In January 1927, seventeen months after the last known promotional activity, the Pike County Courier suddenly carried a prominent front-page article announcing “MAUNEY DIAMOND MINE HAS BEEN LEASED FOR ACTIVE OPERATIONS.” Now wary of such pronouncements, the paper reprinted a report that had appeared in the Arkansas Democrat earlier in the week, a brief item about a British-American Diamond Company that had leased the Mauney diamond field “some time ago” and now had a crew preparing the grounds for mining. “W. J. Mauney, in company with Col. L. G. White, who is local superintendent of all operations, states that this is in no wise a ‘test’ but that the company intends making the operations of a permanent nature,” the Democrat said. A mill (processing plant) would be installed “within a short time.”[1]
Providing no information on its own, the Courier simply welcomed the company and credited the activity to the recent termination of the Mauney-Millar conflict and the commercial potential of the diamond field. “Now that litigation is over capital has began [sic] to move, which is always the case where production is certain and proven.”[2]
With very little fanfare, the shadowy company maintained a sense of momentum on the northeast slope. In late January 1927, the Courier’s reporter visited the property and found activity continuing despite constant rain. Bridges leading to the mine were rebuilt or repaired; the road was re-graveled, and “other construction work put underway.” Mining operations were “not expected,” however, until the preparation and the rain ended. “As is well known by all familiar with these mines, the earth is sticky as wheat dough in wet weather . . ..”[3]
In following months, things seemed to move ahead. Preparation of the plant site continued in February.[4] On July 1, the Courier’s reporter was “agreeably surprised” while inspecting the improvements of the past few weeks: a test pit had been dug and covered by a “building”; the wood frame of the plant was being completed, with an “engine” already in place; an office building and driveways were under construction, and the frame for a water tank had been finished. On the other hand, “The machinery which has been ordered has to be rebuilt and [it] will probably be some time before the completion of the mill and before operations can begin.”[5] Although this was the Courier’s last article on the subject, a writer for an out-of-state newspaper visited in August and found the crew still “laboring in the hot sun building a small plant for the British-American Company.” Mining would start “within the next month,” he concluded.[6]
All the while, the organizers of the operation, a small group based in the Ft. Worth, Texas, area, engaged in the most imaginative stock promotion of the entire era. It began by late November 1926 and reached its highest pitch about three months later, most lavishly in a tour de force styled as the Pike County Courier of Friday, February 18, 1927.[7]
Virtually promising “incredibly huge profits,” the eye-catching “Courier” told potential investors, “This opportunity is before you TODAY. But! . . . NOT FOR LONG! Just for long enough to raise sufficient money to install machinery and start operations on an efficient basis. Then--the offer will be withdrawn! Never to come to you again! . . . For, this is the ONLY known diamond pipe in North America!”
According to that sales pitch, the company “anticipated” the mine would “shortly go on a producing basis sufficient to supply a major portion of the Forty-two Million Dollar demand for diamonds in the United States.” Without qualification, it said: “OUR PROPERTY HAS ALREADY GIVEN UP MORE THAN 2,000 OF THESE TREMENDOUSLY VALUABLE STONES!” And “In all probability, COUNTLESS THOUSANDS OF TREMENDOUSLY VALUABLE DIAMONDS ABOUND IN THE GREATEST PROFUSION FROM THE VERY SURFACE ON DOWN TO PERHAPS THOUSANDS AND THOUSANDS OF FEET!” An unidentified engineering firm had estimated profits of “$3,638,840 FROM THE FIRST THIRTY FEET,” and other engineers estimated twice that sum![8]
On November 24, 1927, the lead article of the Arkansas Gazette announced the results of an investigation by the U.S. Postmaster General. The postal department had found the British-American Diamond Company and its organizers were engaging in a scheme to obtain money “‘by means of false and fraudulent pretenses, representations and promises.’” The company and the principals—W.I. Brashears and “Newell & Co.” of Ft. Worth—were barred from further use of the mails. Walter Mauney was mentioned only as the person leasing the ten-acre property.[9]
The Gazette’s review of the evidence left no doubt the little group of Texans had, indeed, used fraudulent propaganda to push stock. Statements in the “great volume” of “letters, printed folders and display circulars” were generally more deceptive than those in the “Courier” of February 18—one item not only declared 2,200 diamonds had already been “taken out,” but also added, “We are busy taking out more.”[10]
Exposed, Brashears and associates promptly abandoned the buildings and equipment on the Mauney Mine. Creditors and hired workers, including Lee J. Wagner, were left with payments due; even the British-American Company’s local superintendent, Colonel White, declared he had $2,450 coming.[11]
Ordered into receivership by a Pike County judge, the company’s property was declared of insufficient sales value to cover the moderate claims submitted December 1, 1927-May 14, 1928, although they totaled only $3,237.73, including White’s amount. At the time, the Arkansas Diamond Company was preparing for more work on the southeast slope, and the Receiver recommended postponement of the sale until “a re-organization of the Company and the beginning of actual operations of the Diamond Mines in Pike County.” Meanwhile, claimants received liens on the buildings and equipment.[12]
[1] “Mauney Diamond Mine Has Been Leased,” Courier, January 21, 1927, p. 1. No lease was filed in Pike County.
