THE COMSTOCK:

ECONOMIC HISTORY

OFMINING

BONANZA

1865-1885

RICHARD LYLE GARNER

COPYRIGHT 2009

RICHARD LYLE GARNER

Resident of Ann Arbor, Mi.

Graduate of:AB Drew University, 1957MA University Of Pittsburgh, 1960PhD University of Michigan, 1970

Web Pages:www.insidemydesk.comwww.insidemyrightbrain.comwww.comstockhistory.com

Email:richlygarner@gmail.com

Select Published Articles and Books:1980 "Silver Production and Entrepreneurial Structure in Eighteenth-Century Mexico,"

Jahrbuch für Geschichte von Staat, Wirtschaft und Gesellschaft Lateinamerikas, 17, 157-185.1985 and William Taylor, eds., Iberian Colonies, New World Societies: Essays in Memory of

Charles Gibson. State College, PA: Privately published.1985 "Price Trends in Eighteenth-Century Mexico," Hispanic American Historical Review,

65:2, 279-326.

1988 "Long-Term Silver Mining Trends in Spanish America: A Comparative Analysis of Peru and Mexico," American Historical Review, 93:4, 889-914.

1990 "Prices and Wages in Eighteenth-Century Mexico," in Lyman Johnson and Enrique Tandeter, eds., Essays on the Price History of Eighteenth-Century Latin America. Albuquerque, NM: University of New Mexico Press, 73-108.

1993 with Spiro Stefanou. Economic Growth and Change in Bourbon Mexico. Gainesville, FL: University Press of Florida.

1997 "Prices and the Economic History of Colonial Mexico," in Alain Musset and Thomas Calvo, eds., Des Indes occidentales á l'Amérique latine: à Jean-Pierre Berthe. 2 vols. Fontenay-aux-Roses (France): ENS Éditions Fontenay/Saint-Cloud, 439-452. Series: Sociétés, Espaces, Temps.

On-Line Essays at www.historydatadesk.com2007 Late Colonial Price Trends in Selected Latin American Cities2007 Mining Trends in the New World 1500-1810.2006 Where Did the Silver Go

Current Project:To Rule Oneself: Self-Government in Antebellum America

i

Preface

This book is an extension of research that I have done for 40 years on the colonial economies of Latin America. In the 1960s I wrote a dissertation on the Mexican mining town of Zacatecas in the eighteenth century. After that I began research on the eighteenth-century Mexico economy in which mining figured prominently. In retirement and living as a “ski bum” at Lake Tahoe I visited the University of Nevada at Reno Library one afternoon out curiosity as to what holdings it had in Latin American colonial history. A random decision to type mining records into the computerized catalog yielded page after page of archival materials housed in Special Collections. That is how my research on the Comstock began. I knew nothing about the Comstock except that many years before I had purchased and skimmed Mark Twain’s Roughing It. Through no fault of Samuel Clemens his writing about the Comstock left no impression. I was preoccupied with other things. As I studied the computer screens, I absorbed by so many references to mining company accounts. For those who are not familiar with Spanish colonial mining, company accounts simply do not exist. Almost all the published research on colonial mining is based on the public record, which is voluminous because mining, although a private enterprise for the most part, were heavily regulated and taxed. Information specifically on mining operations at the company or individual level is seldom found independent of the public record. But according to the catalog the surviving archives contained many company accounts. I promptly made my way to the second floor and the home of Special Collections, introduced myself and thus began what has proven to be an almost serendipitous journey that inheres in this book.

Economic history has many faces. What has interested over my career and what interests me with respect to the Comstock is economic performance. It is well known that very few Comstock companies despite capital inflows in the tens of millions of dollars actually attained a level of profitability that these inflows would suggest. Mining as practiced on the Comstock (and in many colonial silver camps like Zacatecas and Potosí or in the gold rush of California) produced enormous wealth, but the control and disposition of that wealth did not necessarily redound to the community that produced it. From an operational standpoint, mining has a highly local character. The act of extracting and processing ores in the quantities realized on the Comstock requires nothing less than a community. Plants must be built, workers must be housed and feed and regulations must be impose. But the ores that are mined and milled have an international character. They seldom remain in the community except to a modest degree to compensate workers and to pay for imported goods or to underwrite expansion.

ii

Acknowledgements

Many individuals and institutions assisted me in this research. Most of the research was carried out in the large mining archives at Special Collections in the University of Nevada-Reno Library. Robert Blesse and his staff were always amiable and efficient despite the hundreds of requests I submitted in assembling the material for this book. I also want to thank the staff at the Nevada State Library and Archives. My knowledge of the early territorial and state governments was nil when I started this project, and they generously tutored me in how these governments were organized and where I might find pertinent documents in their large archives. The Nevada Historical Society also has important documents concerning the Comstock period including a long run of The Territorial Enterprise and other newspapers. While I made a conscious decision not to base this study on newspaper accounts to the extent that other writers have used them, I am grateful to the staff in assisting with a search of the manuscript records. I owe a debt of gratitude to the staffs of the Bancroft Library at the University of California at Berkeley, the United State Archives in San Bruno, California, and the Huntingdon Library in San Marino, California, for giving me excellent guidance in how to find pertinent materials during visits of no more than a couple of days. I want to pay special tribute to the office staff of the Story County Assessor’s Office in Virginia City, Nevada. They assisted me ably in locating the actual tax ledgers (post-fire 1875) and in explaining how assessments and taxes were levied. Several faculty members at the University of Nevada-Reno with expertise in geological and mining matters generously took time to answer my emails about the Comstock, and while I tried to be a diligent student concerning these matters, I realize that I may have failed the test. This manuscript was written far away from the Comstock in Paris, France. Jean-Jacques and Chantal Bouquier, the landlords of the furnished apartment that I rented, were attentive to what every writer in this day and age needs, access to the Internet, quiet and comfortable conditions, information about the best bakeries, markets and restaurants and above all invitations to join them for occasional apéritifs after too many hours in front of the computer screen. Like my French friends I too had a café – Café des Philosophes on rue Vieille du Temple, 4th Arrondissement – that I walked to most every evening for an espresso and perhaps a repast. All the serveurs and hostesses made my visits so comfortable and pleasant that the I never dreaded the prospect of facing another day of composing, rewriting, calculating or just staring blankly into space. Despite so much support and attention, however, I alone must assume responsibility for the errors in this book.

iii

E-Book

This book is available only on the Internet. I'm not sure that it qualifies precisely as an E-Book. I have formatted the manuscript with Adobe Acrobat. You have two options. You may elect to download the entire manuscript as a pdf file. Or you may decide to download one or more chapter. As pdf files, they cannot be edited but they may be printed.

Full-Manuscript There are 26 chapters plus a bibliography and several appendices. I insist on footnotes – some very long – and in addition I have added Special Appendices at the end of chapters to present certain scanned materials relevant to the contents of the chapters. Each chapter has a number plus a letter, which refers to the file in the download-by-chapter only folder. Each chapter is individually paginated and footnoted. If using Acrobat, you can call up its Navigation Tool to see continuous pagination. The manuscript will appear as two-page format but that can be changed within Acrobat.

Chapter-by-Chapter Separate files for each chapter and other components of the manuscript. They too will appear as two-page format.

This book is free, and everyone is asked to observe profe4ssional courtesies in citing or quoting from it.

THE COMSTOCK [A]

Chapter 1The Nation Perspective in Post-Civil-War America:

Economic Growth, Coinage Questions, Monetary Policy

The quest for precious metals is as old as civilization itself. Its modern phase started with the discoveries of gold and silver after the Spanish Conquest of the New World. From the middle of the sixteenth century into the early nineteenth century Spanish and later Portuguese mines pumped billions of ounces gold and silver (probably between 125,000 and 150,000 tons) into the world economies.1 In the second half of the nineteenth century new discoveries in the western United States added hundreds of millions of ounces to the world supply of gold and silver. Foremost among those states was Nevada. Although mining began there in the 1850s and continues today, its fame rests on a brief but spectacular period from 1865-1885. In that period Nevada produced as much as $400,000,000 in gold and silver, more than a third of all the gold and silver reported in the United States. While mining operations existed in most Nevada counties, a single county, Story, accounted for almost 60 percent of Nevada’s output. Concentrated along a lode known as the Comstock under the shadow of Mt. Davidson, the boom spawned a new and vibrant settlement called Virginia City. In the city under the streets were the richest Comstock veins. One company, known as The Firm, through its two operating subsidiaries – Consolidated Virginia and California Mining – registered two-thirds of all the ore produced along the Comstock. Public pronouncements of untold wealth that could be exploited years and decades into the future, based in large part on The Firm’s success, proved to be vastly overstated. The boom was confined to a few years, perhaps a decade at most; it was over almost as quickly as it began. Mining continues in Nevada more than a century after the Comstock boom and has left an indelible imprint on the state’s economic landscape. Since the Comstock, however, mining has fallen to a lower rank in the state’s economic hierarchy. Without the Comstock it is hard to envision what Nevada’s mining legacy would be.

By all accounts the United States underwent a profound economic change between 1800 and 1900. An agrarian-based society was transformed into an industrial-based society in the course of the century. One set of figures published by Robert Gallman shows that between 1774 and 1909, a long stretch of 135 years, “real gross national product [GNP in 1860 dollars] increased about 175-fold, or an average rate of 3.9 percent per year.” For various short-term GNP estimates between 1859 and 1885 the annual rates range from 2.9 percent to 5.6 percent. If real GNP growth rates could be calculated solely for the period coinciding with the Comstock era (ca 1859-1885) they could fall between 4 and 5 percent a year.2 The decade of the 1880s witnessed 1 Silver registrations are estimated in Richard L. Garner, “Long-Term Silver Mining Trends in Spanish America: A Comparative Analysis of Peru and Mexico,” American Historical Review, 93:4 (1988), p. 898. The late Professor John TePaske, Duke University, prepared a new comprehensive database of colonial gold and silver production in the New World, and the tonnage may be higher than given here. There is no way to capture the volume of gold and silver that escaped royal registration. Estimates range from 10 to 50 percent. Evading the tax collector was not easy but was nonetheless practiced with some skill and success. The database is available on-line at www.historydatadesk.com. 2 An overview appears in Robert Gallman, “Growth and Change in the Long Nineteenth Century” in Stanley Engerman and Robert Gallman, eds., The Long Nineteenth Century, vol. 2 of The Cambridge Economic History of the United States (Cambridge: Cambridge University Press, 2000), 2-6 and Table 1.3,

1

THE COMSTOCK [A]

exceptionally strong economic growth according to another measure: the “real reproducible tangible wealth per head” that rose about 4 percent over the decade.3 The growth in the economy during the second half of the nineteenth century was real and significant, but what was its connection, if any, with the West’s major mineral strikes? To be sure, in simplest terms, the surge in mining of minerals, first in California and then in Nevada, Colorado, Arizona, Montana, etc. added to the national wealth by producing metals that entered the currency stream and by doing business – buying supplies, paying wages, reinvesting profits. More gold (in U.S. dollars) was mined between 1850 and 1900 than the world-wide total mined prior to 1850 and perhaps three-fourths as much silver.4 In the United States alone more than a billion ounces of “fine” gold and silver worth $2 to 3 billion was produced in the second half of the nineteenth century.5 Not all of this was coined, and part of it was exported. In other words the American consumer did not find his pockets jingling or wallets bulging with several billion dollars more in coins or notes. Market conditions, international exchange and government policy all influenced how a billion new ounces of gold and silver were allotted and utilized within the economy. But the fact remained that since a share of the new mineral wealth was coined or traded the effect was to replenish and expand the money stock. Indeed the money stock nearly tripled in the second half of the nineteenth century. According to Friedman and Schwartz (in their later Monetary Statistics of the United States) the money National Coinage and Monetary Policy stock in terms of a “consolidated total” that included both currency in the public’s hands plus commercial-bank deposits, all seasonally adjusted, was about 1.29 billion dollars in the 1860s. A decade later it had reached 1.65 billion dollars, although in 1875 it actually exceeded 1.7 billion dollars. Finally in the 1880s it doubled to 3.3 billion dollars. With respect to publicly held currency its pattern differed from that of the total money stock. In the mid-1860s it averaged about 600 million dollars and then declined to about 550 million dollars in the mid-1870s. In the early 1880s it jumped sharply to almost 900 million dollars before dropping back to slightly under 800 million dollars.6 Publicly held currency was directly dependent on monetary policy, and its decline in the mid 1870s was attributable to the Act of 1873 and its rise in the 1880s to the resumption laws of 1878 and 1879. Perhaps more importantly even as the western mining boom was unfolding currency was occupying an increasingly smaller niche within the total circulating medium, a trend that would continue into the twentieth century and would ultimately reduce coins to a minor role in the United States economy. But for many citizens and especially for westerners who were extracting millions of tons of gold and silver ore each year, minting coins still represented the historically-sound standard by which to bolster the national currency.

especially note following table. Several Gallman publications with more extensive data analysis are listed in the note.3 See also by Friedman and Schwartz in Monetary History of the United States, 93, from Historical Statistics of the United States, Colonial Times to 1957 (Washington DC, Bureau of the Census, 1960), Series K-1 and K-4, 276,4 These figures are from many different sources and do not always agree. The reason that silver did not exceed pre-1850 totals was the enormous output of Spanish-American silver between 1500 and 1800.5 These are estimates based on data from Laughlin, History of Bimetallism in the United States, Appendix 1.6 Milton Friedman and Anna Schwartz, Monetary Statistics of the United States. Estimates, Sources, Methods (New York: National Bureau of Economic Research and Columbia University Press, 1970), 61-63.

2

THE COMSTOCK [A]

For the average reader monetary histories can be daunting. Citizens spend dollars every day but have little understanding of or interest in how money is created or how it is valued. In nineteenth-century America the money stock consisted mainly of gold and silver coins along with some state and national bank notes. Paper currency then was less widely used and trusted than today. Since notes could be discounted at the time of a purchase or transfer, those holding them in effect paid more. Coins were preferred to notes, but also gold coins were preferred to silver. From time to time prior to the 1870s the federal government had minted silver dollars, and nearly all so-called subsidiary coins of one dollar or smaller were minted from silver. According to Milton Friedman and Anna Schwartz in A Monetary History of the United States, however, “the silver dollar had not been in circulation since 1836, and was an unknown coin to Americans” in the middle decades of the nineteenth century.7 This did not mean that silver dollars ceased to be coined; rather they ceased to circulate. They were stored in federal vaults or used in foreign transactions. The main reason for this was that the market price of silver was higher than its mint price. In other words one would do better to sell silver on the open market than to sell it to the federal mint. Not surprisingly, as silver output grew in the second half of the nineteenth century so too did pressure grow for the national government to increase the mintage of silver.

