘black’ in him (under Victorian social rules, any percentage of ‘Negro blood’ in his ancestry would make him ‘a black man’) inspite of his very pale skin and blue eyes.  His separate lives never connected and he spent thirteen years dancing between two different worlds without ever telling his wife, children, or his friends (King’s or Todd’s acquaintances).

     King borrowed hundreds of thousands of dollars over the years from his good friend John Hay.  Running two separate households proved expensive and his ventures at mining and cattle ranching in the West did not pan out.  The strain of this dual life may have contributed to his failing health and he contracted tuberculosis.   King/Todd moved to the American Southwest to convalesce but never found a cure.  He died on Christmas Eve, 1901, and perhaps at Clarence’s request, the attending doctor wrote a letter to Ida explaining she wasn’t really Mrs. Todd, but Mrs. King.  King had always stated he felt the ideal America would be “[When] the composite elements of American populations are melted down into one race alloy, when there are no more Irish, or Germans, or Negroes, and English, but only Americans.” The letter did not offer any further information about King’s other life, other than his real name.

     This was pretty advanced thinking in light of how race relations were viewed in the period following the Civil War.  It may also be the reason the doctor did not list King as ‘caucasan’ or ‘black’ on his death certificate.  In the section asking for a description of the deceased, the doctor had simply typed ‘American’.  It is ironic that the man who unraveled one of the greatest get rich quick scams of the century spent more than a decade of his later years perpetuating a different kind of con, this one driven by his love for a woman.

Top Piece Video:  Can you think of a better song involving baubles?  An older Gary Lewis and the Playboys rocking one of those oldies package shows…still sounds good, doesn’t he?