[2] Ibid.
[3] “Preparations for Diamond Mining Being Made,” Courier, January 28, 1927, p. 1.
[4] “First Diamond is Found by British-American Diamond Commpany Employee,” Courier, February 18, 1927, p. 1. A worker “caught the gleam and poised long enough to pick up a splendid small blue-white diamond that had been washed out by the incessant rains within a dozen feet of where a hand washer had just been installed.”
[5] “Much Progress Going On At The Diamond Mine,” Courier, July 1, 1927, p. 1.
[6] “Pike County Has Real Diamonds, He Says,” The World, August 14, 1927, clipping (no source identification; no page number), in IV.E.5, Crater archive. “This company was organized by W. J. Mauney, who owned nine acres of the old crater,” the writer said. “Mauney has worked years and spent money in order that his property may be developed and may soon be rewarded for his labor.”
[7] On November 26, 1926, H. A. Bigelow of Pasadena, California, wrote Howard Millar asking for advice. The British-American Diamond Company of Ft. Worth, Texas, was “being organized” and selling stock, to buy machinery to work the Mauney Diamond Mine. “They claim to have leased this mine, and want to sell me stock in it . . ..” Millar, no doubt savoring the opportunity, replied that the Mauney property could not be worked by itself, because it included only “.41 acres” of the pipe and had a problem with caving along the sides adjacent to the Ozark and Arkansas Mines (I.N, Crater archive).
A well-preserved copy of the promotional “Courier” is in IV.E.1, Crater (and on the microfilm of the archive, ibid.). Such exploitation of local newspapers was fairly common in those days. There is no way of knowing if the Courier ever knew about the piece, which would have been used quietly in selective appeals to investors. Evidently, the rare copy in the Crater archive came with the Millars’ collection.
[8] The oversized pamphlet cited an article on American diamonds appearing in the Literary Digest of February 26, 1927. Investors reading the small print would have noticed a comment about most Arkansas diamonds being very small stones picked up from the surface.
[9] “Fraud Order Hits Arkansas Concern,” Gazette, November 24, 1927, p. 1; the same press release appeared as “Fraud Order Hits Arkansas Diamond Co., Nashville News, November 26, 1927, p. 2. According to the findings of the department’s solicitor, Brashears had leased the ten-acres from Walter Mauney on May 20, 1926, but (as the deed records still indicate) never filed the lease in Pike County. More important, Ike Kempner and William Little had signed neither the lease nor the power of attorney the rest of the Mauney family had given Walter earlier; so the solicitor declared the lease invalid.
Among other alleged infractions, it was not clear Brashears had ever assigned the lease to the company, which he, B. J. Thigpin, and H. L. Green had incorporated in Texas with a capitalization of $35,000 and an authorized 1,000,000 shares having no par value. As for “Newell & Co.,” supposedly the group’s stock broker, the solicitor found it was only an oil-field worker “who at the instance of Brashears entered the brokerage business and without a license or the payment of the state taxes proceeded to sell and to advertise stock in Brashears’ company.”
