Diamond hoax of 1872

The diamond hoax of 1872 was a swindle in which a pair of prospectors sold a false American diamond deposit to prominent businessmen in San Francisco and New York City. It also triggered a brief diamond prospecting craze in the western USA, in Arizona, New Mexico, Utah, Wyoming, and Colorado.

In 1871, veteran prospectors and cousins Philip Arnold and John Slack traveled to San Francisco. They reported a diamond mine and produced a bag full of diamonds. They deposited the diamonds in the vault of the Bank of California.

Prominent financiers convinced the "reluctant" Arnold and Slack to speak out on their find. The cousins offered to lead investigators to the Wyoming field. Investors hired a mining engineer to examine the field. From a railroad stop in western Wyoming, Arnold and Slack led the inspection party to a huge field with various gems on the ground. Tiffany's evaluated the stones as being worth $150,000.

When the engineer made his report, more businessmen expressed interest. They included General George S. Dodge, Horace Greeley, Asbury Harpending, George McClellan, William C. Ralston, Baron von Rothschild, and Charles Tiffany of Tiffany and Co. They convinced the cousins to sell their interest for $660,000 and formed their own mining company.

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