The GREAT DIAMOND MOUNTAIN - Chapter One

 

I would like to see every PhD.. candidate in economics required to make at least one pilgrimage to the Unita Mountains in Utah. The humble range can be found about 100 miles due east of Salt Lake City. There, among the headwaters of the Green River, a wind swept conical peak looms over a 7,000 foot high green mesa called Diamond Mountain Plateau (above). 

There are no diamonds on the Diamond Plateau. Never have been. But amongst the scrub brush, gravel, and oppressive isolation there (above) the academic acolytes might find, if they looked hard enough,  a  a zircon of veracity, a small brilliant shinning baguette illuminating the fundamental and eternal truth behind capitalism – greed makes you stupid.

Our story begins in 1846, when 17 year old Philip Arnold (above, left) left his home in Elizabethtown,  with his cousin John Slack (above, right). They  joined 4,700 of their fellow Kentuckians volunteering to fight in the Mexican war.  

Both men were mustered out in 1848 in Texas, and rather than returning east, they joined the California gold rush. But, like the vast majority of prospectors, they found no gold. 

Eventually  Philip found employment in San Francisco at the new Bank of California - owned by William Chapman Ralston. Phillip became an appraiser of other prospector's gold claims. It was not the romantic adventure Philip had dreamed of.  But as the precipice of middle age yawned open before him, Philip Arnold found it less physically demanding and better paying than prospecting itself.

He eventually found even more sedentary employment, as an assistant bookkeeper for “General” George D. Roberts, at his Diamond Drill Company. 

And it was at the diamond drill company that Philip saw his first diamonds, in the diamond dust used in the rock drills. 

From this reasonably secure pedestal Philip also watched as the pattern established in California during the 1850's was repeated in the gold and silver strikes in Nevada of the 1860's. Out of the thousands of prospectors who rushed in, a mere handful of the early arrivals actually found any gold, and they were quickly bought out or squeezed out by the banker run mining conglomerates which followed. 

Then, in 1869, a mixed race sheepherder stumbled over an 83 1/2 carat diamond on the banks of the Orange River.  Named The Star Of South Africa, it quickly sold for the modern equivalent of  £1,363,334. And that set off The Great South Africa Diamond Rush.

Hundreds of aging desperate 49's, knowing nothing about diamonds, immediately sailed for South Africa. They all arrived in Capetown months too late to strike it rich. Meanwhile the smart ones, those who hadn't already drifted back to "the states",  stayed in California. But they all dreamed about the new fortunes, this time in Diamonds.  

And being reasonably smart,  in 1870,  forty year old Philip Arnold (above) gathered his life savings, quit his job at the Diamond Drill Company, and along with his cousin and old partner John Slack, went prospecting for diamonds in America.  They disappeared for two years. And over time, their fate became a mystery.

In early February of 1872, two dusty unshaven prospectors carrying a battered raw hide bag stumbled  into a crowded San Francisco saloon, ordered drinks and sat alone. 

Their furtive whispered arguments and their sheltering of the tattered bag immediately drew attention from the boozy crowd. A few of the denizens recognized them as  the long missing John Slack and Philip Arnold.  After several minutes, the pair paid their bill, gathered their bag and left.

But they repeated their argument at several saloons before finally presenting themselves, now reeking of whiskey, at the main office of the Bank of California - Phillip Arnold's old firm.  Without a word of explanation, they presented their bag for deposit. It was accepted and recorded by the bank manager as being filled with diamonds, rubies and other sapphires. It took about twenty minutes for the whole town to assemble the story and that story to be afire with rumors.

The bank manager immediately notified his boss, William Ralston. And after Ralston made inquires about the  two men, he then urged Major George Roberts to contact his old “friend” Philip Arnold. 

But Philip was reluctant to talk, and John Slack was virtually mute.  Only after being plied with whiskey for hours, did Philip finally admit that some where in the great desert wilderness of Utah territory, just before winter drove them back to civilization, he and John had found a mountain literally peppered with diamonds and sapphires. The bag deposited in Ralston's bank was just a sample of what they had picked up in a few hours. Right off the ground, just like that Hottentot in South Africa. Arnold explained they had filed on the claim and were now the legal owners of a diamond mountain.

It was an unbelievable story. But Ralston (above) and Roberts both knew, or thought they knew, Philip Arnold as a trustworthy and honest employee. And John Slack was also know around town as a dull but hard working man. And there was a logic to finding yet another massive, rich deposit of wealth in the American west, where everything was possible. The biggest problem at this point was getting information out of the two prospectors. 

Over the next few weeks banker Ralston and a small group of close investors managed, by befriending the two miners, to convince the pair to allow two local jewelers to examine the contents of the bag. The pair had never seen a diamond in the rough of course, or a ruby.  But they pronounced the contents as worth $125,000. 

