The 1920s:  Financial Plight and Promotional Morass

 

    Recovery of the Mauney Mine proved crucial for the Mauney family, because that venturous group emerged from the previous decade heavily in debt and facing bankruptcy.[1]  By late 1922, major creditors had grown impatient, particularly the State Life Insurance Company of Indianapolis, which held a note for $6,901 plus interest due.  Both State Life and the Pike County Bank had liens on family properties, except for the ten acres included in the Mauney Mine.  After State Life sued for payment, 255 acres of land were scheduled for public auction on June 30, 1923.[2] 

 

    But now, with a clear deed to the Mine, the Mauneys could benefit from certain advantages they held in the early ‘20s.  As descendants of leading pioneers of the area, they were active in the affairs of Murfreesboro and Pike County, and had a longstanding relationship with the Pike County Bank and its president, J. C. Pinnix.  Now, they could arrange for the bank to buy those 255 acres at auction and return the deeds to the family.  In return, they signed a deed contract pledging the ten acres of the Mauney Mine as security for both the new debt and “several” other “notes and obligations” held by the bank.  According to the contract, the Mauneys would clear all debts, including all expenses associated with the auction, within ninety days after recovering the 255 acres.[3]  A later contract clarified the total amount due the Pike County Bank after it had paid $7,410.25 for the auctioned properties:  $20,907.93, at 10% annual interest.[4]

    At the time, the ninety-day deadline seemed reasonable.  The Arkansas Diamond Company’s operation just south of the Mauney Mine was still generating excitement and local confidence in the future; Walter Mauney, head of the family since his father died, was an experienced promoter with many useful contacts.  Recently, almost all the family had given him full Power of Attorney to sell or lease the Mine, and only one deal was needed to make the financial situation at least manageable.[5] 

 

    Walter Mauney’s new adventure began in early July 1923, when John Peay, John Fuller and other stalwarts of the Arkansas Diamond Company dined at the Mauney home on Prairie Creek, reportedly to talk about buying the Mine.  “If these gentlemen purchase the property,” declared the Pike County Courier, “they will probably begin development work on a large scale which will mean much towards the industrial growth of Murfreesboro and Pike County. . . . and if they take charge of this rich field we may rest assured that it will be developed.”[6]  

    Although that discussion led nowhere, another prospect soon appeared on the scene.  In mid October, 1923, O. L. Brace, a consulting geologist from Camden, Arkansas, inspected the Mine for Gordon Ingalls of nearby El Dorado, and submitted a balanced, straightforward report.  Benefiting from the ADC’s experience, Brace recommended a cautious approach.  “In order to place the Mauney property on an operating basis it would be necessary to install machinery first to handle the black ground, . . ..  The best type of plant for this purpose is the small washing plant, as used [currently] by the Arkansas Diamond Corporation.  At a later date, after the black ground has been exhausted, it would be necessary to install a larger plant. . . .”[7]

    Dispassionately, Brace emphasized that the ADC’s experience showed diamonds could be recovered “by means of a simple, inexpensive plant, thus permitting the thorough test of the property without a large initial outlay of funds.  The period over which this company [ADC] has operated would tend to show that their operations have been profitable.  We have no statistics to prove this point, however.”  He closed with the standard caveat, that only field operations could obtain data about “commercial possibilities of diamond recovery.”[8]

    Ingalls, however, was representing an aggressive promoter from New York City:  A. Rovenger, whose visit to the Mine in late October helped send expectations soaring in Murfreesboro.  According to the Pike County Courier, those negotiating with Walter Mauney were “said to be very strong financially” and “reported to be worth something near $14,000,000.”[9]  They planned to erect “one of the most modern diamond washing plants in existence and have the diamonds cut and polished here . . . and marketed from Murfreesboro to the jewelers of the world.”  The mine would be run “regularly and permantly [sic], employing a large force of men and will prove to be one of the biggest industries started in Southwest Arkansas in many years.”  Walter Mauney had selected the buyers carefully, the Courier said, and “states that he believes we are on the eve of the biggest business revival ever had in this part of the state.[10]

    In mid November, the Courier reported Rovenger had leased the Mine tract for twenty-five years, with the Mauneys getting a one-eighth royalty for all diamonds found.  The lessee would begin preparing the grounds for a modern South African plant within thirty days; engineers from abroad were scheduled to leave for Murfreesboro “at once” to handle the project.  For the cutting and polishing, Belgian experts were being brought in.[11]  Lauding Rovenger and Walter Mauney, the Courier concluded with a long prepared statement from the latter, effectively a promotional tract as well as an apparent articles of faith.  “‘There is enough diamond bearing earth to insure a daily run of many years and I know the diamonds are there and in paying quantities,” said Mauney, who also thought many other “diamond craters” would be found in the area.  He believed his little town was “on the eve of a boom.”[12]

