THE GREAT DIAMOND MOUNTAIN Chapter Two

I don't know if you have ever heard of Henry Thompkins Paige Comstock (above). And the few who know he was the namesake of the 1859 Comstock Lode silver strike, probably do not know he acquired his share in mines worth $14 million in gold and $21 million in silver ($773 million today), not with a pick and shovel but by trading a blind horse and a bottle of whiskey for a disputed share of the existing claim. After that he negotiated stubbornly.

But even fewer know that within a few weeks he sold his shares for less $11,000.00.  Ten years later,  in September of 1870,  Henry Comstock (above) was flat broke again and was forced to take advantage of the poor man's retirement plan. He shot himself.

                            William “Billy” Ralston (above), aka “The Magician of San Francisco”, founder and manager of the Bank of California, had no intention of suffering a similar fate. In 1864, almost by slight of hand, he  convinced twenty-two of California's Gold Rush millionaires to finance his new bank. 

He used their capital to make predatory loans to the miners who built Virginia City, Nevada (above) atop the Comstock Lode. And although Ralston did not invent the idea of giving his mining partners the shaft, he did practice it on an industrial scale. He carefully hid inflating payments in his loan documents, and used them ruthlessly, seizing mine after mine until he was one of the richest and most powerful men in California and Nevada.

He invested his profits in wool mills, cigar factories, hotels and theaters. And he gave money to the needy so willingly that it seemed at times as if Ralston wasn't interested in money, so much as he had an insatiable hunger to be richer than he was. And that was why in the spring of 1872 he jumped on the idea of a diamond mountain with such enthusiasm.  

Ralston's plan was to quickly squeeze the original founders of the strike, Philip Arnold (above) and John Slack, out of the deal completely.  But once that was done, to properly exploit the diamond mountain Ralston figured he would need $50 million, far more cash than even he possessed.  He needed lots of investors, and lawmakers to protect his share of the investment.  Ralston sent his good friend and sometime business partner, the magically named Asbury Harpending to New York City via the transcontinental railroad,  with a bag of gems and instructions to get them valued by none other than the “King of Diamonds” himself, Charles Lewis Tiffany.

The truth was Charles Tiffany (above) had never seen a raw diamond in his life. What he was, was a marketing genius. 

He had opened his stationary store in 1837 with $1,000 in capital borrowed from his father. Then, when P.T. Barnum had to shoot one of his elephants, Charles Tiffany bought the poor pachyderm's hide and had it sewn into cigar cases, diaries and wallets. 

When Barnum's Tom Thumb got married, the miniature pony and coach which carried the diminutive bride and groom away from the church, were provided by Tiffany, and before and afterward displayed in his store. 

And when the the first Transatlantic Telegraph cable was completed in 1858, Tiffany bought several hundred yards of the excess wire, sliced it into sections and sold it mounted on plaques. On the first day of sales, the crowds were so large the police had to restore order – or so Tiffany claimed

But it was Gideon Reed from Boston who ran the firm's Paris store, and who invented the diamond engagement ring, to handle a glut of small stones from South Africa then swamping the market. And it was George McClure, the companies' head gemologist, who oversaw the army of designers who created the Tiffany jewelry style. But nobody outside of the diamond industry had ever heard about those guys. Charles Tiffany (above, right,  in his 5th Avenue Manhattan shop) was the public personification of Tiffany and Company.   So when Asbury Harpending stepped off the train in Manhattan's Pennsylvania Station in the spring of 1872, it was Charles Tiffany's valuation of the gems that he was seeking.

Asbury Harpending (above) described Tiffany's dramatic performance, at his lawyer's home. “A number of distinguished men were present to see the gems displayed...(Democratic Presidential candidate General George B. McClellan, Newspaperman Horace Greeley, Mr. Duncan, of the banking house of Duncan, Sherman & Co....(and Congressman) General B. F. Butler...I opened the bag of diamonds....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”...In an official statement, still available, his valuation on the lot was $150,000....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....The news of the Tiffany appraisal ...soon became common property in New York and made a big stir in speculative circles.”

Back in San Francisco, and thrilled at Tiffany's evaluation, William Ralston officially incorporated the San Francisco and New York Mining and Commercial Company, with so many investors forcing money into his hands the new firm quickly had a million dollars in “working” capital, and 100,000 shares of stock, initially valued at $40 a share. William Lent was named as President, Ralston named himself as treasurer, and David Colton became the general manager. Even British banker Baron Rothschild bought stock in the new company.

