The Great Diamond Hoax - Asbury Harpending, Edited by James H. Wilkins

I think it was the next day or the day following that a display of diamonds was made in the office of William Willis that filled San Francisco with astonishment. The precious stones were actually displayed in open trays to a multitude of sightseers, until I bought a show-case and gave them some kind of protection. General Dodge, a partner of Lent in mining, bought an interest from the prospectors at once, and Maurice Dore also acquired a small holding, although I do not remember exactly what.

Hitherto there had been no attempt made at organization. It was generally understood that Ralston, Lent, Roberts and myself owned three-quarters of the properties by virtue of money already advanced and to be advanced. For that there seemed to be ample security in the gems we held. The last invoice alone appeared to be security many times over for our cash outlays, to say nothing of the probable value of the diamond fields. So we prepared to get our affairs into business shape, without further delay, and for that purpose held a meeting at which all concerned were present. The plan of action was to follow these lines: First we were to send a large sample of the diamonds to Tiffany, of New York, then, as now, the greatest American authority on precious stones, and have them thoroughly examined and appraised. If their value were proved beyond peradventure, then Messrs. Ralston, Lent, Roberts, Dodge and myself were to choose a mining expert to whom Arnold and Slack agreed to exhibit the diamond fields and permit a full examination of the same.

Nothing could possibly be fairer to all, and Arnold and Slack easily consented to these conditions, without a momment's hesitation. On the favorable outcome of the valuation and the engineer's report concerning the diamond deposits, we agreed to take care of the financial end. Not connected with any agreement with Arnold or Slack, was a plan to facilitate the passage of a law whereby a great territory of mining land could be taken up so as to insure to ourselves the entire field, no matter what the extent. The outline of a corporation was sketched, with a capital stock of $10,000,000 and the allotment of shares to each arranged and defined.

These preliminaries being settled, we set out for New York without delay. In the party were William Lent, General Dodge, Rubery, Arnold, Slack and myself. It had been arranged beforehand in a general way that Mr. Lent should be president and myself general manager.

We first retained Samuel Barlow, a leader of the New York bar, as general counsel. Mr. Barlow's reputation as a sound business adviser was no less assured
than his standing as a great trial lawyer. On his advice we added General B. F. Butler to our legal staff. I had some southern prejudice against Butler on account of the spoon story in New Orleans, but when I came to know the gentleman I found him to be very companionable and quite a social genius in his way. A side reason for employing General Butler was because he was a member of Congress and perhaps able to aid us materially in legislation needed to acquire the diamond fields, as later proved to be the case.

Through Mr. Butler, an arrangement was made to meet Mr. Tiffany at the lawyer's house. My counsel had some eye to stage effects. A number of distinguished men were present to see the gems displayed. Among them I remember General George B. McClellan, Horace Greeley, Mr. Duncan, of the banking house of Duncan, Sherman & Co., Mr. Tiffany, General B. F. Butler, and the host. I opened the bag of diamonds I had brought from California; also there were mixed in a few rubies, emeralds and sapphires. Mr. Tiffany viewed them gravely, sorted them into little heaps, held them up to the light, looking every whit the part of a great connoisseur. "Gentlemen," he said, "these are beyond question precious stones of enormous value. But before I give you the exact appraisement, I must submit them to my lapidary, and will report to you further in two days."

Within two days Mr. Tiffany presented his report. In an official statement, still available, his valuation on the lot was $150,000. My own recollection is that he named a much higher sum. However, let it go at that. At that figure, we had diamonds enough already in stock to make up a total of $1,500,000 in hard cash, whenever we wanted to turn them into money. That certainly seemed a very satisfactory financial basis - regular velvet to begin with. The news of the Tiffany appraisement, though not intended for public consumption, soon became common property in New York and made a big stir in speculative circles. The hardier class of plungers were only too eager to get aboard even at this early stage of the game.

All that remained now was the choice of a mining expert. One name naturally suggested itself - Henry Janin.