Two monetary historians – W. A. Shaw and J. Lawrence Laughlin – from the late nineteenth century collected and published figures on gold and silver coinage at the federal mint.8 Their series, to be discussed below, are identical with regard to the total coinage. Laughlin, however, distinguished between silver-dollar coins and subsidiary silver coins: half and quarter dollars, dimes and half dimes (today’s nickel) and other minor coins. The importance of this distinction is that while silver dollars could be legally coined (“free coinage” according Laughlin) between 1793 and 1873, only 8 percent ($8 million) of the silver coined was in dollars and the remainder in subsidiary coins. In addition his data revealed that no “silver dollars” were minted between 1806 and 1835 and only slightly more than 6.5 million dollars worth were minted between 1835 and 1873. The absence of silver dollars in day-to-day business apparently did not create any serious currency shortages.9 In light of the absence of circulating silver dollars Congress in 1873 passed with little opposition an act to “demonetize” silver dollars. That meant that the US Mint was not permitted either on private or public accounts to coin any silver dollars.10 Europe had given up on bimetallism, and now the United States joined the fold. Silver coins under one dollar could be minted as well as something called silver trading dollars to be used for transactions abroad, mainly in the Far East.11 As noted 7 Milton Friedman and Anna Schwartz, A Monetary History of the United States 1867-1960 (Princeton, NJ: Princeton University Press, 1963), 114. Excerpts of the various currency laws were published in J. Laurence Laughlin, The History Bimetallism in the United States (New York: D. Appleton and Company, 1900), 300-311. 8 W. A. Shaw, The History of Currency 1252 to 1984… (London: Wilson & Milne, 1900), 265-266 and Laughlin, History Bimetallism in the United States, 338-340.9 Shaw, History of Currency, 260. Friedman and Schwartz’ data on money stocks tend to bear out this observation by Shaw. 10 Relevant excerpts of the act appear in Laughlin, History of Bimetallism in the United States, 304-305. 11 Friedman and Schwartz, A Monetary History of the United States 1867-1960, 114-115. Friedman and Schwartz discuss the role of silver trading dollars in the US economy in footnote 37, pp. 113-114. In

3

THE COMSTOCK [A]

above, the difference between the market and coin value of silver made the silver dollar an unpopular choice.

Then came a reversal in national policy with the passage of the Bland-Allison Act in 1878. Ironically the decade of bimetallism came after the boom in Nevada and Virginia City. The accompanying charts show that up to 1878 silver coinage except for subsidiary coins was manifestly unimportant in the national currency. After 1878 with the resumption of coinage of silver through 1890 the volume of silver currency shot up more than ten-fold from a few million dollars per year to tens of million. In a few of those years silver coinage exceeded gold coinage. The “goldbugs” mounted a successful attack on the Sherman Act, which was repealed shortly after it was passed. The nation virtually abandoned bimetallism again, even though the “silverites” continued to press for the “free and unlimited coinage of silver” and a restoration of bimetallism. Over the long term despite great silver discoveries in Nevada, Colorado and other western states, discoveries that fired the imagination of Mark Twain and opened the wallets of San Francisco speculators, silver played second fiddle to gold. Silver only accounted for 685 million dollars or 28 percent of a total coinage of 2.4 billion dollars from 1793 to 1895.

FIGURE 1COINAGE IN THE UNITED STATES MINTS, 1793-1895

Gold Silver TotalDollars $1,755,813,763.00. $685,023,431.00 $2,440,843,544.00

% 71.93 28.07 100.00Growth Rate /Year 8.25% 5.11% 6.69%

R2 .76 .68 .85

Silver producers and their supporters complained that by the “Crime of 1873” the gold advocates had robbed the industry and the nation of a new and important source of wealth that could stimulate growth and ensure prosperity. Silver proponents under the leadership of Congressman Richard Bland from Missouri pushed through Congress the Bland-Allison Act in 1878 (and a revision in 1879). This Act restored bimetallism to the nation’s currency system. While it did not allow for the “free and unlimited” coinage of silver, as some had demanded, it did authorize and direct the Secretary of the Treasury to purchase not less than 2 million dollars worth of silver bullion and not more than 4 million dollars per month. If carried out every month at the maximum level the US Treasury would buy enough silver to mint just under 50 million silver dollars. In fact silver coinage in the decade following Bland-Allison was about 30 million dollars annually, although the Treasury may well have bought more silver than it had coined. From the bullion the US Mint was authorized to coin silver dollars of 371.25 grains pure silver (412.50 grains standard silver). These silver dollars could circulate as “legal tender, at their nominal value, for all debts and dues, public and private” unless stated otherwise in legal contracts.12 The law did not permit owners of silver to convert their bullion directly into coin. Rather they sold their bullion to the Treasury at the market price of

California trading dollars helped to facilitate commercial transactions between the West Coast and the Far East. In regions outside California minor coins could be scarce, and currency speculators and money brokers found ways to inject trading dollars into local economies. 12 Laughlin, History of Bimetallism in the United States, 307-308.

4

THE COMSTOCK [A]

silver. The market price of silver dropped sharply as the output of silver rose after 1873. Monetary policy changes may also have contributed to the declining market price. From 1834 through 1873 the average market price for pure silver of 371.25 grains was $1.0236; a year late the price had declined to $0.9898 and by 1886 to $0.7690.13 That was a 25-percent decrease in a dozen years. On average during these years the mint paid about 90 cents for an ounce of silver and then returned a coin marked “one dollar” even though the silver was worth about 10 percent less than that. In many transactions the silver dollar was discounted to take into account the difference between the market and nominal values of the coin. Also because of the weight of silver dollars, the law also permitted the government to issue silver certificates that traded like silver dollars with some additional restrictions. Finally the law permitted the continued coinage of subsidiary coins (under $1.00). An important underlying consideration is that the law fixed the weights of gold and silver coins and therefore the ratios between the two metals. Thus, resumption of coinage of silver placed the United States squarely in the camp of bimetallism. In short, producers had won a new outlet for the white metal but at some cost – they sold bullion for less than the face value of the silver dollar, and they received coins that the market deemed to be worth less than the stated value with the result that silver coins and certificates might be discounted in commercial transactions.

FIGURE 2COINAGE IN THE UNITED STATES MINTS, 1793-1895

Notes: Red=Total Coinage; Blue=Gold Coinage; Orange=Silver Coinage.

13 Laughlin, History of Bimetallism in the United States, 297.

5

17941797

18001803

18061809

18121815

18181821

18241827

18301833

18361839

18421845

18481851

18541857

18601863

18661869

18721875

18781881

18841887

18901893

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

$140,000,000

R² = 0.54

R² = 0.46

R² = 0.65

Years

Dol

lars

THE COMSTOCK [A]

FIGURE 3COINAGE IN THE UNITED STATES MINTS, 1793-1895

(SEMI-LOG)

Notes: Y-Scale is semi-log.

Mining of precious metals, in particular silver, did not stop because Congress outlawed the minting of silver dollars. Figure 2 shows the nominal yearly figures for gold, silver and total, while Figure 3 shows the annual total on a logarithmic scale. The purpose of Figure 3 is to illustrate that in relative terms coinage climbed steadily until the third quarter when it reached a plateau before moving higher again in the fourth quarter. It is noteworthy, of course, that the third quarter with such high silver production was also the quarter of static mintage output. Figure 2 illustrates quite clearly that total coinage had three sharp peaks between 1850 and 1880. The first around 1850 coincides with gold discoveries in California, the second around 1860 coincides with further discoveries of gold and silver in the western states or territories like Nevada and finally the third around 1880 coincides with the passage of Bland-Allison and in the waning period of the Comstock bonanza. With the first two peaks coinage shot up and then fell back over a two- to four-year cycle. Silver had an inauspicious role in the first two run-ups for the reason cited above – silver was not a highly valued coin. Those peaks were largely a function of gold production. The third peak is different in that it was reached after a decade in which coinage climbed somewhat irregularly from 20 million dollars per year to 120 million dollars before declining to about half the high. In this run-up post-1878 silver played a much larger role. If unacquainted with silver coins prior to 1880, Americans become fully acquainted with them after 1880. After Bland-Addison the U. S. Treasury purchased gold and silver to be minted into coins; prior to that it bought primarily gold. Between 1873 and 1878, however, Congress enacted almost annually laws that authorized the U. S. Treasury to purchase a quantity of silver to replace fractional coins and paper notes. That the Treasury enforced these provisions became evident in the coinage series from 1875 to 1878. The quantity of subsidiary silver coins (no silver dollars were coined) rose from 5 to 6 million dollars to 20 to 25 million

6

17941797

18001803

18061809

18121815

18181821

18241827

18301833

18361839

18421845

18481851

18541857

18601863

18661869

18721875

18781881

18841887

18901893

1

10

100

1000

10000

100000

1000000

10000000

100000000

1000000000

Years

Dol

lars

- S

emi-

Log

THE COMSTOCK [A]

dollars.14 That would not absorb all the silver being produced. The question arises: what happened to all the silver that was mined before 1878? The answer is that tens of millions of dollars in silver were exported, mainly to Europe but also to Asia. In other words silver bullion had value in other commercial arenas even though it could not circulate on par with gold in the United States.15 Mining, especially the mining of silver, would have ceased without an outlet for bullion. Although the transactions were complex and probably little understood by the average miner, a mechanism had evolved for the disposition of gold and silver, albeit different for each metal.

14 Laughlin, History of Bimetallism in the United States, 304-306, 339.15 Currency movements cannot be fully understood in the absence of discussions about macroeconomic matters such as price, international trade and seasonal and cyclical factors. See Friedman and Schwartz, Monetary History of the United States, 113-122.

7

THE COMSTOCK [B]

Chapter 2The Nevada Perspective in Post-Civil-War America:

Overview of Nevada Mining, Geology of Comstock Lode

The discovery of ore during the late 1850s in the western part of the Idaho territory laid the foundation for America’s second mining boom. The first boom, a decade earlier, was the California gold rush, and the second was the Comstock, which yielded up both gold and silver. President James Buchanan had signed the bill that created the Nevada Territory in March 1861. By 1863 with 10,000 to 15,000 residents Nevadans voted overwhelmingly for statehood in spite of the fact that the Congress failed to pass an enabling act. A state constitution was written in late 1863, but it failed to win ratification. Faced with an uncertain presidential election in 1864 Abraham Lincoln and the Republicans urged several western territories to apply for statehood. Only Nevada completed the process. A new constitution was approved in September 1864, and Nevada officially entered the Union in October 1864 in time to participate in the November presidential election and the ratification of the Thirteenth Amendment.1 It is unlikely, of course, that Nevada’s rapid progress toward statehood would have occurred without the mining boom no matter how compelling the election calculus might have been.

By the middle of the 1860s when the territory become a state hundreds of mining claims had been registered across the state. In his 1865 Report to the 3rd Session of the Legislature (1867) the Surveyor-General (then responsible for gathering information about mining) made the following observations:

From this discovery [i. e. Comstock] resulted the marvelous growth of Nevada. Immediately the lode was claimed for miles; an unparalleled excitement followed, and miners and capitalists came in great numbers to reap a share of the reported wealth. The few hardy prospectors, exploring the mountains for hidden wealth, soon counted their neighbors by thousands, soon walked along miles of busy streets called into existence by the throng of adventurers, and soon prospectors were ransacking almost every part of the State (at present) of Nevada in search of silver lodes.2

Nevada had other noteworthy discoveries during the 1850s and 1860s but none comparable to the Comstock. The Surveyor-General’s 1866 Report presented to the same 3rd Session (1867) of the Legislature identified more than 40 operations with claims along the Comstock. Although only about half of the claims were productive, they included the well-known companies of Gould & Curry, Savage, Hale & Norcross, Yellow Jacket and Crown Point, all of which would participate in the Comstock boom of the next decade.3

1 James W. Hulse, The Silver State, Nevada’s Heritage Reinterpreted, 2nd edition (Reno & Las Vegas: University of Nevada Press, 1998), 74-84.2 “Annual Report of the Surveyor-General of the State of Nevada for the Year 1865” in Journal of the Senate and Appendix, 3rd Legislative Session (1867), 20.3 “Annual Report of the Surveyor-General of the State of Nevada for the Year 1866” in Journal of the Senate and Appendix, 3rd Legislative Session (1867), a fold-out before p. 29. Also a list of mills in Story and Lyon Counties.

1

THE COMSTOCK [B]

From the earliest days of statehood the mining industry figured prominently in government planning at the state and the local level. For a decade or more the most prominent mining official was the Mineralogist. The first Mineralogist was appointed for the biennium, 1864-1865, even though the Office of the Mineralogist was not established by law until 1866. In 1869 the Legislature changed the office from appointive to elective, effective in 1871. As a cost-cutting measure it abolished the office in 1877, effective 1878.4 Once the Mineralogist was appointed he instead of the Surveyor-General was responsible for keeping the Legislature informed about the mining industry. He collected data on revenues, costs and yields, on future discoveries, on new technologies and on special circumstances affecting individual mining districts. In addition to the Mineralogist’s reports, the Controller, as Nevada’s chief auditor, collected data on ore production. Each quarter he received reports and revenues from county assessors who were directly responsible for assessing and collecting taxes on mineral output within their counties. The quarterly report known as an “Abstract Statement” contained information on ore tonnage, yields, costs and net value for operations of individual companies. That information was then published for each county in the Controller’s biennial reports to the Legislature. His statistics had a more consistent and systematic character than the Mineralogist’s statistics, and therefore they have become the basis for the analysis of the numeric series on ore production in the discussion that follows.5

FIGURE 1TONS BY PERCENTAGES BY COUNTY, 1867-1885

Churchill0.03%

Elko1.06%

Esmeralda3.84%

Eureka8.87%

Humboldt2.06%

Lander1.74%

Lincoln4.55%

Lyon12.21%

Nye1.79%O rmsby

1.77%

Story58.50%

Washoe0.37%

White Pine3.22%

A further word about Nevada’s tax system may be useful in regard to these data. How to raise enough revenue to launch the new state and in particular to build the infrastructure across such an arid and rugged terrain was a continuing challenge for local and state government. Not surprisingly during the boom years mining assessments added substantial funds to government coffers. These receipts were allotted by formula to state 4 Statutes, 1866, State of Nevada, Chapter CVI, 206 and Statutes, 1877, Chapter XIX, 59.5 The Biennial Reports (actually two Annual Reports) of the Controller appear in the Appendices of the Legislative Reports from the 3rd Legislative Session (1867) through the 13th Legislative Session (1887). I have used the Reports on file at the Nevada State Archives and Library.

2

THE COMSTOCK [B]

and county governments. In addition both the county and the municipality assessed the value of property owned by mining and milling companies. None of the revenue from the property tax, so far as I could determine, entered the state treasury. Given the magnitude of the boom on the Comstock the governments of Virginia City, Story County and Nevada earned hundreds of thousands of dollars per year from the mining assessments and property taxes. They may also have had substantial expenses with in-migration of tens of thousands. And then in a matter of a few years, as mining operations fell on hard times and both mining and property assessments plummeted, the public coffers were drained and not easily replenished. Fewer people, of course, required fewer services, but the remaining revenues were barely sufficient to maintain minimal public services and cover whatever debt service remained from the boom years.