As the addition of the word “Commercial” indicated, Ralston was dreaming big – very big. The board of directors of his new company were empowered not only to dig up the diamonds of Diamond Mountain – where ever that might be – but they were also empowered to cut and polish the stones, and develop the market for them. Less than six months after Allen and Slack had shared the existence of the Diamond Mountain with him, Ralston was planning on transplanting the entire Amsterdam (above) diamond market to San Francisco, replete with cutters, polishers, graders, wholesalers and, of course, customers. Anyone who could be helpful to Ralston's grand plan, including Congressman Butler, was granted shares in the new venture.

What the rotund Congressman Butler (above) from New York delivered were a few words added to the General Mining Act of 1872, approved in record time and with a minimum of debate in either the American House of Representatives or the Senate. The new law took effect almost immediately, ,on 9 July 1872.  

This rushed bill established the price of a mining claim on federal land at between $2.50 and  $5.00 an acre, a figure which has ever since resisted all pressure for an increased benefit to the federal purse. Under this landmark legislation, mining claims on public lands were offered at those bargain prices to those seeking gold, silver, copper or, as Butler amended the act, “other valuable deposits”. In short, diamonds.

By the time these loose end had been tied down, Philip Allen and John Slack were back in San Francisco again, with another bag of diamonds and sapphires. By this time, however, William Ralston had managed to convince the Kentucky simpletons to sell their entire claim to him outright. Their price was $660,000.00; half up front and half upon a final examination by a third engineer, picked by Ralston,  and the revelation of the exact location of the claim.

The man Ralston picked for this final and most important appraisal of the diamond mountain was one of the most respected consulting mining engineer's in America, a man whose 600 previous appraisals had been so accurate his clients had never lost a dollar on his jobs; Henry Janin (above).  His fee was standard - $2,500 in cash, all expenses paid to and from the claim, as well as the price of chemicals required to confirm the quality of the claim, and the right to buy 1,000 shares in the enterprise at a nominal price. It was all boiler plate, industry standard arraignments.  Of course, contained within them were the seeds of destruction for the entire enterprise, and everyone associated with it. At least one person had figured that might be where they were heading, right from the start.

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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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CROSS WORDS And D-Day

 

I would say, with apologies to Winston Churchill,  that never have so many labored so hard to obscure what was so obvious to so many as during the spring of 1944. Every school child in Europe knew that one  day soon the allies were going to hurl themselves against the Nazi held Atlantic coast of France. 

And there were only two places with beaches close enough for unlimited air support from Britain and wide enough for major military operations - the Pa de Calais, just 20 miles across the channel, and 75 miles away, in Normandy. But it was vital the 400,000 German defenders not know which of these two spots was the eventual target, or exactly when the invasion would occur. The planned date and location of the invasion was maybe the second biggest secret of the 20^th century.

It would take 1 ½ million military personnel, and probably another 2 million civilians to prepare and launch the invasion. And 4 million people can not keep a secret. So, like a puzzle the invasion was divided into pieces, each given a code name to disguise how it fit into all the others. 

The over all plan was code named “Overlord”. 

Misinformation fed to confuse the Germans was code named “Bodyguard”.  Bombing to isolate the beaches was code named “Point Blank”. 

Naval operations were code named “Neptune”. Operation “Tonga” was the code name for the British parachute and glider attacks designed to be launched before dawn behind the British beaches. 

The British beaches were “Gold” and “Sword”, the Canadian beach “Juno”, and the American beaches “Utah” and “Omaha”. 

Architectural drawings for the two floating harbors built in England and towed across the channel were code named “Mulberry”.

And the flexible gasoline pipeline to be rolled out and laid down under the channel after the invasion was named “Pluto”.

Out of the millions of documents generated for “Overlord” - the U.S. 9^th Air Force's plan for the airborne troops parachute  drop alone was 1,376 pages and weighed 10 pounds - ranged from shipping bills of lading to company rosters. Only a few hundred of these referred to the actual time and place of the invasion. But almost all of them hinted at one or both. 

Besides being stamped with “Top Secret” and "Eyes Only", the most sensitive documents also had the word “Bigot” stamped on them. Only a few hundred people with an absolute “need to know” were allowed to handle or even read “Bigot” papers. Those people were given special security clearances, and were described as “Bigots or “Bigoted”.