This inspired Ralston to offer $50,000 for one half of one percent interest in the claim, if it were first examined by two experts of his choosing. One was to be David Colton (above), part owner of the successful Amador gold mine, and the other expert being "General" Roberts. Reluctantly, Philip Arnold and John Slack agreed to take these experts to their claim.

In early March, after Slack had gone ahead to secure travel connections, Arnold, Colton and Roberts traveled by railroad from San Francisco to Sacramento.  Because of missing bridges, that was as far west as the transcontinental railroad reached at the time.   There the trio boarded the Central Pacific Railroad line, climbing over the Donner Pass, down into the Nevada basin and thence across the Utah desert to Promontory Summit, in mountains north of The Great Salt Lake. Here the trio switched to a Union Pacific train to continue their journey eastward.

From now on,  Arnold insisted, Colton and Roberts must wear blindfolds at all times, and the pair meekly complied. Then, after 36 hours on the train, just before dawn, at a small seemingly abandoned station, the train pulled to a stop for water and coal.

Here they met John Slack. Philip and John helped the two men, still blindfolded, off the train and onto horseback. Immediately they continued their journey. For the next two days the experts, softened by life in San Francisco, suffered on horseback in the oppressive heat by day and endured freezing temperatures each night. 

They were allowed to remove their blindfolds only well after sunset. And before sunrise each morning, they were required to replace their blinders. And then, just as they had grown so frustrated they were on the verge of demanding to return to the train, the horses were brought to a stop and their blindfolds were removed.

What was revealed was a flat desert mesa, covered in scrub brush and gravel, with an odd thrust of a mountain at it's foot. Colton and Roberts wandered about, staring at and kicking the nondescript terrain until, suddenly, Colton reached into what appeared to be an ant mound and pulled out a small hard brilliant crystal. In an instant the two excited experts agreed. The Great Diamond Mountain was real!

They spent several hours collecting gems – diamonds and sapphires – before Philip Arnold and John Slack re-blindfolded the men and led their horses back off the mesa. It was a two day journey back across the horrible desert until they reached the railroad tracks again, Arnold flagged down the next west bound transcontinental passenger train.  Colton and Roberts were accompanied by Arnold and Slack as far west as Oakland. There the prospectors collected their $50,000 down payment and then returned to their "diggings". But the two experts  continued on to San Francisco with the two bags of jewels they had collected.

With those jewels in hand it seemed obvious to William Ralston (above) that the Diamond Mountain  was going to make him even richer than he was already.  It was the usual two step plan for this master of high finance, one he had already perfected in California and Nevada.  First he had to squeeze Philip Arnold and John Slack out of the deal as quickly and as inexpensively as possible. Then it would be just a matter of piling up the riches in his bank accounts. And you know, Mr. Ralston was half right.

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STEALING ARIZONA - TEN

 

I doubt anyone in the county courthouse (above) on Monday, 10 June, 1895 was surprise at the first words James Reavis-Peralta, spoke. 

When he rose, the self proclaimed Baron of Arizona, asked for a delay, while he sought a new attorney. When Mathew Reynolds, lawyer for the government, objected, Reavis was granted a one day continuance. Encouraged by that small success, Reavis made a motion to have the case dismissed entirely. This motion was just as quickly dismissed.  This Federal Judge was not going to be lead down any rabbit holes.

And when the trial reconvened on Tuesday, 11 June ,  the Baron announced that he was going to be doing a single: lawyer, plaintiff and witness all in one. He spent most of his direct testimony by describing his dealings with Huntington, Crocker, and various Senators and cabinet members. None would testify in his defense. Reavis did not ask to subpoena any of them. None would admit to even knowing him.  If the jury was impressed by his name dropping, they had little time to be, because Reynolds began his cross examination that very afternoon. 

No matter what question Reynolds asked,  Reavis' answers were endless and rambling. Did he not notice that the documents he claimed to have discovered in the San Xavier record books, were on a different paper than the other pages in the book, and at right angles to the standard pages? (above) 

What about the questionable testimony regarding Sophia's noble birth?  Did he pay anyone to lie in  their testimony?  But no matter how long Reavis talked, no matter how many twist and turns he made in responding, Reynolds just kept attacking. 

By Wednesday, 12 June, Reavis had been forced to admit that even he had doubts about some of his documents. His explanation was that he just filed them, he wasn't vouching for them.

On Monday, 17 June, the Baroness Sophia Reavis Peralta took the stand. She admitted she had no knowledge about any of the documents filed supporting her noble birth. Perhaps it was the paternalistic Victorian machismo at play, but the courtroom was convinced the lady was telling the truth, as she believed the truth to be.  