FIGURE 2TONS, STATE & STORY COUNTY, 1867-1885

0

200000

400000

600000

800000

1000000

1200000

Nevada

Story

Two components of the quarterly assessment statements - total tons and values – provide the foundation for the construction of the database on ore production at the Comstock and in Nevada.6 Across the state the reported tonnage of extracted ore plus tailings between 1867 (the first year with usable data) and 1885 was 11.6 million for an average of 610,000 tons each year. Not surprisingly, almost 60 percent of the total

6 In following chapters I will examine the mining assessments in greater detail. Here I am interested in presenting some totals for individual counties based upon reports to the State Controller. The Controllers’ annual reports to the biennial Legislative sessions were broken down into quarters. The last or eighth quarter of a biennium (October-December) was not included because the data were not yet available for the Legislative session that began in January of the next year. The final quarter of the previous biennium would be the first quarter of the next biennial report. For example, for the 5 th Biennial Legislative Session, starting in January 1871, the quarterly reports ran from the fourth quarter of 1868 through the third quarter of 1870. In order to create annual figures, I have reorganized all quarterly reports into conventional twelve-month, January-to-December calendar years. Therefore, I could not use the totals from the Controllers’ Reports. Some of the Controllers’ Reports had inaccurate quarterly totals so that all the figures from the quarterly totals to the annual totals have been recalculated. My series from the Controllers’ Reports will not agree with other published series based also on the Controllers’ Reports.

3

THE COMSTOCK [B]

tonnage came from Story County. The next three largest county producers were Lyon (next to Story), Eureka and Lincoln, but their total share was barely half of Story’s. Figure 1 shows the percentage of ore extracted in tons for each county during the twenty years. Extracted ore contained a mixture of gold and silver, and while the proportions varied from county to county and mine to mine, a common ratio was 40 percent gold to 60 percent silver. About half of the total tonnage - between 800,000 and 900,000 tons per year – was extracted between 1872 and 1878, which, as Figure 2 illustrates, coincided more or less with the bonanza on the Comstock.7 Tonnage figures reveal a more dynamic state-wide mining industry than might be deduced from percentages alone. In the late 1860s nearly all the recorded tons came from Story County. As other counties reported more and more discoveries, however, Story’s share dropped below 60 percent by 1873. The Comstock bonanza pushed Story’s percentage back up over 60 percent through 1877 and as high as 73 percent in 1876. From 1878 through 1885 Story’s share fell again and more sharply than before. It reached a low of 27 percent in 1881 before recovering somewhat to 53 percent by 1885. As important as Story County was to Nevada mining from 1865 to 1885, it was not the only county to post impressive discoveries and yields. Although Story County was never seriously challenged in terms of total tonnage, its success combined with that of several other counties served to ignite an enthusiasm among public officials and private investors for a bright, long future in mining. Just as the Comstock boom was short-lived so too were booms in other areas. The rapid ascent and the equally rapid descent of Comstock production in the 1870s might well have been ample warning of mining’s vicissitudes, but they went unheeded in part because other districts showed promise even to the extent of not just supplementing but supplanting the Comstock. Of course mining booms have always had a way of distorting the future.

Tonnage of ore extracted indicated the size of the mineral field but did indicate the quality of the ore. The value of ore per ton was recorded in the company’s ledgers, in the assessor’s ledgers and in the mint’s ledgers. Indeed the tax collected by various agencies was levied in terms of value per ton.8 The more gold and silver to be extracted from a ton of ore the more value that ton had. The range was huge, from a hundred dollars or more to a few dollars per ton. If the ore body was simply “streaked” with gold and silver, then it was worth far less per ton. When Figure 2 and Figure 4 are compared, the difference is immediately apparent. Tonnage remains at 800,000 or above per year from 1872 through 1878, but value climbs from $25,000,000 to $45,000,000 per year in the same period. What accounts for the upswing in value as well as tonnage in the middle 1870s was the discovery, primarily under Virginia City, of ore bodies that were measured in hundreds of cubic feet and were packed with gold and silver. Once these bodies were extracted and no others like them were found, the Comstock bonanza came to an end. Figure 5 is based on an average yield per ton for all Nevada districts. From 1875 through 1778 yield per ton exceeded $40. For the remaining years it fluctuated between $15 and $40 per ton. Between 1866 and 1885 the nearly 12 million tons equaled about $400

7 It should be pointed out that to get this much ore required removal of great quantities of dirt, rock, clay, etc. to reach the veins.8 The law contains a complicated formula that will be discussed in chapters ahead. For the text of the law, see M. S. Bonnifield and T. W. Healy, compilers, The Compiled Laws of the State of Nevada Embracing Statutes of 1861 to 1873, Inclusive, 2 vols (Carson City, Charles A. V. Putnam, 1873), Chapter C, Section 3245, Section 1.

4

THE COMSTOCK [B]

million for an average of just under $20 million per year. If converted to current dollars the output would be between $7 and $8 billion dollars. Nevada’s production curve clearly shows the role played by rising and falling values per ton.

FIGURE 3PERCENTAGE OF TONS IN STORY & OTHER COUNTIES

0%

20%

40%

60%

80%

100%

120%

Other

Story

It is important to recall that these were the values reported by the companies based on an inflated formula of the worth of silver. From 1873 to 1878 silver could not be coined. Most of the silver ore presented to the mint was returned as silver bullion and then exported. For accounting purposes, however, it was entered into the company accounts at $1.2929 per ounce. That was about 25 percent more than it was worth on the open market. Paradoxically the abundant Comstock discoveries had driven silver prices below $1.00 per ounce and as low as 89 cents per ounce after several decades of fluctuating narrowly between 1 dollar and 1 dollar and 5 cents. Grant Smith in his well-regarded history of the Comstock discounted the value of silver from the standard $1.2929 by more than 11 percent to about $1.14 per ounce so that his total values were less than those reported by the companies and the Controller. Although the value of the ore in the coin could differ from the value of the ore on the market, Smith’s discount was still 10 to 15 percent above the market value in any given year.9 Still for this analysis either the reported or the discounted figures serve my purposes, that is, to evaluate the trend over the two decades. If we focus on the 15 years from 1870 to 1885, we can easily observe that in the last year ore production in both Nevada and Story County had fallen below what it was in the initial year. If we accept 1877-1878 as the turning point, we can calculate that ore output rose by 14 percent per year from 1870 through 1877 across Nevada and by 19 percent per year in Story County. The decline from 1878 through 1885

9 Market prices reported in Laughlin, The History Bimetallism in the United States, 297. Smith’s recalculations appear in The History of the Comstock Lode, 1850-1997, (Reno, NV: Nevada Bureau of Mines and Geology with University of Nevada Press, 1946/1998), 260-261. In time, as the market value of silver declined, the ledgers of Virginia and California reduced the standard formula to about $1.21 per ounce. Of course, that was still considerably above the market value.

5

THE COMSTOCK [B]

was even greater for each component: 19 percent for Nevada and 22 percent for Story.10

Such rates in either direction were unsustainable. But the magnitude, especially on the upside, suggests why so much euphoria existed among public officials and private investors. Ore bonanzas had a way of inspiring hyperbole. Even the famous nineteenth-century German engineer, Baron von Richthofen, in a report written about the Comstock in the mid-1860s, certainly bolstered that euphoria. Even though he was careful to dampen enthusiasm about the continuing discovery of very rich ore bodies, like those near the surface of the Comstock, he did conclude that “the amount of nearly fifty million dollars which had been extracted from the Comstock lode is but a small proportion of the amount of silver awaiting future extraction, in the virgin from the lowest levels explored down to indefinite depths….”11 The State Mineralogist reprinted a summary of Richthofen's study in his 1875 Report to the State Legislature at the beginning of the Lode’s biggest bonanza, and two years later, well into the bonanza, he told the next legislative session that “the supply of ore to be obtained from the Comstock lode is almost inexhaustible. Never before were there more encouraging prospects for the future. Never before was there more confidence felt in the permanency of the mines….”12 Within a year the bonanza peaked and over the next seven years it vanished. The decline was swift, like air escaping a balloon, and while Nevada and even Story County would enjoy some minor bonanzas over the next 100 years (a topic for another essay), the bonanza of the 1870s remained unique and the subsequent history of the Comstock Lode was mainly filled with borrascas (storms, squalls literally, downturns, failures, pitfalls).

FIGURE 4ORE VALUE, STATE & STORY COUNTY, 1866-1885

0

10000000

20000000

30000000

40000000

50000000

60000000

1865 1870 1875 1880 1885 1890

Dollars

Nevada Value

Story Value

Figure 4 reveals unmistakably that Story County’s production curve began to decline one year ahead of the Nevada’s production curve. Story County peaked in 1876 at

10 These rates were calculated by a simple linear regression. R2-values were .69 to .83.11 “Biennial Report of the State Mineralogist for the State of Nevada in the Years of 1873 and 1874,” in Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 91-101, quote from 101.12 “Biennial Report of the State Mineralogist for the State of Nevada in the Years of 1873 and 1874” in Appendix to Journals of Senate and Assembly, 8th Legislative Session, 1877, 120.

6

THE COMSTOCK [B]

$38.0 million while Nevada peaked the following year at $47 million. But from 1876 to 1877 Story’s decline was a modest 2.6 percent. This did not set off any alarms in part because in previous years production had surged 55.2 percent (1871), 79.4 percent (1873) and 46.2 percent (1876). Overriding any serious concern for the Comstock was the fact that the State as a whole had posted a rise in output of 2.7 between 1876 and 1877. But the small decrease in 1877 presaged the end of the boom. Those rich strikes from 1875 to 1877 were not duplicated even as companies sunk deeper shafts and cut longer tunnels. From 1777 to 1881 output in Story plummeted: 44.9, 63.2, 43.4 and 65.7 percent respectively. For the next four years (1881-1885) mining in Story showed small gains, but they hardly signaled a full-scale recovery. The value of ore fell from $38.0 million in 1876 to $3.0 in 1885, even after four years of rising output. Nevada’s premier mining center was merely a shadow of its mid-1870s self. And in time the ore curve for Nevada followed Story’s path: from $47.0 million to $6.8 million. As Story County slid from 1876 to 1881, other Nevada counties recorded notable advances in ore output in percentage terms. In absolute terms, however, they could not compensate for what was lost in Story and lift Nevada mining from depression into prosperity again.13

FIGURE 5NEVADA AVERAGE VALUE PER TON, 1867-1885

33.6631.1230.41

37.75

27.3924.94

37.7835.28

42.72

53.2851.39

40.48

27.25

21.9921.6320.6518.66

16.0115.06

0.00

10.00

20.00

30.00

40.00

50.00

60.00

The fruits of the bonanza along the Comstock were not shared by all the mining and refining companies. Through mining-assessment documents we can refine the Comstock database to show how much each company reported annually from 1875 to 1885 over and above what was reported to stockholders or publicized by speculators. For now, let me focus on a single year, 1876, when the Comstock produced ore worth just under $40 million. About two-dozen firms were recorded as paying assessments on ore from the mines and tailings. The two principal mining districts in Story County were

13 County figures from various legislative reports compiled for each Biennial Legislative Session. The calculations are by the author.

7

THE COMSTOCK [B]

Virginia City proper and Gold Hill, just south of the county seat. The biggest producers of ore were in the heart of the city. A half dozen shafts for removing the ore were located between D and H Streets. The total reported ore, as certified by the County Assessor, was $38,038,240.80. This number turns out to be very close to the figure, $38,038,145.76, reported by the State Controller to the Legislature in 1877. More than 79 percent of the ore was registered by two Virginia City companies, Consolidated Virginia and California, which were the principal mining properties of a business conglomerate known as the Firm, under the control of John Mackay, James Fair, William O’Brien and J. D. Flood. In addition to their mining properties this quartet had invested in milling, logging and other local businesses that gave them virtual control over the Comstock and the County’s economy for a decade at least. Some referred to them as the “owners” of the Comstock. The Firm certainly made money from mining, and its mines were among the few that paid dividends instead of imposing assessments. Accounting for more than $30 million of the $38 million recorded by the County Assessor, The Firm spent under $10 million for extracting, transporting and refining the ore plus taxes collected by the County and State. Other costs, operational and non-operational, and a more precise return on investment can be teased from the company’s extensive records. These mines made money because their yields of ore per ton were about $110. No other company even approached such yields. Even more telling was the fact that the Firm accounted for 65 percent of the gold and silver reported in 1876. The Firm obviously had the richest ore bodies and may well have had the most efficient and profitable operations in Nevada or along the Comstock. It was the best year in the history of the Comstock and the final year of the Comstock bonanza. After a decade and a half in which new discoveries saved the Comstock from demise, the Lode’s treasure, deemed to be inexhaustible, was found to be finite. It was truly the beginning of the end.14

The western mining boom in the second half of the nineteenth century caught the attention of the American public and suffused the American imagination. Not only among those who went west in search of fame and fortune, but among those who dreamed about fame and fortune. Perhaps given the level of government corruption and economic discontent in the wake of the Civil War another “gold rush” offered a welcome diversion. For Nevada, however, the Comstock was more than a diversion. Mining was the economic backbone of the new state that was wrestling with how to finance, maintain and expand the public infrastructure. Of the $400 million worth of ore recorded between 1865 and 1885 probably 60 percent came from mines along the Comstock. Based on existing state and county mining taxes this yielded several million dollars for the public coffers. More to the point, however, almost half of the $400 million was extracted during a few years of the middle 1870s. While dozens of mining companies operated along and in the vicinity of the Comstock, a handful, mainly working under Virginia City, pushed output to the mid-decade’s unprecedented levels. When they exhausted their diggings,

14 Specifically for Story County in 1876 some of the data were drawn directly from the assessment ledgers in the vault of the Story County Assessor’s Office and the rest from the microfilm copies of the assessment ledgers on file in Special Collections, University of Nevada, Reno, Library under The County Microfilm Project, Story County, ST66. In addition the Nevada State Bureau of Mines published “Nevada’s Metal and Mineral Production (1859-1940, Inclusive” in a 1943 issue of the University of Nevada Bulletin. The compilers, Bertrand Couch and Jay Carpenter, used various sources including the Controller’s Reports to assemble these series for each county.

8

THE COMSTOCK [B]

they reduced or terminated their operations, and more importantly they were not or perhaps more accurately could not be replaced. Shafts were pushed deeper and tunnels further but without success. The buoyant outlook of the first half of the 1870s turned into bitter accusations against speculators, bankers and investors, always described as outsiders, had drained Nevada of its natural wealth for their own selfish ventures elsewhere. Seldom in the long history of New World mining did the camps or their localities become long-term beneficiaries of the mineral wealth that they produced, and the Comstock would not be the exception.