[10] Ibid.
[11] “Report of Receiver—In the Matter of the Receivership of British American Diamond Company,” May 14, 1928, in T. J. Jones, Receiver, v. British American Diamond Company, 1927, Chancery No. 1541, drawer 150, Pike County Courthouse. Almost all of those filing a Statement of Account to Obtain Lien (ibid.) were local laborers and craftsmen:
R. B. Carroll and C. W. Carroll, doing business as Carroll Auto Company, filed December 1, 1927 (two pages of detail; materials and labor for maintaining a “Model J. Hudson 1918). $20.80 for labor, gasoline, oil, tire work, etc. R. B. Carroll was bookkeeper of the firm.
W. O. Basham, “garage” owner, December 1, 1927 (two pages). $10.50 for sales and delivery of gas and oil.
Henry Davis, filed December 5, 1927 (four pages of detail). Due $90.16 for lumber sold to the BAC; $20 for hauling steel from Caddo Gap, Arkansas, and $20 for steel nails and spikes supplied. Total, $130.16.
Lee J. Wagner, December 5, 1927 (three pages). $42 for selling and delivering 180 feet of drill stem; $8 for one lot of bolts; $18 for two shafts, and $25 for labor. Total, $93.
Giles Wagner, December 22, 1927 (one page and a one-page affidavit listing equipment and describing plant in detail). Due $30 for labor, helping construct the plant.
Paul Parker, December 23, 1927 (one page and affidavit). $1, balance due for labor in October; $11.25, balance for labor in November. Total, $12.25.
Freeman Kizzia, December 23, 1927 (one page and affidavit). $21.25 for balance of labor in October, and $7.50 for balance in November. Total, $28.75.
J. R. Sidebottom, a Blacksmith and Woodworkman, December 30, 1927 (one page and affidavit). $5.10 for bolts, clamps, bearings, and other hardware.
Will Fugitt, January 14, 1928 (one page and affidavit). $8, night watchman (@ $2); $1 for four hours of carpentering (@ 25 cents); $1 for two hours hauling (@ 50 cents); also worked in construction of plant. Total, $10.
Lee Buckley, mechanic in construction and repair of equipment at plant, January 26, 1928 (one page, detailing what he worked on). $64.50 for sixteen days work in October and five and one-half days in November (@ $3).
Filings included an “Intervention” of M. L. Carroll, May 14, 1928 (two pages, listing equipment at the BAC site that he sold on credit to L. G. White, including a “W. C. Meadows Mill Company Grist Mill, complete” (Carroll wanted repossession). Also, an Intervention of Grover Conway, May 14, 1928 (statement with a contract to L. G. White attached): $125 due on a Delco Light Plant sold on credit, September 7, 1927 (Conway wanted repossession).
The Receiver added a few creditors: Diamond Gravel and Lumber Co., $13.35; Murfreesboro Telephone Co., $20.13; Murfreesboro Hardware Co., $226.69; Tropical Paint Co., $45; L. G. White (the British-American Company’s mine superintendent), $2,450, and Henry Bumgarner, $20 (Report, 1-2). Excluding the repossessed machinery and making minor adjustments to the Statements of Account, the Receiver submitted a total of $3,237.73 due.
[12] Report of Receiver, May 14, 1928, ibid. The property list included: a “washing plant building, 16 by 24 feet, painted, sheet-iron roof, housing jigs and screens, with engine room”; one “Fairbanks-Morse Z type, 15 h.p. Gas Engine, #485997”; a set of three-stand jigs, complete; one “Trommel, 3-section Screen, ¼, ½, and 1 inch mesh, 36 by 36 inch [each section]; sections complete, without shaft”; a 38-inch cast-iron pulley; two 24-inch cast iron pulleys; 100 feet of 2-inch pipe, new; 250 feet of 1½-inch pipe, new; two 2-inch brass G. Globe valves; two 1½-inch brass check valves; two 2-inch brass check valves; “and other machinery and materials put into said plant and buildngs.” Also see Giles Wagner’s list, and other Statements, supra.