Henry Janin bore at that time in the financial world about the same reputation that John Hays Hammond enjoys to-day. As a great mine expert and consulting engineer, he was without a peer in the United States, perhaps in the world. Nearly all the big operators like Haggin, Hayward and their class were willing to stake their fortunes on his judgment. It was said of Janin that he had the record of having examined something over six hundred mines, without once making a mistake, certainly without ever having caused his clients to lose a dollar by his bad judgment. If he had any failing at all, it was on the side of ultra-conservatism. Some complained that he never took a chance - that he even turned down good mines, to strengthen the confidence of the greatest investing classes, both in the old world and the new. The O. K. of Henry Janin fixed the reputation of a mining property in every market.

Therefore there could not have been selected a better equipped expert, so far as the financial world knew, to settle finally the existence of the diamond fields. Mr. Janin was interviewed. He was a man of big affairs, whose time was well occupied. But he agreed to make the examination provided the time to be consumed did not exceed a month. He was also a very high priced professional. His best terms were $2,500 cash, all expenses paid, and a right to take up 1,000 shares of the stock at a nominal price. I may add here that Mr. Janin later on sold his stock, while the excitement was in full bloom, for $40,000. Mr. Lent rebelled and protested against this arrangement a excessive, but was overruled. He and I afterwards purchased Mr. Janin's stock.

At this stage of the proceedings Arnold became restive. He said he was placing his property at the mercy of others without proper security, that what he had received was a trifle compared to the value he was about to disclose and that he must have a further guarantee in cold cash. He named a hundred thousand dollars as the amount that must be paid down, but agreed to let it remain in escrow, pending Mr. Janin's report. Some quick writing went on between Mr. Lent and Mr. Ralston, as the result of which the latter transmitted the amount by telegraphic order; Mr. Lent holding the diamonds appraised by Tiffany at $150,000 as a further and final security. This was not exactly according to program, but the transaction was fairly businesslike and did not present itself as a hold-up.

All our arrangements and differences in New York were settled in a very brief space of time and we set out in high spirits on the way to the mysterious diamond land. The party consisted of Henry Janin, General George S. Dodge, Alfred Rubery, myself and Arnold and Slack.