FIGURE 6

PERCENTAGE OF ORE BY COMSTOCK COMPANIES, 1876

43.7906%

35.2299%

7.4164% 6.2750%

2.3817% 2.2519% 1.2760% 1.3785%

0.0000%

5.0000%

10.0000%

15.0000%

20.0000%

25.0000%

30.0000%

35.0000%

40.0000%

45.0000%

50.0000%

The Comstock era “officially” began in the spring of 1859. In the upper region of the Gold Cañon (where Gold Hill would soon be founded) placer miners dug into the top of the vein that would constitute the southern branch of the Comstock Lode, and some weeks later a mile north at the “Ophir Diggings” where the future Virginia City would be founded another group of placer miners dug into the same vein. Much controversy surrounds who deserves the credit for discovering or locating the Lode and when that occurred. For nearly a decade after 1850 prospectors for gold had worked the streams and outcroppings between the Carson River (somewhat beyond the Lode’s southern boundary) and the Ophir Diggings. The area was streaked with veins of gold. While working these veins some prospectors might have actually tapped into the Comstock Lode without knowing that they had done so. In any event working these veins did not lead to any rich deposits until 1859. Even the Gold Hill discoveries, in the words of Grant

9

THE COMSTOCK [B]

Smith, “created little excitement”.15 The difference, it appears, was the discovery of silver with the gold on the northern end of the Comstock Lode. In the course of constructing a trench 6 to 12 inches deep to reach the gold the claimants had to discard heavy blue sand. Placer miners were familiar with black sand but not blue sand. A few weeks after the initial discoveries assays from Ophir and its companion claims, Mexican and Central, showed that the blue sand was rich in silver. The effect of this combination of gold and silver was to push the yields per ton of ore from tens of dollars to hundreds of dollars. As the news of the Ophir assays spread the Comstock experienced its first real “rush”. Although estimated in the thousands, mainly from California, how many actually joined the so-called Washoe rush cannot be verified. Apparently many more came than stayed. The placer miners complained that there was no “ground worth having” and the quartz miners complained that the best mines were “already located”.16 Those who stayed had to endure a harsh winter with few amenities. Winter in the Nevada Sierras was nothing like winter in the foothills of the California Sierras. Despite complaints of hardships the new arrivals during the initial rush staked out hundreds if not thousands of claims in an area of no more than 75 to 100 square miles. It would be an exaggeration to say that every square inch of the Comstock and the region surrounding it was claimed, and yet the truth was that any land with even the slightest evidence of vein matter was staked.17 After a hiatus during the winter 1859-1860 the rush resumed in the summer of 1860, again mainly from California. Prospecting had yielded ample rewards, and the Comstock according to the 1860 census had a count of over 3,000.18 The Comstock was for real even if the vast majority of the claims proved to be barren.

From the earliest years Nevada mining was closely linked to California. In the first place, as the home of the first western mining boom, California had a pool of experienced miners who began to see more opportunities in Nevada than California. What they had learned about mining in California, however, was barely applicable in Nevada. In the California gold fields miners depended on placer mining. In ancient times “placers” referred to both surface and underground deposits, but in the United States they were defined legally as alluvial deposits of sand, gravel, clay and other materials on the surface and in or under the river beds that could be dredged and washed to flush out valuable minerals like gold. California was not without underground or lode mining. In the Alleghany (CA) Mining District, for example, 18 tunnel mines were said to be operating profitably in 1858. The Rainbow Mine was apparently the first to find a gold vein below the lava cap. According to a 1932 United States Interior

15 Smith, The Comstock Lode, 6.16 Smith, The Comstock Lode, 19.17 Smith declared that “First and last over 16,000 claims located in the Comstock region.” He did not provide a source and did not explain if it covered just the first year of the Comstock or its entire history. The Comstock Lode, 19-20.18 Roland James, The Roar and the Silence, A History of Virginia City and the Comstock Lode (Reno & Las Vegas, NV: University of Nevada Press, 1998), 34-35.

Illustration 1: Comstock Discovery

10

THE COMSTOCK [B]

Department Report, recounting operations there, the “favorable opportunities for discoveries beneath the lava were offered by tunnels that crosscut the upper part of the bedrock in order to reach the gravel channels,” and the “vein was cut in the gravel tunnel 2,000 feet from the portal, and an incline was sunk on the vein”. Rich ores were harvested until the mine was flooded soon after the discovery. The mine was marginally operative until the 1880s when some new discoveries were made. In the same report the authors remarked that lode mining “proceeded in a rather desultory fashion.” They concluded that this was the result of the way in which the ore deposits were arranged. “A shoot of enormously rich high-grade ore would occasionally be encountered” and the owners instead of using their proceeds to search for new “shoots” simply cashed out and moved on. Only a few mines stayed in business for the long haul.19 For Californians with some experience in underground mining, however, Nevada posed formidable challenges. Whatever mining knowledge the newcomers brought with them from California or other localities, they soon learned that adaptation and innovation became the touchstone for success in mining on the Comstock. The history of the Comstock was not only about mining rich deposits of gold and silver but also about introducing and developing new technologies that allowed miners to reach those ores.

Shortly after the initial Comstock discoveries Nevada became a laboratory for scientists – geologists, chemists and engineers – and for cartographers who were in demand to describe and map the mineral phenomenon. Visitors included Americans and Europeans whose reports and treatises on Comstock geology were published or summarized in local and regional newspapers and journals. Under authorization of the United States Geological Service several surveys produced splendidly rendered maps, charts and tables for the western latitudes in general and the Comstock Lode in particular.20 The Comstock Lode was simply one of “four quartz-dominated vein systems. It was the longest and richest of the four. The other three were the Silver City Lode, which connected to the southern end of the Comstock Lode, and the Occidental and Flowery Lodes to the east of the Comstock. All of these lodes were located “in or near normal faults”, e.g. fractures in the earth’s crust that occurred during periods of dynamic geological activities. Along these fractures, as a result of the shift in underlying rock formations, spaces opened up where mineralization took place. The dominant minerals found in these faults (as well as in cross-faults) were, of course, gold (Au) and silver (Ag).21 The Comstock riches were virtually exhausted within a quarter of a century, but mining continued sporadically and with little financial gain during the rest of the nineteenth century and well into the twentieth century. Today Nevada is the largest producer of gold and silver in the nation, and its mineral-resource production (including 19 Henry G. Ferguson and Roger W. Gannett, Gold Quartz Veins of the Alleghany District California (Washington, DC: United States Department of Interior, Geological Survey, Professional Paper 172, 1932), 3-5, downloaded from www.origsix.com, web site for Original Sixteen to One Mine, Inc.20 See George F. Becker, Atlas to Accompany the Monograph on the Geology of the Comstock Lode and the Washoe District (Washington, DC: Department of the Interior, 1882).21 See Kai Yang, Jonathan F. Huntington and Joseph W. Boardman, “Mapping the Comstock Epithermal Mineralization System, Nevada, Using Simulated ARIES-I Hyperspectral Data,” www.gisdevelopment.et/aars/acrs/1999/ts10, 2, and D. M. Hudson, “Summary of the Geology of the Comstock District, Nevada,” in J. L. Johnson, ed., Bulk Mineral Precious Metal Deposits of the Western United States. Guidebook for Field Trips (Geological Society of Nevada, 1987), 413-418; Hudson also available at www.seismo.unr.edu/.

11

THE COMSTOCK [B]

oil and gas) contributes between 2 and 3 percent to the state’s gross domestic product.22

Equally important from historical perspective is that the continuing interest in the state’s mining sector has yielded new maps and surveys that have significantly added to the knowledge base of the geological and lithological conditions at the time of the most intense Comstock activity. The history of the formation of the Comstock is much better known now than it was more than a century ago. Whatever the state of science during the heyday of the Comstock, the miners themselves through trial and error eventually figured out enough about the Comstock to do their work. That had to happen because there was virtually no prior mining experience in the country from which to draw. Lode mining in Mexico and South America had some features in common with Comstock mining, and that knowledge found its way into the lore and the science that informed the local mining community. But the initial and even the subsequent encounters with the Comstock’s physical world continually challenged Comstock miners to review and revise their techniques for dealing with an ever-expanding underground network.

It is risky for one like me with virtually no knowledge of the science of geology to try to describe the physical features of the Comstock Lode. Some description is necessary, however, because the formation of the Comstock and the presence of its ores had an impact on how the industry developed. As noted above, Californians in particular soon realized that their lode-mining experiences would play but a minor role in opening up the Comstock. Many were unfamiliar with the igneous rock which surrounded the Lode and through which the tunnels or shafts had to be cut in order to gain access to the ore itself. Igneous rocks are “fire-formed” rocks consisting of grains and crystals of varying shapes and densities. They formed when magna or hot, molten rock crystallized and solidified. The process (melting) originated deep within the Earth not far from the boundaries of the active plates, which are also known as “hot spots”, and then rose upward toward the surface. The area that generated the magma is assumed to be the asthenosphere, which is the top layer of the upper mantle. The upper and lower mantles combined are about 1,800 miles thick and make up about 83 percent of the volume of the earth. Above the mantles is the crust (about 1 percent) and below the mantle is the core (about 16 percent). Almost all the rocks that appear on the surface of the earth or are mined from beneath the surface of the crust can be traced to the solidification of molten magma because they share its chemical and mineral properties. From the surface through the crust (the ocean crust is about 1-2 miles thick and the continental crust from 12 to 40 miles thick) into the upper part of the asthenosphere, a distance of about 60 miles, exists the lithosphere. This region can be identified with earthquakes, volcanoes, uplifts that form mountains, continental drifts and tectonic plates. Lode mining occurs in the crust of the lithosphere and involves igneous rocks born out of the movement of magma (temperatures of 1,100 to 2,400 degrees Fahrenheit) from the asthenosphere or the bottom of the lithosphere through the crust and onto the surface. These are the rocks that contained the gold and silver of the Comstock.23 The heat of the magma made it less

22 Various publications and statistics can be accessed on the Web Site of the Nevada Commission on Mineral Resources, Division of Minerals, at www.minerals.state.nv.us. 23 Descriptions of igneous rock formations can be found on scores of web sites devoted to rocks and minerals. See http://volcanoes.usgs.gov/images/pglossary/index.php, US Geological Service volcanic-rock-classification web page. See also www.physicalgeography.net/fundamentals, Fundamentals of Physical Geography, Chapter 10 Introduction to the Lithosphere, (a) The Rock Cycle (h) Structure of the Earth, and

12

THE COMSTOCK [B]

dense than the rocks around or above it and caused it to wend its way toward the surface. The movement of the magma could remake the rock formations and chemical properties of the lithosphere.

In his Fundamentals of of Physical Geography, M. Pidwirny presents the accompanying chart to describe the surface and subsurface processes of rock formation.24 Two flavors of igneous rocks, generally speaking, were left in the wake of the magma bursts: intrusive (also known as plutonic) and extrusive (volcanic). Intrusive refers to a rock formation from magna “trapped deep inside the Earth.” Such molten matter because of its high temperatures naturally rises toward the surface but in fact

remains “trapped below” the surface where it cools slowly and the “individual mineral grains” having a long time to develop turn into large rocks with a “course-grained texture.” Extrusive, as the word implies, refers to magna that “cools outside of, or very near the Earth’s surface.” When the magna erupts through the surface of the Earth and cools quickly into what is popularly known as lava, the result is a rock of fine-grained (or glassy) texture. Plutonic and volcanic igneous rock activity occurred “intermittently and repeatedly from earliest geologic history to within the last thousand years” according to Jonathan Price, a Nevada geologist. This activity began with the spreading of the sea floor hundreds if not millions of years ago, and it was further elaborated through “collisions of ancient and modern plates” along with “hot spots in the Earth’s mantle and perhaps outer crops….” The majority of Nevada’s mineral deposits have some association with these activities. Price writes that some “metals came from the magmas themselves” and some from magma heat that caused hot water to circulate and deposit minerals in the veins and the fractured rocks. Some “spectacular mineral specimens occur[red] in ore deposits that formed when magmas intruded and metamorphosed sedimentary rocks.”25

www.geology.csupomona.edu, Igneous Rock Identification, Nature’s Fiery Cauldron by David Jersey and Donald Tarman.24 M. Pidwirny, 2nd Edition, Fundamentals of Physical Geography, originally produced by Digital Library for Earth System Education, 2009, reproduced on http://www.physicalgeography.net/. 25 Jonathan G. Price, “Geology of Nevada,” in S. B. Castor, K. G. Papke and R. O. Meeuwig, eds., Betting on Industrial Minerals, Proceedings of the 39th Forum on Geology of Industrial Minerals, May 19-21, 2003 (Sparks, NV: Nevada Bureau of Mines and Geology Special Publication, 33), 5.

13

THE COMSTOCK [B]

Whether a rock is “fine-grained volcanic” or “course-grained plutonic” is simply the starting point for a more detailed classification systems of a region’s geologic formation. The accompanying table, again by Professor Pidwirny, offer one approach to

how volcanic and plutonic rocks can be arranged. The descriptive terms that appear in Pidwirny's table and in the earliest surveys by George Becker and the United States Geological Service differ, although it is still possible to follow the basic Comstock geology. Becker listed more than a dozen different rock formations. On a large map entitled “Geologic Map of the Washoe District” and on an insert entitled “Geologic Map of Virginia, Nev. and Immediate Vicinity” (between 119o

and 120o

longitude and 39o and 40o

latitude) Becker and his team took hundreds of samples from which they identified up to 14 different rock formations. The Lode itself (between two and three miles long, north to south) was described simply as “quartz” or “quartz vein”. Quartz is the most abundant mineral on the face of the earth and is an important constituent of igneous rocks (as well as in metamorphic and sedimentary rocks). Rocks are fundamentally silica, combinations of silicon and oxygen (not unlike glass), and quartz is crystallized silica. In terms of the way in which igneous rocks are classified, quartz is a major component of plutonic or intrusive rocks known as granodiorite and granite and of volcanic or extrusive rocks known as dacite and rhyolite. From 5 to 20 percent of granodiorite and dacite can be quartz and from 20 to 35 percent of granite and rhyolite can be quartz. Other crystallized minerals in these rock formations include feldspars (with calcium, sodium and potassium among others) and hornblende and biotite (iron and magnesium). Further down the classification scale, intrusive rocks named gabbro and diorite and extrusive rocks named basalt and andesite have little or no quartz. Among the dozens of silicon-based minerals quartz has a ranking of 7 on the hardness scale, one of the highest. Feldspars, which could make up 20 to 60 percent of intrusives like granodiorite and granite and extrusives like dacite and rhyolite, comes in at 5 to 6 on the scale.26 Quartz, of course, did not exist independent of plutonic or volcanic rocks. Some rock specialists consider diorite as a quartz-bearing plutonic rock. In fact diorite and its companion volcanic rock andesite have little quartz, perhaps up to 5 percent. Granodiorite rather than diorite is technically

26 See www.theimage.com/mineral/class.htm for information on silicates and other minerals.

14

THE COMSTOCK [B]

the correct name, but diorite, it appears, continues to be used. When Becker made his survey and prepared his atlas, he seldom if ever used the term granodiorite. I best leave it to the geologists and other specialists to sort how and when these terms should be employed. What I can propose by way of an elementary explanation is that diorite and andesite were the predominant rocks in the immediate vicinity of the Comstock Lode. The rock formation on the Mt Davidson (or western) side of the Lode was diorite and across the Lode on the eastern side was andesite. As a general rule volcanic rocks such as andesite could be 50 percent crystalline while plutonic rocks like granodiorite could reach 100 percent crystalline.27 If any of these rock formations but in particular granodiorite (or diorite) and andesite had not been altered (or had not morphed) over time, they would appear harder to mine than if they had undergone some modification. Some and perhaps a substantial portion of the Comstock had been altered. Indeed Becker used classifications, such as metamorphic diorite, to suggest such modifications. Some Comstock quartz was found in a crushed or sugary form as a result of geologic changes, and the miners soon learned that sugar quartz was easier to mine than the unaltered quartz.28 That some rock along and around the Lode had been softened up through the metamorphosis of the rock itself allowed for speedier construction of shafts and drifts than might have been the case with unaltered rock.