    Two weeks later, the Courier carried a brief article about a visit by one of Rovenger’s associates, who was “highly elated” with what he found.  “The diamond mining experts from South America and South Africa will arrive here about December 10, when work of development is expected to begin on a big scale,” the paper reported.[13]

    Then, without further comment, the heralded project vanished from the record—an understandable outcome in view of the mineral lease filed at the Pike County court house a week after Rovenger’s first visit.  According to that document, the twenty-five-year concession cost the New Yorker $12,500 “cash in hand,” as well as the royalty.  Moreover, the contract called for three additional payments of $12,500 each, the first due within six months.  Both the initial money and the following installments would go directly to the Pike County Bank to assure repayment of the Mauneys’ debt there.  Under a generous performance clause, Rovenger had a full year to commence work at the mine.[14]   

    Walter Mauney apparently understood the promotional essence of the arrangement, and included a careful disclaimer in the contract.   “It is distinctly understood and agreed that the parties of this Lease are not partners,” it said, “but stand in relationship to each other as Lessor and Lessee.”[15]  Similarly, Mauney indicated a degree of sensitivity by assuring any reader of the contract that his family honestly intended to pursue diamond mining and was not involved primarily because of the lease payments.[16]

    What about the $12,500 “cash” payment?  After the venture failed, the debt at the Pike County Bank remained untouched. This and the general circumstances indicate there was no $12,500 payment upfront, which according to the contract would have applied directly to the debt.

 

    Evidently, the Rovenger affair was another of those episodes when “cash in hand paid, the receipt of which is hereby acknowledged” actually meant the cash fell due as the promoters raised money.  This happened again in early 1925, when Walter Mauney entangled himself with investors in Texarkana, about seventy miles southwest of Murfreesboro.  This time, there was no publicity.  According to the documents covering the short-lived arrangement, Mauney borrowed $5,000 from the group in April and immediately leased them the Mine property for $35,000 “cash in hand”—$5,000 of which was to apply to the loan.[17]  The group also had the option of buying the ten acres for $120,000.[18]  Years later, Mauney explained that the group’s trustee, C. C. Turquette, had returned the lease in 1925 without paying the money or conducting any operations at the mine.[19]  The aborted venture terminated only a few weeks after the Arkansas Diamond Company’s operation shut down on the southeast slope.

 


 



[1] Financial strain, primarily from real-estate ventures and legal costs, was evident by late 1916, when M.M. Mauney’s heirs mortgaged all of his real estate in Arkansas and Oklahoma except for Kimberley Township, the Mauney Diamond Mine (ten acres), and a twenty-seven acre tract that had already been deeded to Henry Mauney (Pike, Mortgage Record 10, 581-583, Deed of Trust, Bettie L., Walter and Emma, and Henry and May Mauney to W. F. Galloway, Trustee, in behalf of Pike County Bank, December 30, 1916 [$2,800 loan for sixty days at 10% annual interest, secured by notes]).  The mortgage deed stipulated the properties also could serve as security for any further loans.  The $2,800 was paid off on schedule.

    In March 1917, the Mauneys took a mortgage loan of $6,000 from the Southern Trust Co. of Little Rock, putting up 255 selected acres near the diamond field (Record 12, 122-125, Deed of Trust, family to STC, March 1, 1917 [loan at 6%; payment in seven annual installments, by due by January 1, 1924]).  A second mortgage deed of that date specified the first two of the seven annual payments (ibid., 143).  As SLI’s law suit later clarified, at least some of the 255 acres mortgaged to SLI remained part of the collateral at Pike County Bank.

    In April 1917, Southern Trust transferred the mortgage to State Life Insurance Co. of Indianapolis, Minnesota (ibid., 406, April 5, 1917).  After the Mauneys made the first two payments, State Life released the second mortgage deed of March 1, 1917 (Mortgage Record 13, 199, Release, January 4, 1919).  When they missed the next scheduled payments, the company sued (infra, nn. 206,207).

    Along with legal costs and failures in real-estate development, there family experienced misfortune such as the ill-fated marriage of a daughter, Mesilla Mauney Shackelford.  Years earlier her father, M.M., had divided money from the sale of the Ozark property among his children, and “all this and her other property, he [the husband] ran through with and consumed it before he left her” (Walter J. Mauney, deposition, Mesilla Shackelford v. Thad Shackelford, petition for divorce, September 28, 1921, Pike County Chancery Court No. 1097, drawer 128).

 

[2] State Life Insurance Company v. Bettie L. Mauney, et al., 1922, Chancery No. 1247.  The Mauneys also were indebted to the Pike County Bank for unspecified but “divers [sic] sums of money.”  The details were summarized in Pike, Mortgage Record 17, 48, “Mortgage with Power of Sale,” Bettie L. Mauney, Walter J. and Emma Mauney, and Henry and May Mauney to Pike County Bank, June 30, 1923.  A copy also is available in the British-American packet noted infra (1927, Chancery No. 1541, drawer 150).