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Chapter XXVII. Promoters Decide to Submit Samples of Their Collection of Diamonds to Great Authority on Gems. Tiffany Consults His Lapidary and Soon Makes Report That Creates Big Stir in Speculative Circles. I think it was the next day or the day following that a display of diamonds was made in the office of William Willis that filled San Francisco with astonishment. The precious stones were actually displayed in open trays to a multitude of sightseers, until I bought a show-case and gave them some kind of protection. General Dodge, a partner of Lent in mining, bought an interest from the prospectors at once, and Maurice Dore also acquired a small holding, although I do not remember exactly what. Hitherto there had been no attempt made at organization. It was generally understood that Ralston, Lent, Roberts and myself owned three-quarters of the properties by virtue of money already advanced and to be advanced. For that there seemed to be ample security in the gems we held. The last invoice alone appeared to be security many times over for our cash outlays, to say nothing of the probable value of the diamond fields. So we prepared to get our affairs into business shape, without further delay, and for that purpose held a meeting at which all concerned were present. The plan of action was to follow these lines: First we were to send a large sample of the diamonds to Tiffany, of New York, then, as now, the greatest American authority on precious stones, and have them thoroughly examined and appraised. If their value were proved beyond peradventure, then Messrs. Ralston, Lent, Roberts, Dodge and myself were to choose a mining expert to whom Arnold and Slack agreed to exhibit the diamond fields and permit a full examination of the same. Nothing could possibly be fairer to all, and Arnold and Slack easily consented to these conditions, without a momment's hesitation. On the favorable outcome of the valuation and the engineer's report concerning the diamond deposits, we agreed to take care of the financial end. Not connected with any agreement with Arnold or Slack, was a plan to facilitate the passage of a law whereby a great territory of mining land could be taken up so as to insure to ourselves the entire field, no matter what the extent. The outline of a corporation was sketched, with a capital stock of $10,000,000 and the allotment of shares to each arranged and defined. These preliminaries being settled, we set out for New York without delay. In the party were William Lent, General Dodge, Rubery, Arnold, Slack and myself. It had been arranged beforehand in a general way that Mr. Lent should be president and myself general manager. We first retained Samuel Barlow, a leader of the New York bar, as general counsel. Mr. Barlow's reputation as a sound business adviser was no less assured than his standing as a great trial lawyer. On his advice we added General B. F. Butler to our legal staff. I had some southern prejudice against Butler on account of the spoon story in New Orleans, but when I came to know the gentleman I found him to be very companionable and quite a social genius in his way. A side reason for employing General Butler was because he was a member of Congress and perhaps able to aid us materially in legislation needed to acquire the diamond fields, as later proved to be the case. Through Mr. Butler, an arrangement was made to meet Mr. Tiffany at the lawyer's house. My counsel had some eye to stage effects. A number of distinguished men were present to see the gems displayed. Among them I remember General George B. McClellan, Horace Greeley, Mr. Duncan, of the banking house of Duncan, Sherman & Co., Mr. Tiffany, General B. F. Butler, and the host. I opened the bag of diamonds I had brought from California; also there were mixed in a few rubies, emeralds and sapphires. Mr. Tiffany viewed them gravely, sorted them into little heaps, held them up to the light, looking every whit the part of a great connoisseur. "Gentlemen," he said, "these are beyond question precious stones of enormous value. But before I give you the exact appraisement, I must submit them to my lapidary, and will report to you further in two days." Within two days Mr. Tiffany presented his report. In an official statement, still available, his valuation on the lot was $150,000. My own recollection is that he named a much higher sum. However, let it go at that. At that figure, we had diamonds enough already in stock to make up a total of $1,500,000 in hard cash, whenever we wanted to turn them into money. That certainly seemed a very satisfactory financial basis - regular velvet to begin with. The news of the Tiffany appraisement, though not intended for public consumption, soon became common property in New York and made a big stir in speculative circles. The hardier class of plungers were only too eager to get aboard even at this early stage of the game. All that remained now was the choice of a mining expert. One name naturally suggested itself - Henry Janin. Henry Janin bore at that time in the financial world about the same reputation that John Hays Hammond enjoys to-day. As a great mine expert and consulting engineer, he was without a peer in the United States, perhaps in the world. Nearly all the big operators like Haggin, Hayward and their class were willing to stake their fortunes on his judgment. It was said of Janin that he had the record of having examined something over six hundred mines, without once making a mistake, certainly without ever having caused his clients to lose a dollar by his bad judgment. If he had any failing at all, it was on the side of ultra-conservatism. Some complained that he never took a chance - that he even turned down good mines, to strengthen the confidence of the greatest investing classes, both in the old world and the new. The O. K. of Henry Janin fixed the reputation of a mining property in every market. Therefore there could not have been selected a better equipped expert, so far as the financial world knew, to settle finally the existence of the diamond fields. Mr. Janin was interviewed. He was a man of big affairs, whose time was well occupied. But he agreed to make the examination provided the time to be consumed did not exceed a month. He was also a very high priced professional. His best terms were $2,500 cash, all expenses paid, and a right to take up 1,000 shares of the stock at a nominal price. I may add here that Mr. Janin later on sold his stock, while the excitement was in full bloom, for $40,000. Mr. Lent rebelled and protested against this arrangement a excessive, but was overruled. He and I afterwards purchased Mr. Janin's stock. At this stage of the proceedings Arnold became restive. He said he was placing his property at the mercy of others without proper security, that what he had received was a trifle compared to the value he was about to disclose and that he must have a further guarantee in cold cash. He named a hundred thousand dollars as the amount that must be paid down, but agreed to let it remain in escrow, pending Mr. Janin's report. Some quick writing went on between Mr. Lent and Mr. Ralston, as the result of which the latter transmitted the amount by telegraphic order; Mr. Lent holding the diamonds appraised by Tiffany at $150,000 as a further and final security. This was not exactly according to program, but the transaction was fairly businesslike and did not present itself as a hold-up. All our arrangements and differences in New York were settled in a very brief space of time and we set out in high spirits on the way to the mysterious diamond land. The party consisted of Henry Janin, General George S. Dodge, Alfred Rubery, myself and Arnold and Slack.