Mastering rock formations and vein structures could lead miners to mineral-bearing ores, but what was a mineral-bearing ore? After cutting through various materials such as rocks, clay, quartz, porphyry, etc. how did they know that had reached the so-called ores from which gold (Au) and silver (Ag) (and other minerals) could actually be extracted? Gold and silver were themselves born out of activity and movement of the magma. As the magma began to cool and solidify, it released water and steam along with some volatile elements. Water and steam had high enough pressure and temperature to make fissures in the rock through which the magma could flow. The hydrothermal solutions that flowed into the cracks and crevices began to cool and to solidify and form quartz rocks or quartz veins. These solutions also contained molecules of gold and silver that became attached to the quartz. In their pure, native form gold and silver along with copper, lead, aluminum and mercury belong to the “Gold Group” because they have similar chemical properties and appear in the same column on the Periodic Table. Gold can be alloyed with silver, as was the case on the Comstock. If gold and silver occurred as “native” ores, that is, not in combination with other minerals, they could be identified by color and appearance. Gold occurred that way far more often than silver. Silver seldom occurred in a natural form and almost always combined with gold, copper, lead and zinc among the major minerals but also with 50 or more other lesser minerals. Thus one can picture a crew of miners cutting through rock, removing clay or porphyry and finally reaching vein matter that appeared to contain recognizable minerals like silver. (They could also have followed vein matter toward what they hoped would be a sizable deposit.) Historically speaking, even though silver came in many variations, galena (PbS), a lead sulphide that contained more lead than silver, was one of the best known of the silver-bearing ores. But silver sulfides such as argentite and acanthite also could yield the mineral silver. The Comstock had a much greater concentration of acanthite/argentite

27 See http://volcanoes.usgs.gov/images/pglossary/index.php 28 Communications with geologists at UNR.

15

THE COMSTOCK [B]

(AG2S), a class of silver sulfides, than galena.29 Such ores also were found in the major colonial Mexican camps and perhaps in the Andes as well. And of course what made a huge difference on the Comstock was that the sulfides enclosed by rocks and other materials featured both gold and silver, a condition that would not describe the ores of Zacatecas or Guanajuato in Mexico nor the ores of Potosí in Bolivia. Although the silver extracted from the Comstock was voluminous and rich, had it been the only mineral the Comstock would still have qualified as a mining bonanza but with lower overall value since the presence of gold (40 percent) raised the value of a ton of ore considerably. The rock and its related components in particular the quartz might be said to have surrounded gold and silver ores that once extracted had to be milled to be separated.30 Not necessarily a common occurrence for silver mining in the New World, the gold and silver combination gave the Comstock a celebrity status among the big western mining bonanzas.

FIGURE 7OVERMAN MINE GEOLOGY, BECKER, ATLAS SHEET XII

[LINES OF SOLFATARIC ACTION HAD NO LETTERS]

Notes: Overman Mine was on the southern end between Caledonia and Belcher Mines.

29 In the Quarterly Newsletter of Nevada Bureau of Mines and Geology the statement occurs: “… the substantial amount of silver sulfide (Ag2S, the mineral acanthite) which was present in the Comstock ores…” (Winter 1992) on NBMG website: http://www.nbmg.unr.edu.30 I examine briefly the types of ores encountered in the Spanish colonial mines in Mexico and Peru in an essay published under the title of “Silver Mining Trends Colonial Latin American Mining” at www.historydatadesk.com.

16

THE COMSTOCK [B]

FIGURE 8GEOLOGY OF COMSTOCK LODE, WASHOE DISTRICT,

BECKER, ATLAS SHEET IV[Enlarge PDF To Read Type]

Note: Becker's description may not agree with contemporary geological surveys and maps. It is presented to illustrate how the Comstock geology was viewed toward the end of the bonanza era. Red lines across map are adits for drainage or Sutro Tunnel.Sources: See footnote 20.

17

THE COMSTOCK [B]

FIGURE 9ILLUSTRATIONS OF ROCKS

18

Illustration: Diorite Illustration: Andesite

Illustration: Granite

Illustration: Gabbro Illustration: Rhyolite

Illustration: Dacite

THE COMSTOCK [B]

In his highly readable The History of the Comstock Lode Grant Smith briefly described some of the formidable challenges faced by Comstock miners, especially the early Californians, in building an underground system to reach and extract the ores. In addition to familiarizing themselves with the igneous rock formations, they had to learn how to read the veins once they were underground. In California having located the veins miners could extract the ores more or less by following normally narrow veins until they petered out. The Comstock was riddled with metal-bearing veins, most of which were largely worthless. Comstock gold and silver occurred in “large thick bodies” scattered across the Lode at various depths. They could begin a foot or two wide, grow to a thickness of 50 or 100 feet and then just disappear. As a result dozens of shafts were dropped and hundreds of tunnels were dug to try to intercept those ores bodies along and in the vicinity of the Comstock Lode. In carving out these vast underground networks, miners first and foremost had to figure out how to keep them from collapsing. Using the rock itself (common in Spanish-American mines) or wooden posts and beams to shore up the tunnels proved to be unreliable. The expanse of work areas around ore deposits required more in support than the conventional methods provided. In addition the walls of the shafts and tunnels were simply not strong or solid enough to bear the weight of the ground surrounding them. They consisted of altered or fractured rock. Consequently the quartz rock, which contained the minerals, had a “sugary” character, “crushed and water-soaked”, as Smith described them, after millennia of hydrothermal and seismic activities. But there were even more serious problems. These underground spaces were “rendered still more unstable by the presence of clay and inclosed [sic] fragments of porphyry.” Clay walls often surrounded ore deposits, and as the rock was removed to reach the ore the clay could not bear the weight above or on the sides. These clay barriers “were only a few feet in thickness as a rule, but occasionally increased to 20 or 30 feet. Beyond the clay were belts of partly decomposed porphyry and other walls of clay, with occasional parallel sheets of ore. When an opening was made [into the clay] the whole country began to swell and move unless held back by stout timbering. The expansive power of the clay almost surpasses belief”, reported Smith, at which point he quoted a passage in James Hauge’s U. S. Explorations of the 40th Parallel by Clarence King, who became Director of the United States Geological Survey: “[the clay] is of tough consistency, and when the air is admitted by gallery or shaft it immediately begins to swell and exert tremendous pressure, forcing itself through the interstices of rocks, bending and breaking the most carefully laid timbers and filling the mine openings with extraordinary rapidity.”31 From time to time scalding water was encased in these clay formations, and when the clay was pierced or broken the water would pour through the adjoining tunnels.

Fragmented porphyry did not make the situation any better. By definition porphyry was quartz that had undergone both slow and rapid cooling as the magma erupted toward the surface; as a consequence it had a mixture of large and small grains. It too could become sugary over time from the same forces that altered the composition of quartz. Even though miners came to realize that fragmented porphyry could be an indicator of the presence of gold and silver ores, it in combination with clay made for treacherous working conditions.

31 Smith, The Comstock Lode, 24.

19

THE COMSTOCK [B]

Before turning to how underground operations confronted these natural impediments I should make clear that except for the official surveys along with some expert commentaries the technical references to rock and ore formation seldom appeared in the mining companies’ annual reports or the superintendents’ weekly reports. More often the rock was called hard or not so hard and the ore good or not so good. Terms like quartz, porphyry and clay to describe where the ores might be did appear in the weekly reports. The purpose in summarizing geological and mineral information was to try to pinpoint more precisely what the miners encountered even if the miners themselves were not conversant with the technical or scientific knowledge base.

The story of building an underground system had two contrasting elements. Days of arduous work with unaltered and often hardened (given the equipment) plutonics like granodiorite could then be followed by days of less arduous but more daunting work with altered porphyry amidst shifting clay and scalding water. Even shafts and tunnels cut through moderately hard rock could buckle as nearby sections of clay and porphyry shifted and collapsed. It is improbable that lode mining could have continued or expanded along the Comstock without the invention of a method of framing that could accommodate the unpredictable character of the natural elements. The Ophir Mine posed the initial challenge. Although there is some disagreement about the width or thickness of the Ophir ore body as it descended to depths of several hundred feet, the numbers still illustrate the problem. At the 50-foot level the ore body was said to be from 3 or 4 feet thick to 10 or 12 feet, and by the time the mine had followed the ledge that contained the ore 175 or 180 feet the width had grown from 40 to 50 feet or perhaps as much as 65 feet.32 To prop up the crumbling walls and roofs the miners tried to strengthen the upright posts and horizontal capstones by splicing the timbers together. But they had no success with this approach. “Surrounded by riches, they were yet unable to carry them off and their mass of black sulphurets [gold and silver minerals] bade fair to become a white elephant on their hands. The Ophir Company began to wish themselves less fortunate, as their miners narrowly escaped burial day after day in their attempts to stope out the ore.”33

To the rescue came a young California miner and German-trained engineer, Philipp Deidesheimer. He was the superintendent of a quartz mine in El Dorado County, California, when William F. Babcock, a trustee of the Ophir Company, asked him to visit its Comstock property and advise on ways to improve the timbering of the interior of the mine. With some experience from “gravel and quartz” mines in California he arrived in Virginia City in the autumn of 1860 and set about to develop timbering that came to be known as the “square-set” system. It consisted of a base made from four horizontal timbers, four to six feet in length, to which were attached four corner posts, six to seven

32 Eliot Lord in Comstock Mining and Miners (Berkeley, CA: Howell-North, 1859, reprint of 1883 edition), 89, reported 3 to 4 feet at 50 feet and 65 feet at 187 feet while Smith in The Comstock Lode, 24, reported 10 to 12 feet at 50 feet and 40 to 50 feet at 180 feet. Lord’s sources were the Sacramento Union from 12 December 1859 and the San Francisco Evening Bulletin 11 July 1860, and Smith’s was the San Francisco Bulletin (probably meant to be Evening Bulletin) 12 April 1860. I cannot verify the accuracy of the newspapers’ reports. I found d no such references in the archives to which I had access.33 Lord, Comstock Mining and Miners, 89.

20

THE COMSTOCK [B]

feet in height. Four more horizontal timbers were attached to the tops of the posts, and four more vertical posts were attached to the horizontal timbers. These cubes could be “extended to any required height and over any given area, forming a series of horizontal floors, built up from the bottom sets like the successive stories of a house. The spaces between the timbers were filled with waste rock or with wooden braces, forming a solid cube when ever the maximum degree of firmness was desired.”34 As the miners worked their way along the Lode - in the case of the Ophir Mine descending from 50 feet to nearly 200 feet - they could adjust the cubes to account for the angle of the stope and the openness of the chamber. The “square-set” modules allowed for the weight of the rock, clay and porphyry to be spread across more than a “cap and post” approach. This helped to reduce the risk of cave-ins from the weight of the material above the working chambers and from less than sturdy walls surrounding the chambers.35 Since the Ophir ore body was replicated in more than a dozen other Comstock locations that required huge cavities to be constructed in order to extract gold and silver at ever-increasing depths the “square-set” platform remained the basic format. Today Virginia City sits over a plot of ground, the underpinnings of which are not the natural elements of rock and clay but rather are Deidesheimer’s cubes.

FIGURE 10PHILIPP DEIDESHEIMER'S CUBE SUPPORT

BELCHER MINE

Nearly all of the Comstock histories credit Deidesheimer was the most timely of inventions. Besides descriptions of square-sets (the above from Lord’s Comstock Miners and Mining) Comstock histories included wonderful illustrations of how square-sets may have looked inside the mines where the ore bodies existed. Whether these illustrations accurately portrayed the installation of square-set timbering in underground chambers,

34 Lord, Comstock Mining and Miners, 90.35 Smith, The Comstock Lode, 24, Dan DeQuille [William Wright], The Big Bonanza…. (New York: Alfred Knopf, 1947), 90-91, 93, and James, The Roar and the Silence, 54-56.

21

THE COMSTOCK [B]

some of which were hundreds and hundreds of cubic feet in volume, cannot be determined from various company reports. A decade later in the largest mines such as Consolidated Virginia and California (to be discussed later) underground crews included bulkheaders and timberers who were responsible for the installing and maintaining these structures. Certainly Deidesheimer opened the way for companies to develop their underground assets at a time when knowledge about deep mining was minimal. But his technology did not eliminate the underground nemeses of structural overload and shifting terrain that could endanger lives and suspend operations at all levels. Over time as miners learned from experience how to refine and adapt underground timbering techniques these nemeses became more manageable and less disruptive. As will be discussed in later chapters, active companies annually committed material and personnel to rebuilding and repairing their underground works in addition to expanding those works.

Once the outcroppings and the shallow veins were exhausted, the Comstock’s continuing operation depended on money. Few miners, whether early prospectors or later entrepreneurs, had the capital to open and expand these underground systems. Thus began a long and often rocky financial relationship between San Francisco and the Comstock. Almost from the outset to find the ores and once found to extract and refine them required large capital outlays. Without them deep mining on the Comstock would certainly have followed a different historical path. San Francisco, having grown up around the California gold rush, was uniquely situated to become the Comstock’s banker. As a financial center, however, San Francisco had fallen into a minor position. Not only had many northern California’s gold fields been exhausted, but because of a series of mining-stock frauds in connection with those fields the city’s financial reputation had also been tarnished. The Comstock presented new and potentially lucrative opportunities for San Francisco’s financial community. As word about the riches of the mines spread San Francisco investors and speculators alike began to buy mines and build refineries at a rapid pace. San Francisco money financed the expanding underground operations that saw output jump from several hundred thousand dollars per year to several million, and this helped to transform San Francisco itself into the west Coast’s financial epicenter. The most direct evidence of this was the establishment of the city’s stock exchange in 1863. The exchange became the vehicle for both the legitimate advancement of capital funds and the less than legitimate manipulation of stock prices. Not surprisingly the California connection, although vital, was not always welcome. The manner in which capital was raised, profits, if any, were distributed and stock was manipulated inspired much Populist rhetoric about the raping of Nevada for the benefit of the rich and powerful in San Francisco. While a mechanism was needed to underwrite the cost of deep mining, it was often criticized as serving the financial schemes of the brokers and bankers rather than the financial needs of the Comstock. Nevada itself had little liquid capital, and if San Francisco had not served as the Lode banker some other financial center would have. Economic benefits accrued to the region of the Comstock and to the State while the mines were being worked, but what aroused the anger of the Nevadans (nearly all transplants) was that what flowed into the region or the state in the form of wages, profits or dividends was a pittance compared to what flowed out mainly to San Francisco and the West Coast. When the Comstock bonanza ended once and for all in the 1880s there was widespread condemnation of the practice of outsiders – investors, speculators, financiers

22

THE COMSTOCK [B]

and even notable miners – reaping fortunes in Nevada and reallocating them to California. How and where such internal development could have been channeled in a nation and a region that deeply distrusted any form of public economic planning (had such planning any relevance in the first place) was never explained, and indeed historically extractive economies like early Nevada’s were more often than not exporters of wealth and not investors of it. The Comstock was unique to the degree that it sired one of the grandest mining ventures ever, but it was hardly unique in how its mining economy evolved and functioned.36

36 Many books and articles were been published on the financial connection between the Comstock and San Francisco. Almost without exception whether of the nineteenth-century laissez-faire or muckraking tradition they take note of the malicious and profligate actions of the San Francisco capitalist network. By far the grandest complaint was that this network of moneylenders, speculators, and investors were often driven to manipulate the prices of the stocks of the Comstock mining companies for personal gain rather than by sound business practices. It is almost uniformly true across the history of large-scale mining in many societies that the communities that produced the wealth realized few long-term benefits from the wealth itself. The Comstock was no exception. Among the earliest and most vividly written critiques were by George Lyman, the Progressive historian: The Sage of the Comstock Lode (New York: Charles Scribner’s Sons, 1937) and Ralston’s Ring California Plunders the Comstock Lode (New York: Charles Scribner’s Sons, 1937).

