Philip Arnold and the Jewel Mine
Philip Arnold was one of the forty-niners who went west to make their fortunes in the California Gold Rush. Although he did not make a fortune, he did accumulate enough money to return to his native Kentucky and establish himself on a small farm, where he pondered the events of the gold rush and what he had learned about human nature when the prospects of easy money were at hand. The Civil War intervened, and it wasn’t until 1870 that Arnold was able to return to California, by way of Arizona, where he traded with friendly Indians to obtain rough jewels such as sapphires and garnets.
He then visited a friend at the Diamond Drill Company of San Francisco, from whom he purchased industrial diamonds after obtaining a promise from the bookkeeper who handled the transaction that it would be kept secret. The diamonds were mixed with the raw jewel stones acquired previously from the Indians in Arizona, and with his cousin, John Slack, as his partner, Arnold began looking around for a businessman successful enough to be worth targeting, and gullible enough to be fooled.
He found one in the form of George Roberts, convincing him that the stones had been discovered in a new deposit. Roberts could not keep a secret and brought in several investors as partners. Using their money Arnold went to England, purchased more stones, and returned, using some of the stones to salt the deposit, and sending others to New York for assay by no less than Tiffany’s. More investors were solicited and found, among them General George McClellan and publisher Horace Greeley. Arnold and Slack used the investor’s money to “explore” the deposit while keeping its location secret.
In the summer of 1872 Arnold, who had already pocketed more than $150,000 from his scheme, led a party of investors or their delegates to Rawlins, Wyoming, traveling by train from St. Louis. Once in Rawlins, they continued on horseback for several days until they arrived at the spot where Arnold and Slack had buried the raw stones purchased in London. Arnold suggested the investors dig for themselves to determine the value of the find, in which he claimed he retained over $400,000 interest. As the investors dug stones turned up rapidly, diamonds, rubies, garnets, and sapphires. The investors purchased the rest of Arnold’s interest on the spot.
Arnold returned to Kentucky, built one of the largest houses in Elizabethtown and bought over 500 acres of prime land (which he put in his wife’s name). He eventually went into the banking business. The mine hoax was revealed in 1872 and Arnold was the target of several lawsuits by swindled investors, but they were settled out of court for undisclosed sums. He was not prosecuted. In 1878 he died of complications of a shotgun wound, the result of a dispute with another banker which had developed into a feud. The fact that nobody pointed out that the stones Arnold found form under different conditions and would not be found together is an example of gullibility exploited by the con artist.