There were, of course, slip ups. In March a U.S. sergeant accidental used “Bigot” papers as packing material for a present he sent to his sister in the United States. When the package broke open in transit, workers in the Chicago Post Office were put under FBI surveillance. Some wind and an open window forced British staffers to spend two hours recovering 12 copies of a “Bigot” memo from a Whitehall street.  An abandoned briefcase containing “Bigot” papers left on a train in Southern England was turned in to the station master. The last owner of those was reduced in rank and placed under detention.  And several officers were reduced in rank and relieved for talking too much at a cocktail party . But the British domestic Military Intelligence Service - MI 5 - thought all of those leaks had been plugged.  At least until they picked up a copy of the Daily Telegraph newspaper on 2 May, 1944, a little over a month before the invasion date.

The Daily Telegraph - “The Largest, Best, and Cheapest Newspaper in the World” - started out as a penny tabloid in the 1850's.  By the 1930's it had built a circulation of almost 1 million readers by assuming its audience was intelligent, middle class and progressively conservative.  The Telegraph helped make Winston Churchill Prime Minister in May of 1940., and in late 1941 the paper printed an offer to donate £100 to charity for each person who could solve the paper's crossword puzzle in less than 12 minutes. Winners were then ordered to report as code breakers to Beletchley Park, home to the Twentieth Century's ultimate secret, the breaking of Germany's top secret code machines. 

On that Tuesday, 2 May, 1944, a “Bigoted” officer was solving the Telegraph crossword and stumbled over the clue for 17 across - “One of the U.S. (4 letters)” 

The next day the paper published the solution -  “Utah” - which happened to be the codename for one of the intended American invasion beaches (above).

It was most likely  a coincidence. Right? Well, paranoia being an occupation hazard for intelligence officers, this hyper vigilant Bigot decided to look closer.  And ominously,  a review of solutions to April's crosswords turned up more invasion beach code names - “Gold”, “Sword” and “Juno” 

Well,  gold and sword were common in all crossword puzzles, and even if Juno was unusual it was decided a full investigation might draw too much attention  But the officials kept their eye on the puzzle page. And for ten days the Telegraph crosswords were clueless, as least as far as military intelligence was concerned. 

And then on Monday, 22 May, 1944, the clue for 3 down - “Red Indian on the Missouri (5 letters) – led to the obvious solution published on Tuesday, “Omaha”. -  the code name for other intended American invasion beach (above). And now that their suspicions had been aroused, in the same puzzle the word “dives” appeared, which might refer to the Normandy river named Dives, at the eastern edge of the invasion area. And also in the puzzle there was the name “Dover” which did not have any special importance to the invasion, but which, at this point just sounded suspicious. MI 5 decided to assign two agents to investigate.

It didn't seem the newspaper itself could be responsible. The owner and editor-in-chief, William Berry, was so trusted he had briefly served as the Minister of Information. But agents learned the crosswords were written ahead of time not by a Telegraph staffer, but by a 54 year old freelance “compiler”, a legendary English amateur football player and “stern disciplinarian” headmaster of the Strand School for boys, Mr. Leonard Sydney Dawe (above). And the agents had questioned Dawe once before when his crosswords had seemed to violate security.

On Sunday, 17 August, 1942, a puzzle composed by Mister Dawe contained the clue “French Port (5 letters), with the answered confirmed on Monday, 18 August, by the word “Dieppe”. At 5:30 in the morning of Wednesday 19 August, 1942 (two days later) , 5,000 men from the 2nd Canadian infantry Division, 1,000 British Commandos and 500 U.S. Army Rangers landed on the stone beaches of the French harbor of “Dieppe” (above). Their objective was to seize and hold the port for 24 hours.

But the Nazis were waiting as if they had been forewarned. Less than 6 hours after landing the Canadians had suffered 50% causalities (above) and the surviving men had to be withdrawn. After that disaster MI 5 had interrogated Dawe for several hours, and came to the conclusion that the use of the word “Dieppe” had been “a coincidence”. But as they say in the intelligence game, fool me once, shame on you, fool me twice and you are in BIG trouble.