23

THE COMSTOCK [C]

Chapter 3Statistical Profile of Mining Industry:

Prospectors to Investors, Profile Database, Costs versus Profits

From the beginning the Comstock served the interests of the less than scrupulous. As Smith pointed out, the presence of so many “silver-mad investors”, mainly from San Francisco and California, encouraged cheating and lying. His description of how he believed the claiming of the Comstock took place is worth reviewing. He began with the weather. Early November winter storms dumped several feet of snow on the Comstock. Surface mining more or less came to a standstill while lode mining at shallow depths continued. Despite the snow the weather cleared enough to allow local prospectors to stake out more and more claims even without knowing what was under the snow. Californians, especially the incipient financial community of San Francisco, “were in a fever of excitement of the Washoe mines.” Many were willing to buy claims “without knowing anything about the location or the value, and the local prospectors were preparing to supply the demand.” According to Smith’s calculation more 16,000 claims were staked out. Many claims were worthless, but they were often sold, abandoned and then in the wake of further “good news”, even if fabricated, they were resurrected and sold again.1

The opportunity for fraud did not end as the era of corporate mining replaced the prospecting free-for-all. Since a claim consisted of so many linear feet, it could be divided among one or more shares of stock per foot. Four companies - Ophir, Gould & Curry, Savage and Yellow Jacket – were incorporated between 1860 and 1863 and claimed a total of 4,600 feet along the Lode. Ophir claimed 1,400 feet and issued 16,000 shares or 12 shares per foot. The total value was more than $5 million so that a share of stock had a nominal cost of $300. Both Gould & Curry and Yellow Jacket claimed 1,200 feet each, and whereas Gould & Curry issue 4 shares per foot Yellow Jacket issued only one share per foot. The nominal value of the capital stock was more than $2 million or $500 per share for Gould & Curry and $1 million or $1,000 per share for Yellow Jacket. Savage with 800 feet issued 800 shares with a nominal value of $2,000 per share.2 The value of the stock was not so much based on the capacity of the mine as on what the stock might trade for in the marketplace. Since no marketplace a priori existed for these stocks, held initially by the incorporators, one had to be created. It was created by inviting outsiders – persons who were known to speculate in real estate and other assets as well as persons of means – to buy a portion of their shares. Creating this marketplace often entailed “fictitious trades”. Two stockholders might trade the same shares over and over again in order to move the price of the stock and to attract attention. In addition there were “sympathy trades”. As the prices of shares in one company began to move 1 Smith, The Comstock Lode, 20. Smith provided no source for the figure of 16,000, although in all probability it was drawn from studies of the hundreds of lawsuits that were contested in state and federal judiciary.2 Maureen Bloomquist Jung, “The Comstock and the California Mining Economy, 1848-1900: The Stock Market and the Modern Corporation” (PhD dissertation, University of California, Santa Barbara, 1988), 70.

1

FigureAA Smith’s BookIllustration 1: UNR Press

THE COMSTOCK [C]

upward, the holders of stocks of other companies would begin to trade their shares in hopes of impressing investors that all stock prices were on the rise. It helped that the dollar value of Comstock production, to the extent that figures existed, jumped from several hundred thousand dollars in 1859 to $12.5 million in 1863. A 10- to 15-fold increase made it fairly easy to entice market speculators but also legitimate investors. While the aggregate value of gold and silver mined in the first several years came to nearly $25 million, the value of mining stocks sold in San Francisco may have been several times that amount. In short, as promising as the Comstock was, brokers and speculators in San Francisco tried to enhance their own financial positions through opportunistic purchases and sales that had little in common with actual Comstock operations.3

It is hardly surprising, though, that mining stocks were a frequent source of financial chicanery. By its very nature mining, especially underground, was a perpetual roller coaster. While past output was measurable, it seldom was a reliable indicator of

future output. The Comstock was filled with surprises, even for serious-minded scientists, who year by year gained more knowledge about the character of the Comstock but could not always predict where the next bonanza would occur nor how much longer the Comstock would continue to generate bonanzas. Conversely they were reluctant to be bearers of bad news and seldom said much about the bonanza-borrasca cycle that was becoming evident in the early years. One of the most important of the visiting scientists was Baron Ferdinand von Richthofen, a German geographer and geologist. His report in 1865-66 identified correctly many of the geological and chemical features of the Comstock but incorrectly posited that the richest veins would be located in the upper regions with a diminution in the quality and the concentration of the ore as the depths increased. In fact since the mines had only reached depths of several hundred feet he could not have known nor did

he anticipate that the richest deposits were found between 1,000 and 1,500 feet beginning in the early 1870s.4 The work of the scientific community was important, and their findings could actually move markets. But more often than not the slightest shift up or down in production or just the rumor of a shift had a more pronounced impact that could cause prices of stocks to skyrocket or plummet. And of course company executives like market speculators were not above planting information in order to manipulate stock prices. Even after the establishment of the San Francisco Stock Exchange in 1863 and the

3 Jung, “The Comstock and the California Mining Economy”, 76, 88, 114.4 The Baron’s report was widely circulated and cited. It exists in a microform version under the title The Comstock Lode: its character, and the probable mode of its continuance in depth [1866] at the University of Nevada, Reno Library. Perhaps the Baron’s most serious miscalculation was to conclude that the richest pockets of ore were located toward the top of the Lode, and the quality would diminish as the depths increased. In fact between 1,200 and 1,500 feet the richest strikes ever were made. Below 1,500 feet the quantity and quality of the ore declined to virtual barrenness even though the strikes between 1,200 and 1,500 feet caused some investigators to revise their projections in favor of greater depths would yield richer strikes.

2

Illustration 2: Baron von Richthofen

THE COMSTOCK [C]

enactment of some minimal trading rules, market manipulation in the hands of some bulls and bears achieved the level of an art form. The timely release of information whether truthful or fictional about progress or the lack thereof could serve stockholders who wanted to unload their holdings at the highest possible price or to increase them at the lowest possible price. Newspapers like Virginia City’s Territorial Enterprise could become unwilling conduits of false information. The extent to which the activities of the stock exchanges influenced day-to-day decisions in the Comstock operations themselves is not easy to determine with any certainty. Grant Smith organized his History of the Comstock Lode in such a way as to accentuate the role of the San Francisco bulls and bears in precipitating the cycles of boom and bust on the Comstock. But historically production cycles were normal phenomena in every mining economy, although heavy speculation in mining stocks may well have exaggerated the movement of the cycle. What is necessary but difficult to do is to separate the legitimate institutional functions of a stock exchange from those that were conceived for other perhaps illegal purposes.5

Noted earlier was the fact that the discovery of ores was the occupation of the many, but their exploitation became the occupation of the few. Lode mining, certainly as the depths increased, required not only capital but also organization and management. Mining had always seemed to attract strong personalities and flamboyant characters, and while the Comstock had its fair share, it also confronted them with the challenge of developing their business skills to complement their personal ambitions. A profile of the Comstock mining industry during the two decades, 1865-1885, clearly illustrates and demonstrates how the free-wheeling, almost egalitarian spirit of the first locators was fairly quickly supplanted by a more industrial mentality that emphasized control and production. Of the hundreds if not thousands who tried their hand at making a fortune from the wealth of the Comstock became casualties rather than victors in their endeavors. The road was rocky for all with a high percentage of financial failure at every level. But in terms of the sheer volume of ore extracted and refined, only a handful of companies qualified. The structure of the Comstock mining industry was generally oligopolistic and at times came close to being monopolistic. Even among the oligopolists profitability was elusive and bankruptcy was unavoidable. Whatever their ultimate financial fate, major producers were large companies, some of which owned or controlled dozens of mines and mills across the Comstock.

One set of public records through which we can build a profile of Comstock mining is county assessment rolls. Other documents such as company accounts and state reports can be used to supplement these records. Unfortunately they are incomplete. Because so many of the early placer miners were from California, where mineral

5 Smith, The Comstock Lode. Chapter 7, for example, has a section with the intriguing title “Stock Devilment” (p. 62-63). Smith was not alone. Lord wrote in Comstock Miners and Mining (p. 318 and Smith cites on p. 62, footnote 3): “A well-managed ‘stock deal’ was as acceptable to most holders [of mining stocks] as an actual development of ore.” Smith also cited Fred MacCrellish, editor of the Atlas California, who compared “the stock-jobbing business” to gambling, “the most demoralizing kind: for, unlike card playing it is pursued openly and has been regarded as respectable….It is worse than card gambling, because the players are not upon an equal footing…and it breeds an increasing crop of professional liars whose business it is to entrap honest but credulous people.” Smith, p. 63, footnote 3 from Atlas California, 16 July 1871.

3

THE COMSTOCK [C]

production was not taxed, they successfully opposed any taxation (property or production) during the First Territorial Legislature in 1861. Such opposition did not obviate the need for revenue, and in subsequent legislative sessions (as a territory and a state), a tug-of-war ensued between the mining interests and the government over how to tax the output of the mines. Finally in 1871 the Nevada Legislature agreed upon a mining tax that remained in effect for decades. I will look more closely at the actual debate over taxation of mining in a later chapter. For now I want to explain how the assessment records once the legislation was approved can be used to create a profile of the industry6

The 1871 law was called a mining “net-proceeds” tax, and it was applied against the net proceeds of the mines in the same way as property taxes were applied. In fact tax rates on mining proceeds could be no more or no less than property-tax rates. The legislation spelled out how county assessors were to maintain assessment records and what they were to report to the state controller. Each quarter miners, millers and individuals who might have acquired ores were required to pay their assessment taxes. In calculating and collecting these taxes assessors were to organize their records or ledgers in the following way: Name of Owner(s); Description and Location of Mine; Number of Tons Extracted; Gross Yield or Value, in Dollars and Cents; Actual Cost of Extracting; Actual Cost of Transportation to Place of Reduction or Sale; Actual Cost of Reduction or Sale; Net Yield or Value, in Dollars and Cents; and Total Amount of Tax.7 Story County assessors generally maintained their records in accord with the law, although toward the end of the period for this study the entries in the ledgers became more disorganized and less useful. With these records we have access to Comstock production on a quarter-by-quarter and a company-by-company basis for more than a decade. These are rich sources for the study of the Comstock mining industry, although they are not by any means perfect. [A copy of the ledger for the 3rd Quarter, 1877, appears in a Special Appendix at the end of the chapter.]

There is one important caveat, however. A fire in Virginia City, the county seat, in October 1875 destroyed the courthouse and many of the county’s records including assessments and collections of mining-proceeds taxes from the passage of the legislation in early 1871 through the first half of 1875. From the third quarter of 1875 (mining-proceeds taxes for the third quarter were collected in the fourth quarter) through the fourth quarter of 1885 the documentation is complete. The surviving documents are stored currently in the Story County Assessor’s Office, and microfilm copies are available at the Nevada State Archives and Libraries and in Special Collections at the Library of the University of Nevada at Reno. Some of the missing records have been located in other archives, in particular the archives of the Controller’s Office. The State of Nevada received a portion of the taxes on mining proceeds, and quarterly each county

6 Romanzo Adams, Taxation in Nevada, A History (Carson City, NV: State Printing Office, [Publication of the Nevada Historical Society] 1918), 71.7 The text of An Act providing for the taxation of the net proceeds of mines, approved 28 February 1871, appears in Bonnifield and Healy, comps., Laws of Nevada, 2:225-228. It is located in Chapter C Of the Taxation of the Net Proceeds of Mines Sections 3245-3252. Sections 3255-3258 consider the taxation of Borax and Soda, which are not discussed with respect to the Comstock. The Constitutional provision that governs taxes on proceeds is Section 10, Article 1. Taxation of mining proceeds was and remains controversial and will be discussed in greater detail in Chapter 17 & 18.

4

THE COMSTOCK [C]

assessor provided the Controller with a summary (Abstract Statement) of the taxes collected and authorized a transfer of money to state treasury. Some but not all of the Story County Abstract Statements for quarters prior to the fire have survived in the Nevada State Archives, and while these were summaries of the actual accounts kept by the assessors, they can be used to fill in a part of the missing quarterly data between 1871 and 1875.8 Finally, the State Mineralogist, who prepared a biennial report on the status of mining for the Legislature, included data from the Abstracts submitted by the counties including Story County. Although the Mineralogist extracted only certain data from the Abstracts (which themselves were summaries of the county records), he usually included tonnage and bullion figures for all the operations that paid assessments in his biennial reports.9 It turns out, then, that despite the destruction of the original documents other records allow us to reconstruct a large portion of the destroyed assessment rolls for Story County. The result is that I have been able to assemble a dataset on tonnage and value of bullion for each quarter from the first quarter of 1871 through the fourth quarter of 1884 by mine or mill (that is, by owner of the bullion) except for the fourth quarter of 1872.

It is important to examine what the Act actually stipulated. To determine the assessment from which the tax was calculated county assessors “shall demand from the President, Superintendent, Treasurer, or managing agent of each corporation, association, or firm engaged in extracting ores and minerals within his county, and from any person so engaged other than as a corporation, association, or firm, a statement under oath or affirmation” with the appropriate information noted above. He could also “demand” that the company or individual “open” their ledgers to inspection, although the procedures by which such audits would be made was not specified in the law.10 It is not known how often if ever an assessor inspected a firm’s accounts. It would appear that the government depended mainly on honest affirmations rather than expensive audits. While the firm or individual surely understood the risks in lying to the government and then getting caught, the temptation to misrepresent their finances probably remained strong. Certainly among contemporary observers and later commentators there was considerable suspicion that the mining executives were ever totally honest in reporting their finances to state or county officials and even to their own stockholders. Unfortunately the task of demonstrating that these executives cooked their books to avoid paying taxes or simply to avoid revealing information is a very difficult one. Where company records exist (for example, the financial records of Consolidated Virginia and California Mining Companies are almost complete) the financial summaries extracted from these records tend to be in general agreement with what companies reported to state or county officials and more

8 I have examined the actual surviving ledgers for the last two quarters of 1875 and the full years of 1876 and 1877 in the Assessor’s Office located in the Courthouse of Story County, Virginia City. My principal source was microfilm copies listed under The County Records Microfilm Project, ST 67 Story County, in Special Collections, Library, University of Nevada at Reno.9 Surviving Abstracts of the Story County assessment rolls and the tax collections submitted to the State have been found in the Nevada State Archives. They include 1st Quarter 1871, 1st, 3rd and 4th Quarters 1872, and 4th Quarter 1874. The Biennial Reports of the State Mineralogist of the State of Nevada for the Years 1871, 1872, 1873, 1874 and 1875 appended to the Journal of the Senate 6th Legislative Session (1873) and appended to the Journals of the Senate and the Assembly, 7th (1875) and 8th (1877) Sessions of the Legislature of the State of Nevada.10 An Act providing for the taxation of the net proceeds of mines, approved 28 February 1871, in Bonnifield and Healy, Laws of Nevada, 2:226-227 specifically sections 3246-3248.

