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Diamond Fraud Loss Falls on Shoulders of Original Dupes; Ralston Reimburses All Stockholders.
Gossips Make Unjust Charge Against Men Who Acted in Good Faith and Were Deceived by Swindlers.
The losses growing out of the diamond fraud fell on the shoulders of the original dupes - W. C. Ralston, William M. Lent, George Dodge and myself. My impression is that the money obtained by Mr. Lent from Arnold very nearly, if not quite, balanced his account. Perhaps he may have given a portion of this to General Dodge, his business associate. Mr. Ralston promptly paid the twenty-five stockholders who subscribed $2,000,000 for a half interest in the company, dollar for dollar. Not a man of them lost a cent. This involved a sacrifice of the last $300,000 paid to Arnold and Slack. Mr. Ralston had the receipts in full of the various parties neatly framed and I am told that it was one of the mural decorations of his private office in the Bank of California. The remaining balance of loss was borne by Mr. Roberts and myself.
The diamond fraud story has covered acres of newspaper space. This, however, is the first time that the narrative has been told from start to finish, all the facts assembled in connected form. From what has gone before, certain points stand out in bold relief.
The scheme, or rather the execution of the scheme, was anything but the work of a far-seeing, skilful and well-informed mind. Nothing can illustrate this better than the supreme folly of planting diamonds, rubies, emeralds and sapphires in the same matrix. A capable rogue would have consulted the history of mining for precious stones and would have readily discovered that they are never found associated in the same formation. This would have enabled him to avoid a raw monstrosity that should have led to exposure at the very start. Much of the other work was raw, as, for instance, the diamond and ruby spangled ant-hills and the flat rock, whose fissures were studded with precious stones. A plain, unornamented diamond field would have presented a far better baited hook.
It can be shown by authenticated documentary evidence that Slack and Arnold were the sole beneficiaries of the loot. In fact, some doubt exists whether Slack was a participant at all. Outside the sum that Lent collected, the balance was transmitted to Arnold's heirs, as the records of Hardin county, Kentucky, prove.
Again, if any other actor in the drama had the least foreknowledge of the fraud, he surely would have parted with his interest while the market was booming - before the frail bubble burst. When the coarse diamonds were sent to London, nothing could be more certain than their immediate identification as nearly valueless South African stones. Yet not a share of stock was sold. Every reasonable presumption pointed to the entire good faith of all, so far as the San Francisco and New York Mining and Commercial Company and its stockholders were concerned.
Finally, it is conceivable only on the basis of downright madness, that any man with wealth, reputation and self-respect, in short, with everything to lose, could have conceived and carried out such a reckless plot. If by any chance it had succeeded, if the diamond company's stock had been exploited on the stock market, there was not a place upon the earth so desolate and remote but that the vengeance of mankind would have found him out. It was the evident design of a rather crude intelligence utterly regardless of consequences, and counting on obscurity to make good.
Nevertheless, no matter how plain a case may seem, no matter how free from doubt or complication, if it be only big enough the world loves to build around it a fairy structure of mystery or romance. Nothing could be more evident than that Arnold and Slack were the architects of their own work. Yet the public saw fit to cast grave suspicion on those who were clearly victims and heavy losers - the only ones who lost a cent. Even Ralston, although he paid over $300,000 to make good the losses of the stockholders, was more or less under a cloud. Lent, Roberts, Dodge and myself were in turn suspected. At last public opinion seemed to settle down to a conviction that the guiding - "the master mind" - was mine.
There was not an atom of valid evidence on which to raise the accusation. On this side of the Atlantic it was never remotely charged in any responsible paper, to my knowledge. The conclusion seemed to be reached very much because of the largeness of my business undertakings and my well-known spirit of venture in commercial lines. Therefore, not a few assumed that because I was always willing to take what might be called by some a long chance, therefore, I must have been the power behind the scenes with Arnold and Slack.
Not arguing the case, this conclusion had to put aside many well known facts, as I said before. I was a man of large wealth, making money as rapidly as was good for anyone, so that the financial inducement was not there. I was young, only 32, had a family of which I was proud, had the best possible standing with business men, both in San Francisco and abroad. Honor bright, does it not seem incredible that a man situated like myself, full of ambition and with everything to live for, would have engaged in an ignoble plot to fleece his friends and the public, a plot absolutely certain to drag him and all belonging to him through the dust?
The story would have died a natural death beyond any question just as it did in the case of my fellow victims, had not the London Times made a direct accusation of complicity in the diamond fraud against Alfred Rubery and myself, which became the basis of a famous libel suit.