The puzzle published on Saturday, 27 May, 1944 was the final straw. Almost as if Dawe were taunting officials one of the clues to that day's puzzle was “...some bigwig like this...”(8 letters)”, which led to the solution on Sunday, 28 May of “Overlord” - code name for the entire invasion! Leonard Dawe was arrested at the school's temporary home in Effing and brought in for questioning. As he had two years earlier, Dawe denied having any inside knowledge, and kept denying it  “They turned me inside out,” he said later. “But they eventually decided not to shoot me after all.”

Meanwhile Dawe's crosswords kept indicting him. Tuesday, 30 May the clue was “This bush is the center of nursery revolutions”. The answer, printed on Wednesday 31 May  was “Mulberry” - the code name for the floating artificial  harbors. And then on Thursday, 1 June the clue for 15 down was “Britannia and he hold the same thing.” The solution published on 2 June was “Neptune” - code name for the naval operations within Overlord. It seemed to some that disaster was certain. But shortly after that the Daily Telegraph crossword didn't matter anymore.

Just fifteen minutes into Tuesday, 6 June, 1944 the first paratroops landed on French soil. At 5:45 in the morning the Operation Neptune bombardment began. And at 6:30 troops began landing on the American beaches of Omaha (above) and Utah . An hour later the British and Canadians followed. 

By 3:00 that afternoon the first sections of a Mulberry harbor breakwater were sunk off the beaches. By nightfall, the allies had landed 156,000 men along 50 miles of Normandy coast, and penetrated up to 6 miles inland. The invasion was a success, so far..

On Wednesday, 7 June, Leonard Dawes was released by MI 5, and after reporting to the schools managing board - who were close to firing him - the first person he wanted to see was a 14 year old student named Ronald French.  Having called the boy into his office, Dawe immediately, “...asked me point blank where I had got the words from. "I told him all I knew...” And what young Mr. French knew would have sent the spooks from MI 5 into a faint.

According to Roland, the school's temporary home (they had been bombed out of their original  structure) was surrounded by Canadian and American military camps, filled with young soldiers, most no more than four or five years older than Roland, all in training for the invasion.  ”I was totally obsessed about the whole thing", Roland admitted recently. "I would play truant from school to visit the camp. I used to spend evenings with them and even whole weekends...I became a sort of dogs-body about the place, running errands and even, once, driving a tank.” 

He explained that the soldiers talked freely in front of him... "because I was obviously not a German spy. Hundreds of kids must have known what I knew.". Bryan Belfont, another  student, recalled, “The soldiers were obviously lonely...they more or less adopted us. We’d sit and chat and they’d give us chocolate.” But just how much did these children know?

“Everyone knew the outline of the invasion plan and they knew the code words”, said Roland. “Omaha and Utah were the beaches, and these men knew the names but not the locations. We all knew the nickname for the operation was Overlord....Hundreds of kids must have known what I knew.” As proof Roland showed Dawes the composition books he had filled with diary like notes. According to Roland, Mr. Dawe “was horrified and said the book must be burned at once.” And while  the book burned, Dawes lectured the boy on national security, and war time censorship. “He made me swear on the Bible I would tell no one about it.” Roland was so traumatized he stopped doing crossword puzzles,

So there was the great leak, the hole in the allied security net. Thousands of young soldiers talking to other young soldiers, overheard by even younger boys.  It was to be expected.  It was even allowed for. Knowing the code words would tell the Germans almost nothing essential. But after 6 June 1944 the invasion was no longer a great secret. Why did Leonard Dawe insist the boy swear never to reveal the details? The answer was that Dawes was protecting  his own “Butt” (1 down, 4 letters) . Because Leonard Dawes was a bit of an “ass” (1 across, 3 letters).

Since 1925 Dawes had created more than 5,000 crossword puzzles for the Telegraph, and over those decades he had stumbled upon the easiest working method. He would lay out the crossword grid on a sheet of paper pinned to his wall. There were no letters or numbers in the grid, just empty squares with some blacked out for random aesthetics. And he would then invite his students to fill in the blocks, telling them it was a to improve their “mental discipline”.  In truth it was to improve his income. Dawes would then write clues to match the words provided by his 14 and 15 year old wordsmiths. In their naivety they considered him “...a man of extremely high principle.” But if the truth had come out the newspaper would have fired him for plagiary, and the school for lying.

Leonard Sydney Dawe died in January of 1963. But Roland French, like the other adolescent wordsmiths, kept their his school master's secret for another two decades, finally revealing the truth in an interview in 1984. And only then did Roland French feel he could start enjoying solving crossword puzzles again.

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