5

THE COMSTOCK [C]

importantly with what they reported to their stockholders. It is not easy, therefore, to pinpoint the discrepancies, and where discrepancies may appear to exist they do not always appear to be significant. The category, which invited the worse abuse, was reported operating costs – extraction, refining and transportation. These figures could be more easily fudged than the value (in dollars) of the output because the latter was actually determined by the mint. It should also be recognized that business practices like accounting and bookkeeping was evolving in the late nineteenth century and that companies may not have known with the precision of current contemporary auditing standards what their real costs were. Of all the figures that the assessor collected the value of the gold and silver extracted from the ore, which the owner declared in tons, were probably the most accurate. Certainly they were the easiest to trace and verify through the mint records.

The calculation of mining taxes from mining proceeds had a curious proviso. The law clearly stated that the proceeds would be arrived at by deducting the “actual cost” of extracting the ores from the mines or the “actual cost” of processing the tailings from the gross return: “the remainder shall be deemed the net proceeds, and shall be assessed and taxed as provided for in this Act”. The proviso declared “that in no case whatsoever shall the whole amount of deductions allowed” exceed the gross yield. In short, if costs matched or exceeded receipts taxes would still collected on the bullion in accord with a schedule based on per-ton yields. Every producer with bullion to declare paid net-proceeds taxes even if the costs were greater than the receipts. The aim clearly was to make sure that every producer paid some taxes. Producers had to report yields per tons in gold and silver bullion, and the higher the yields the smaller the deductions for costs against value of the bullion. For example, if the yield per ton was $20, the producer could claim a deduction no greater than 80 percent. Thus a producer with $1,000 worth of bullion from ores yielding $20 per ton at a cost of $900 to extract, reduce and transport per ton would pay taxes on $200 worth of bullion instead of on $100, the difference between the bullion value and the mining costs. The value of the bullion that was taxable was called the assessment, and the tax rate could not exceed the millage by which other property holders were taxed. In this example the producer could not count all his costs in the determination of the assessment. In many cases no deduction at all were allowed. To cite again the $1,000 example, if the total costs had been only $500 even with a yield of only $20 per ton the bullion would be taxed at “net”, that is, no deduction. Under this procedure it was certainly possible for the company to falsify the tonnage so that the yield per ton would be lower and the deduction higher as well as to misrepresent the costs. And this may well have occurred, although where the company’s declared tonnage can be compared to the recorded tonnage few discrepancies could be found. Cooking the books on a regular and consistent basis would have been a large undertaking that few companies, it would seem, had either the time or the money to pursue. This is not to argue against producers using various deceptions to evade the tax collector (among others) but rather to argue that such deceptions were sporadic and not continual. The Act also provided that a further adjustment in determining the taxable value was allowed when ore were refined by a process known as the Freiberg method, although Freiburg was not widely used on the Comstock.

6

THE COMSTOCK [C]

By isolating one quarter of data from the assessment rolls we can see how the system worked. The quarter chosen was the fourth, October through December, of 1876. It was not chosen because it is typical; rather it was chosen because it had fewer declarations than in other quarters and is less cumbersome to summarize. Seven mines and four mills, mainly tailings mills, declared assessable ores. Two mines were assessed on the basis of the “net” – the balance after costs were deducted from receipts. In both cases the reported costs were between 32 and 38 percent of the receipts and therefore did not qualify the mines for deductions in their assessments. Two mines reported yields and costs that allowed them to shield 60 percent of their bullion from taxation, two mines 80 percent and one mine 90 percent. With respect to the four mills two were granted deductions and two were assessed at net. The Act provided for various penalties if owners refused to open their books or to supply the data required to determine the assessments and taxes. But these penalties do not appear to apply in the above examples. In the final analysis since cheating was hard to detect and expensive to investigate the most trenchant criticism of the net-proceeds mining taxes was that the formula described above was too generous. By some calculations mining companies paid less per $1,000 in assessments than did other taxable properties.11

What can we learn from the assessment rolls even with the less-than-perfect statistics that they generate? We can begin with the obvious. The initial sentence in the 1871 Law that “All ores, tailings, and mineral-bearing material, of whatever character, shall be assessed for purposes of taxation….”12 Story County assessments distinguished between ores and tailings, and the first contributed 90 percent and the second 10 percent of the total bullion value. Ores referred to the extracted matter that was crushed and amalgamated to yield the precious minerals. Tailings were residues that escaped during the transportation of the crushed watery ores to the amalgamation pans. They usually ended up in slag piles or holding ponds scattered around the mines and mills. They were also dumped into the Carson River, the bed of which today is still covered with these residues. Sometimes sluices were built to capture the tailings and direct them to their final resting places. Since tailings contained small amounts of gold and silver, they could be reprocessed in mills built specifically for that task. It had always been a matter of concern and speculation as to how much gold or silver was lost in the tailings. Some believed that more minerals were lost in tailings than were actually processed at the mills. It is not an easy to confirm or deny such assertions. Enough could be recaptured, though, to lead some companies to convert or construct mills specifically for the reprocessing of tailings from their amalgamation mills. The 1871 Act also stipulated that assessment rolls should have two columns that read: “Actual cost of transportation to place of reduction or sale” and “Actual cost of reduction or sale”. As the column titles suggest ores could be sold, and when they were sold the buyers paid the net-proceeds taxes. How much ore was

11 An Act providing for the taxation of the net proceeds of mines, approved 28 February 1871, in Bonnifield and Healy, Laws of Nevada, 2:226-227 specifically Section 3245 along with the previously cited sections; quarterly data from assessments on microfilm in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.12 An Act providing for the taxation of the net proceeds of mines, approved 28 February 1871, in Bonnifield and Healy, Laws of Nevada, 2:226-227, Section 3245. Certain compounds like borax could yield precious minerals, and the State Controllers’ Annual Reports showed that two Nevada counties – Esmeralda and Churchill – reported assessments on ores, tailings and boraxes.

7

THE COMSTOCK [C]

sold under the terms indicated in the 1871 law in any given year is not known and cannot be separated out from the figures as they appear in the assessment rolls. Most of the extracted ores were not sold but were processed by the producers, and those that were sold were probably tailings.13

Not only did the rolls distinguish between ores and tailings, but they also noted the mining districts where the mines or mills were located. From the earliest years miners organized themselves into districts in order to administer the rules (which the miners themselves generally wrote and approved) and to adjudicate disputes. Nearly all the declared ores came from mines in the districts of Virginia City and Gold Hill. A very small quantity came from a third district, Flowery, a different lode to the east of the Comstock that was being explored more intensively in the 1880s as the Comstock went into decline. The actual boundaries of the districts cannot be precisely delineated. The district boundaries for Virginia City and Gold Hill may have coincided with the municipal boundaries. With few exceptions the mines that declared ores were known to be within the municipal boundaries whereas the mills and particularly the tailings mills with ores to declare were located throughout the county and beyond in adjacent counties. When locations were given for tailings mills, they might be as general as Virginia City or Gold Hill or they might be more specific such as Six Mile Canyon or Geiger Pass. And in some quarters the locations of the mills were not noted at all. Joseph Tingley, notable contemporary scholar of Nevada mining and the Comstock in particular, writes that American Flat, south of Gold Hill, was also designated a mining district. There was an American Flat mining claim and other claims surrounding that mine, but in the extant assessment rolls no ores were ever declared from those mines or that district (if it continued to exist).14 At times Virginia City and Gold Hill were referred to as the Comstock District, but that designation was not used in the assessment rolls. The importance of identifying the district within the assessment rolls had tax implications. Tax rates as applied to assessable ores differed from district to district. Even though Gold Hill and Virginia City were adjacent to each other, they did not always share the same tax rates. From the assessor’s standpoint it was necessary to know where the ore came from so that the correct rate could be levied and the revenue raised by the tax could be distributed to the appropriate district based on what the county commissioners had legislated.15

Between 1871 and 1884 production data can be assembled for 55 of the 56 quarters (only the fourth quarter 1874 is missing). In that period the number of bullion owners (mines and mills) totaled at least 71. I stress owners of bullion to be assessed because there were many more mine and mill owners who may have had operations that yielded no useful metal. The actual number may be slightly higher or lower than the number given because in compiling these statistics I have had to deal with entries in the assessment rolls that lacked consistency, especially in the recording of names,. It is relatively easy to keep track of the major producers (mines or mills), but it is less easy 13 An Act providing for the taxation of the net proceeds of mines, approved 28 February 1871, in Bonnifield and Healy, Laws of Nevada, 2:226-227, Sections 3245-46.14 See Joseph Tingley, Mining Districts of Nevada, Report 47, Nevada Bureau of Mines and Geology, 2nd

edition, 1998, for a discussion of the Comstock Mining District.15 More about the tax implications in Chapters 17 & 18.

8

THE COMSTOCK [C]

with small, marginal producers. Where I thought that it was reasonable to assume that operations with slightly different spellings or identifying notations could be grouped under a single name, I have done so. Although the number of such groupings was small and mainly concerned modest operations, it can affect other calculations such as rankings. Of the approximately six dozen bullion owners that I have identified 56 percent were mining operations and the remaining 44 percent were milling operations. In terms of ore production and bullion yield the statistics are quite different. The mines accounted for 90 percent of the tonnage and 98 percent of the bullion. As voluminous as tailings were, they were not a significant factor in overall ore production. Against claims numbering in the hundreds along the Lode or in the region of the Lode no more than a few dozen mines produced the bulk of the ore in a decade and a half.

Total ore tonnage of all the declarations between 1871 and 1884 reached approximately five million with a bullion value of $204 million. When ranked according to tonnage Crown Point stood at the top of the list with 804,000 tons or 16 percent, but when ranked by bullion it ranked fourth with $26 million or nearly 13 percent of the total. Close behind Crown Point in tonnage was Consolidated Virginia with 791,000 or 16 percent. In bullion, however, Consolidated Virginia was first with nearly $64 million or 31 percent of the total. The other major ore producers were well-known mines: Belcher was third in tonnage and bullion with 15 and 16 percent respectively, and California was fourth in tonnage with 12 percent but second in bullion with 23 percent. In fifth place but far behind the aforementioned leaders was Chollar Potosi with 5 percent of the tonnage and 3 percent of the bullion. Further scrutiny of these figures suggests significant differences in per-ton yields, perhaps the most important measure of a mine’s productivity. Not surprisingly Consolidated Virginia and California occupied the top two positions with average yields of $81 and $80 per ton respectively. Behind them in third place was Belcher with $44 per ton. Further down the list at sixth was Crown Point at $32 per ton. In fourth and fifth place at $36 per ton were Ophir and Union Consolidated. Both of these properties were on the northern end of the Comstock Lode in the vicinity of the two most productive mines, Consolidated Virginia and California. As high as their per-ton yields were Ophir and Consolidated Union were much farther down on the lists of the rankings by tonnage and bullion: Ophir had no more than 3 to 4 percent of the tonnage and bullion, and Union Consolidated had about 1 percent.

During these 15 years the average yield for all properties was slightly more than $41 per ton. That figure was directly influenced by the extraordinarily high yields at Consolidated Virginia and California. When a median from all of the computed per-ton yields is calculated, it comes in at an extremely low $11 per ton. Since this analysis of tonnage and bullion includes output from tailings mills, which often reported per-ton yields in the low teens and below, the median may understate the performance of the Comstock. Another approach is to make these calculations from mines alone. If all the known tailings mills are excluded, then the mean for the mines is $45 per ton and the median is $14 per ton. One could, of course, treat Consolidated Virginia and California as outliers, since no other properties came even remotely close to their productivity. Removing them from the calculations would drop the mean to $26 per ton, but the median remains at $14 per ton. Clearly without the bonanza mines of Consolidated

9

THE COMSTOCK [C]

Virginia, California, Belcher, Crown Point and perhaps one or two others Comstock yields would barely have justified further investment or exploration.

The ultimate test was profitability. The best measure of Comstock performance would include a comparison of yields per ton versus costs per ton. Yield data were fairly reliable because they were determined at the mint. It was harder for the bullion owner to cheat, if he were so inclined, about yields than about costs. Since there is no sure-fire way to account for fraud, it is worth making quarterly comparisons of miners’ reported costs. (I have excluded millers because they did not have mining costs.) Eliot Lord was openly critical of the profligacy of mine owners and their managers. He observed how extravagant and wasteful they were in the use of company capital by not paying attention to unjustified outlays that boosted their costs and reduced their profits, which should be used to rebuild their capital.16 But Eliot was complaining about poor business judgment rather than conniving and deceiving. One approach is to examine per-ton yields quarter-by-quarter and compare them to quarterly costs as reported by the companies. Data on yields and costs, when assembled and plotted, cover 43 quarters between 1871 and 1884. (Figures from 1885 assessments are virtually unusable.) In these quarters 3.4 million tons were recorded in the assessment rolls with a bullion value of $145 million at a cost of $76 million. The calculation of a mean reveals that the ore yielded $42 per ton in bullion at a cost of $22 per ton. But the mean can be affected by outliers within the variables, and the coefficient of variation (standard deviation/mean) indicates that variability in yields was more than twice that of costs (61 percent to 27 percent). The median, computed for each variable over the 43 quarters, is notably different with a narrower spread: bullion yields came in at $27 per ton and the costs at $22 per ton. The two variables – yields and costs – correlate only moderately at about 63 percent. Expansion in output characterized the period from 1871 through 1878 and contraction for 1879 through 1884. In the first period the mean for yields and costs came in at about $50 per ton and $24 per ton respectively with coefficients of variation at 32 percent and 14 percent (still more than twice). For the second period, costs per ton exceeded yields by 10 cents per ton ($18.72 to $18.62). Coefficients of variation were closer – 45 percent for yields and 32 percent for costs – but again yields even in a contracting economy had greater variability than costs. The mean cost per ton fell by about $5 during the second period, but the mean yield per ton dropped by $24. The level of costs per ton across the entire 43 quarters appears to be fairly consistent, and if miner owners or their agents were manipulating the books in order to reduce tax burdens one might expect less consistency. It can be assumed that they were so clever as to cheat with consistency. It’s more likely that their costs were close to real, and whatever gains accrued by manipulating costs were small and perhaps insignificant.17

That mine owners simply did not pay enough because of the way in which the assessments were structured was a far more valid criticism.

16 Throughout Comstock Mining and Miners Lord depicted managerial behavior that he thought was detrimental to the success of the Comstock. He was probably more critical of that behavior in the first decade than later. The owners who came to the fore in the 1870s were more sober and conscientious in terms of running their companies.17 All the calculations were made from assessment (1875-1884) in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada at Reno, and in the Story County Quarterly Abstracts submitted to the State Controller for 1st Quarter 1871, 1st, 3rd, 4th, Quarters, 1872, and 4th

Quarter, 1874, on file in the Nevada State Archives.