 

[3] Mortgage with Power of Sale, ibid.; Pike, Chancery Court Record, Book D, 461, “Intervention” by Pike County Bank, State Life Insurance Company v. Bettie L. Mauney, et al., November 13, 1922, Chancery No. 1247 (J. C. Pinnix intervened, as attorney for the bank); “Commissioner’s Report,” ibid., 550, November 12, 1923 (no detail); “Order Approving Report of and Confirming Sale Made by Commissioner” and “Order Granting Commissioner’s Deed,” ibid., 561-562, November 13, 1923 (Pike County Bank bought the 255 acres).

 

[4] Pike, Oil & Gas (minerals) Lease Record 5, 59, “Lease of Diamond Mine Property,” Mauney family to A. Rovenger, November 3, 1923.  In addition to those approving the Power of Attorney cited below (infra, n. 209), other family members had inherited a share of the Mine, and signed the lease:  Mesilla Shackelford (nee Mauney) of Okolona, Arkansas, now declared a widow; Ike Kempner of Hot Springs, husband of the deceased Roxana Kempner (nee Mauney); and William W. Little of Hot Springs, guardian of Roxana’s minor children, Mary Elizabeth Kempner and Mauney Ike Kempner. 

 

[5] Pike, Misc. Records, 3, 129, Power of Attorney, March 28, 1923, signed by Bettie Maunie; Emma Mauney, wife of Walter; Henry Mauney and wife, May; J. N. and Occo [Mauney] Alford of Okalona, Arkansas, and J. H. and Alice [Mauney] Peel of Sulphur, Oklahoma—all having an interest in the property.  Not signing, for some unknown reason:  Ike Kempner and William W. Little of Hot Springs.

 

[6] “Prominent Little Rock Men Here,” Courier, July 6, 1923, p. 1.  Except for Reyburn and Stifft, the delegation included almost all the top figures involved with the ADC:  Peay, Fuller, Moorehead Wright (of the Union Trust Company, Little Rock), E. J. Bodeman (another Little Rock banker), and Albert Cohn (of the original Little Rock trio).  The outcome of the meeting was never reported.

 

[7] O. L. Brace, Petroleum and Mining Geologist, Camden, Arkansas, to Gordon Ingalls, McWilliams Bldg., El Dorado, Arkansas, October 17, 1923, p. 4, “Misc.” box, Crater archive.

 

[8] Ibid., 4-5.

 

[9] “Large Diamond Deal This Week—Mauney Heirs Will Probably Sell to New York Capitalists,” Courier, October 26, 1923, p. 1f.

 

[10] Ibid.

 

[11] “Mauney Diamond Mine is Leased,” Courier, November 16, 1923, p. 1. 

 

[12] Ibid., p. 4.  The promotional overtones did not necessarily reflect a lack of sincerity.  When the Millars held the lease, Walter Mauney suspected they had found ample diamonds and had merely failed to report many of them (infra Millars and the Kimberlite Company).  He knew, of course, about the surface concentration of diamonds; but so did John Fuller, who in the 1920s still thought the eroded surface reflected the content of the underlying matrix.  As others, Mauney had invested so much time, money, energy and emotion in the diamond mine that perhaps he had to continue believing in eventual success.  He, himself, probably could not have sorted out his motives and basic intent at this point.

 

[13] “Promoter Visits Mine,” Courier, November 30, 1923, p. 1.  The visitor was identified as “Guy C. Core” of New York City.

 

[14] Pike, Oil & Gas (all minerals) Record 5, 56-57, Lease, Mauney family to A. Rovenger, November 3, 1923.

 

[15] Ibid., 57.

 

[16] “. . . and it is understood that the principal consideration to the parties of the first part [Mauneys, et al.] for this lease is not the cash paid on the signing of this lease, nor the installments of cash payments above referred to, but is the expected One-Eighth (1/8) royalty from the operation and development of the property” (ibid.). 

 

[17] Pike, Misc. Record 5, 131, Escrow Agreement, Walter J. Mauney, as agent, and C. C. Turquette, Trustee, of Texarkana, Texas, April 17, 1925; ibid., 138, Lease of Mine, Mauney family to Turquette, Trustee, April 17, 1925.  Turquette represented himself and other, unnamed investors.  The loan was due within thirty days, as stated in a complicated escrow agreement involving the Mine property, the Pike County Bank, and the Merchants & Planters Bank of Texarkana, Arkansas, the escrow holder.

 

[18] Ibid., 142.

 

[19] Misc. Record 5, 59, Affidavit of W. J. Mauney, November 9, 1945; cf. marginal notation, Lease, April 17, 1925.  The deeds Reverse Index, 1895-1940, “Mauney,” has two entries indicating Turquette returned the two original documents on August 26, 1925.  The documents, themselves, bear no information except the vague marginal notation; apparently, the reverse entries were added in 1945.

 


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