With the discovery of gold in California fake gold and silver mines became common. Swindlers and con men fooled many a greenhorn with “salted” mines. But there were few con men who did as great a job as two cousins from Kentucky named Philip Arnold and John Slack.
In early 1872 Arnold and Slack showed up in a San Francisco bank attempting to deposit a bag of uncut diamonds. When questioned about the diamonds, the two men immediately left with the diamonds. Curious, the bank’s director, William Ralston later found Arnold and Slack, and discovered that the diamonds came from a mine the men had found. The banker, assuming he was dealing with a couple of country bumpkins, schemed to take control of the mine.
A mining expert looked at the mine, and he reported back that it was rich with diamonds and rubies. The banker, Ralston, formed a mining company and capitalized it to the tune of $10 million. He was able to buy the country cousins off with a meager $600,000.
A young geographical surveyor by the name of Clarence King was suspicious of the stories he heard about the mine. It took him one visit to the mine to realize it had been salted…Some of the gems he found had already been cut by a jeweler.
On November 26, 1872 the whole scheme collapsed. Banker Ralston had to refund the investors, with much of the money coming from his own pocket. The two country bumpkins? They disappeared back in Kentucky, along with the meager $600,000 they had been given.
Incidentally, the young man who exposed the fraud, Clarence King, ended up becoming the first director of the United States Geological Survey.