Presented with convincing evidence that she was in fact the daughter of John A. Treadway and an Indian squaw named Kate Loreta, she broke down in tears, but still insisted, through her sobs, that she was the wife and granddaughter of the Baron of Arizona.

Having put his wife through this emotional torture, on Tuesday 18 June,  1897,  Reavis introduced a portrait he claimed was of Don Miguel Nemecio de Peralta de la Cordoba (above), and noted the facial resemblance to his own two sons. 

After that he just ran out of gas, and was reduced to rants about grand conspiracies and lunatic explanations and justifications. During his closing Reavis did not even bother arguing his case, but rather entered a list of 52 objections to rulings the court had made. They would all be denied.

The government did not even bother to present a final argument. Ten days later, the Court of Private Land Claims, created by political allies to defend the Peralta Grant case, found “the claim is wholly fictitious and fraudulent”, and dismissed it entirely. That was, of course, not the end. James Reavis (above) had gone too far for that to be the end of the affair.

Reavis was arrested as he left the courtroom, and charged with 42 counts of forgery, presenting false documents to the Land Court and conspiracy to defraud the United States Government. Bail was set at a lowly $500. And although the court allowed him to telegraph his connections in California and Washington, D.C., nobody stepped up with the cash. James Reavis-Peralta  spent the next year in jail, awaiting the criminal trial. It finally began on Saturday, 27 June,  1896 and ended on Tuesday 30 June,  with a verdict of guilty. Two weeks later, on Friday 17 July, James Reavis-Peralta was sentenced to two years in jail – one year of which he had already served – and a $5,000 fine –about $130,000 today.

To pay the fine, the mansion in San Francisco was sold. Arizola, the home and fortress which was supposed to represent the reality of the Peralta grant, was seized by the U.S. government. It was later converted into a barn. 

When James Reavis was released from prison in April of 1898, he followed Sophia and his children to their new home in Denver,  where he tried for many years to find investors for his various schemes and plans. Few were even interested in buying his book, “The Confessions of the Baron of Arizona”. It had already been serialized in his old newspaper, "The San Francisco Call".  He probably did not even write it himself.

But whoever the actual author, it was presented as a classic Victorian morality tale. “The plan to secure the Peralta Grant and defraud the Government," wrote the author, "was not conceived in a day. It was the result of a series of crimes extending over nearly a score of years. At first the stake was small, but it grew and grew in magnitude until even I sometimes was appalled at the thought of the possibilities. 

"I was playing a game which to win meant greater wealth than that of a Vanderbilt. My hand constantly gained strength, noted men pleaded my cause, and unlimited capital was at my command. My opponent was the Government, and I baffled its agents at every turn. Gradually I became absolutely sure of success.”

"As I neared the verge of triumph”, wrote Reavis, “I was exultant and sure. Until the very moment of my downfall I gave no thought to failure. But my sins found me out, and as in the twinkling of an eye I saw the millions which had seemed already in my grasp fade away and I heard the courts doom me to a prison cell. Now I am growing old and the thing hangs upon me like a nightmare until I am driven to make a clean breast of it all, that I may end my days in peace.” 

No where in his “clean breast” account did James Reavis mention Mr. Huntington, or Charles Crocker or any of the other wealthy and powerful men who had financed and backed his scam in hopes of increasing their wealth. It seemed that Reavis had learned something from the affair, after all. 

Sophia (above) had also gained in knowledge. In 1902, she filed for divorce on the grounds of “non-support”. And the old forger,  who began his career at 18, faking passes for his army buddies, died alone, at the age of 71 on 20 November, 1914, in Denver Colorado. Cause of death was listed as bronchitis, but I suspect he just ran out of ideas. He was buried in a paupers unmarked grave. 

Sophia, once the child of royalty and then a single mother supporting herself and her children, lived the last years of her life under the name Lola Reavis.  The poor soul died on 4 April, 1934. Her obituary in the Rocky Mountain News failed to even mention the Peralta Grant. That was probably not an accident.

In 1963 the National Park Service decided that it was not financially feasible to save the the fortress south of Casa Grande. The ten room mansion of Arizola was allowed to slowly decay and collapse into the desert. The next year they erected a maker on Arizona route 84 at milepost 181, to explain the significance of the spot to any passersby.  

It reads (inaccurately), “James Addison Peralta Reavis was a brazen forger who claimed over 12 million acres of Central Arizona and Western New Mexico as an Old Spanish Land grant. He and his family lived here in royal style until his fraud was exposed. From the barony he went to federal prison in 1895". 

And that is all most people will ever know about this story. But now,  you know more.

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