10

THE COMSTOCK [C]

FIGURE 1COMPARISON OF YIELDS PER TON AND COSTS PER TON, 1871-1884

Quarters # Bullion Per Ton Cost Per Ton1 Quarter 1871 1 $22.81 $16.611 Quarter 1872 2 $30.12 $22.323 Quarter 1872 3 $27.23 $23.704 Quarter 1872 4 $28.86 $21.441 Quarter 1874 5 $46.31 $30.403 Quarter 1875 6 $54.93 $23.484 Quarter 1875 7 $45.25 $28.411 Quarter 1876 8 $69.03 $23.232 Quarter 1876 9 $66.22 $26.103 Quarter 1876 10 $55.97 $28.074 Quarter 1876 11 $52.02 $25.711 Quarter 1877 12 $75.48 $24.862 Quarter 1877 13 $57.24 $23.973 Quarter 1877 14 $57.79 $23.264 Quarter 1877 15 $59.40 $23.341 Quarter 1878 16 $69.01 $25.652 Quarter 1878 17 $53.70 $22.823 Quarter 1878 18 $29.44 $20.634 Quarter 1878 19 $37.65 $19.381 Quarter 1879 20 $36.34 $22.432 Quarter 1879 21 $35.74 $23.103 Quarter 1879 22 $25.03 $21.424 Quarter 1879 23 $33.17 $26.381 Quarter 1880 24 $32.96 $29.282 Quarter 1880 25 $26.55 $22.683 Quarter 1880 26 $18.82 $14.074 Quarter 1880 27 $13.18 $21.021 Quarter 1881 28 $20.73 $36.262 Quarter 1881 29 $14.97 $24.803 Quarter 1881 30 $8.35 $11.894 Quarter 1881 31 $11.76 $14.251 Quarter 1882 32 $14.26 $17.232 Quarter 1882 33 $17.76 $16.463 Quarter 1882 34 $11.79 $15.144 Quarter 1882 35 $15.39 $15.951 Quarter 1883 36 $16.18 $17.042 Quarter 1883 37 $13.76 $12.683 Quarter 1883 38 $15.04 $16.994 Quarter 1883 39 $12.68 $16.821 Quarter 1884 40 $14.19 $14.312 Quarter 1884 41 $13.95 $14.243 Quarter 1884 42 $12.07 $12.494 Quarter 1884 43 $12.21 $12.29

Median $27.23 $22.32Source: Story County Net-Proceeds Assessment Rolls, see footnote 17.

11

THE COMSTOCK [C]

FIGURE 2COMPARISON OF YIELDS AND COSTS PER TON 1871-1884

$0

$10

$20

$30

$40

$50

$60

$70

$80

0 10 20 30 40 50Quarters Sequentially

Per-Ton Yields

Per-Ton Costs

The vast majority of mine owners and operators even in good times operated in the red or very close to the edge of red. It would have taken more than figuring out a way to cheat on taxes to enhance profitability. For whatever reason – malfeasance, incompetence or misfortune – mining companies had to rely on capital (as opposed to tax) assessments to stay in business. Authorization of assessments against stockholders meant that companies at the very least had too few profits from which to underwrite further explorations, to maintain existing facilities or upgrade underground technologies. In some cases assessments were required to meet daily operating expenses. Mines not only lacked profits that could be converted to capital for investment but at the basic level revenue streams that paid for day-to-day operations. But then again companies were expected to pay dividends so that whatever profits they might earn often ended up in the stockholders’ pockets. If companies were paying dividends, theoretically they had profits and surpluses that could be invested in continuing explorations and operations. It was not uncommon for companies to pay dividends while collecting assessments. This created burden than tax payments. It was the basis of much of Lord’s complaint against owners and operators. He compiled a table of assessments and dividends for all stocks trading on the San Francisco Exchange as of 1880. One caveat: his data cannot be readily verified although his research was generally viewed favorably. In any event he found that the Exchange listed 103 mining stocks for Washoe Mines (mines along the Comstock Lode and beyond). Fourteen mines paid dividends totaling $116 million. The four largest bonanza mines – Consolidated Virginia, California, Belcher and Crown Point paid out $102 million. The balance of $10 million was spread among the other ten mines. That group included well-established operations such as Gould & Curry, Hale & Norcross, Kentuck, Ophir, Savage and Yellow Jacket, which combined paid out $13 million. Four smaller operations split up the remaining million dollars. Only 14 percent of the mining companies whose stocks traded generated profits from which to pay dividends. By contrast 102 of the 103 companies (California was the sole exception) approved

12

THE COMSTOCK [C]

assessment that totaled $62 million. Only five of the companies – Belcher, Consolidated Virginia, Crown Point, Gould & Curry and Kentuck – had profits after deducting assessments. (California had profits as well but no assessments.) Thus, while 14 percent paid dividends, only 5 percent had profits that exceeded their assessments. If California is added to the list (profits but no assessments) 6 percent had free and clear profits. Of the $62 million in assessment $44 million (63 percent) was never repaid.18 Although Lord’s data do not resolve the basic issue of yields versus costs, they do reinforce the idea that except for a handful of operations over a quarter of a century could be said to make any money for their owners and investors. Other operations might have been profitable from time to time but over the long term they were not moneymaking investments. Whatever the actual spread between yields and costs quarter by quarter and company by company may be, these computations nonetheless suggest that the color red was as prominent in the Comstock’s financial world as gold and silver were in its mineral world.

Special Appendix:Below are sample pages from microfilm copies of the Net-Proceeds Mineral Tax as recored by the Story County Assessor, 3rd Quarter, 1877. The ledgers were composed of larger-then-normal pages, and the copies (below) have been arranged as follows: top left, bottom left, top cneter, bottom center, top right, bottom right.

TOP LEFT – MINING COMPANIES

18 Lord, Comstock Mining and Miners, 419-421.

13

THE COMSTOCK [C]

BOTTOM LEFT – TAILINGS MILLS PLUS STATEMENT BY ASSESSOR

TOP CENTER- TONS, YIELDS, COSTS

14

THE COMSTOCK [C]

BOTTOM CENTER – SAME DATA AS TOP CENTER FOR TAILINGS MILLS PLUS ANOTHER STATEMENT BY ASSESSOR

TOP RIGHT – TOTAL COSTS, DEDUCTIONS PERMITTED, TAXES ASSESSED

15

THE COMSTOCK [C]

BOTTOM RIGHT – CONTINUATION OF TOP RIGHT AND ASSESSOR'S STATEMENT FROM BOTTOM CENTER

16

THE COMSTOCK [D]

Chapter 4Statistical Profile of Mining Industry:

First Stage 1860-1870

In the preceding section on the Comstock mining structure I focused on the decade and a half after the enactment of the 1871 tax because the official public record allow broad trends and patterns to be identified and studied. In the decade prior to 1871 the Comstock had important discoveries that led to the earliest bonanza mines. The quantity and quality of the documentation, however, is less consistent and complete, and this presents some complications in the effort to link the two decades and to develop a long-term analysis of Comstock mining from 1860 to 1885. There is a fairly large body of private and public data on mining operations and finances from 1860 to 1870, but it has survived in a form that does not lend itself to the creation of a profile such as discussed above. Numeric data are more scant for the first half of the 1860s than the second half. During the territorial period government generated few documents on mining operations, and except for judicial records as the result of hundreds of lawsuits concerning property disputes public documentation is sparse. On the private end prospectors with their picks, pans and packs seldom keep records on ores extracted from outcroppings or streams that they worked. Even when some of the outcroppings led to bonanzas, the record keeping was spotty. Over time, as entrepreneurs replaced prospectors and as the scale of mining grew to unprecedented levels, the paper trail became more conspicuous and pertinent. In the wake of the organization of state government the official public record began to grow. In addition mining companies as stock-issuing corporations had to issue periodically financial reports for stockholders and investors, and these reports plus the business accounts upon which they were based came to constitute private-company archives, some of which have survived in part because they were considered to be collectibles. The well of documentation for the first decade of Comstock mining is not dry by any means, and it can be drawn from to develop a profile of the mining industry during the first decade that can be linked to a far more detailed profile for the second and third decades.

Early Comstock history is subject to frequent rewriting. Who made the first discoveries and how events evolved from there are based as much on lore as on documentation. When the Surveyor-General wrote his first legislative report in 1865 (submitted to the 3rd Legislative Session, 1867), his version of the Comstock earliest history offered a reasonably accurate rendition of how events unfolded. The Grosch brothers were the first (certainly among the first) to find silver while panning in the area of Silver City around 1857. One brother died from a pick-in-the-foot accident, and shortly thereafter the other brother headed for California. Whether or not the Grosch brothers deserve to be credited with the founding of the Lode (since their discovery was modest and their presence brief), reports of their discoveries circulated through western Nevada and eastern California and attracted others. During the next two years panners and prospectors continued to work on the Lode’s southern edge around Silver City and northward into the vicinity of Gold Hill and Virginia City. Surface conditions certainly made prospecting attractive, and while a major discovery remained elusive, it had become a probability rather than just a possibility for those working the valleys and hillsides. Perhaps the most important figure during these first two years was James

1

THE COMSTOCK [D]

Finney, known as “Old Virginia” (being a native Virginian). His fellow miners regarded him as a first-rate placer miner and so honored him by naming Virginia City for him in 1859. The Surveyor-General actually credited Finney with discovering the Comstock, even though the Lode was named for another prospector, Harry Comstock, a naming that the Surveyor-General considered a fraud. He based that on a quartz claim that Finney filed in February, 1858. This claim was for an outcropping, known as “Virginia Croppings”, at the head of Six Mile Canyon, and in the view of the Surveyor-General it was the “western portion” of the Comstock Lode. Finney had actually abandoned his diggings there, and some months later in the summer of 1859 others while “gold washing” discovered a large silver deposit that Finney had missed. So the founding of the Comstock will remain shrouded in controversy, perhaps as it should, because prospecting by its very nature resists being documented. Less controversial is the fact that the prospectors’ activities had by 1860 drawn those individuals who would lay the foundation for the Comstock mining industry.1

In those early months and years no one knew how much ore lay below the surface or how it was configured. It was imagined, as one editor quoted by Smith said, that “Every hill and canon around seems to be literally made of silver—there is no end to it.”2

The scattered nature of the underground deposits as well as their great depth was not yet understood. But a rush was underway, and as a result little of the Comstock escaped being staked for claims. Even ten years later when the topography and geology of the Comstock was better understood, surveyors’ maps (many of extraordinarily high quality) still showed virtually every plot of ground along and beyond the Comstock under a claim, although many had fallen into desuetude.3 Only a few rich outcroppings led to large underground deposits that could be tunneled into with little or no risk. The majority of the claims contained vein matter – streaks of ore not usually profitable – or turned out to be absolutely barren. But enough ore was found or was rumored to have been found to launch a frenzy of building. The depth of the shafts and the length of the tunnels, the horsepower of the hoists and the capacity of the

1 “Annual Report of the Surveyor-General...1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 19-20. Also see Smith, The Comstock Lode, 4-16. For a lively and modern rendering of the early years see James, The Roar and the Silence, Chaps 1-3.2 Smith, The Comstock Lode, quote on p. 32 with no source cited.3 See J. B. Treadwell, compiler, “Graphic Chart of the Comstock Mines, State of Nevada, 1876,” issued with the San Francisco News Letter, 3 June 1876, on file, G4352 C6 1876 T7, at Special Collections, Library, University of Nevada, Reno.

2

Illustration 1: Map of Comstock Claims

THE COMSTOCK [D]

mills were frequently commented upon in local newspapers and published in state reports to illustrate how immense this undertaking had become. Placer mining offered little precedent for what lode miners confronted on the Sierra’s eastern slopes. It was accomplished in large measure through a combination of experimentation, innovation, money and luck. Some new, important technologies from framing the underground workings to accelerating the amalgamation operations – were quickly developed and widely adapted.4 The Comstock benefited from the fact that America was in the midst of a manufacturing revolution, which meant that many industrial-grade products – cables, motors and drills to name a few – could be enlisted in the conquest of the Comstock. In addition it benefited from the fact that the American West and California in particular attracted inventors, engineers and scientists who could be called upon to address the challenges posed by the Comstock. What the first prospectors thought that they had found evolved into a mining business that they would not have recognized. Indeed the Comstock both captured and reflected the inventive and entrepreneurial spirit of America in the second half of the nineteenth century.

FIGURE 1SOUTHERN SECTION, COMSTOCK LODE, BECKER ATLAS SHEET XI[BRACKETED FIGURES FROM SURVEYOR'S POINT (GOULD & CURRY), OVERMAN

(COMBINED) MINES EXHAUSTED AT 600', BELCEHR, CROWN POINT AT 2,000', KENTUCK AT 1,400', YELLOW JACKET AT 1,500', CHALLENGE, CONFIDENCE,

IIMPERIAL AT 1,000']

Notes: Depths from surface above mines may be several hundred feet shallower than surveyor's depths.

Official mining statistics from the territorial period are minimal. A few public documents such as judicial proceedings over disputed claims and company accounts provide a scattering of mining and milling data. Much of the economic, financial and technological information for the territorial period has been drawn from newspapers and periodicals. As word spread about the wealth of the Comstock so too did coverage. Besides the local press there were journalists from San Francisco as well as eastern cities

4 “Annual Report of the Surveyor-General...1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 22.

3

THE COMSTOCK [D]

like New York. News reports as historical sources always raise the issue of accuracy, and in the case of the Comstock the press has served as an important historical repository for the reminiscences, chronicles and histories written about the Comstock. Not surprisingly the two most famous chroniclers, Grant Smith and Eliot Lord, made extensive use of journalistic sources. Almost everyone who has written about the Comstock in the earliest years portrayed it as rife with speculation that resulted in too many mines and mills being built. Lord, relying on data published a decade later (3 March 1877) in a periodical known as the Mining and Scientific Press, averred that in 1861 that 86 mining companies had been organized “with an aggregate capital stock” of $61.5 million. That averaged out to be about three-quarters of a million dollars per company. These were large numbers by any measure. If we accept the numbers as generally accurate and then compare them to the Surveyor-General’s 1866 report, we observe that the Comstock industry had slimmed down considerably. The Surveyor-General’s list had half the number of mines cited by Lord, and only half of those actually registered any production. Lord’s retrospective view of such frenzy in mining on the Comstock, a view shared by Smith and others, accepted this for what it was – fantasy. “In the unknown there is an almost infinite range of possibility, and who could then oppose the confident faith of the optimists, except with unsupported doubts,…[as] every stroke of the pick revealed new treasures.”5 Smith calculated that between 1859 through 1862 output probably rose from several hundred thousand dollars to several million dollars. Impressive but not spectacular, and yet enough to clog the trails from California with would-be fortune seekers. But, as would happen more than once in the first quarter century of Comstock mining, new discoveries sent production skyrocketing. Output jumped to $6 million in 1862, $12 million in 1863 and to $15 million dollars in 1864 and 1865. From 1859 to 1866 the Comstock had yielded up about 1.7 million tons of ore worth about $50 million dollars (near $1 billion today).6

A quantum leap had occurred, and this was not lost on those who followed Comstock mining. By far the largest operation by ore produced in the first half of the 1860s was Gould & Curry with $14,000,000 worth of ore or nearly a third of the total.7

Even though Comstock production had more than doubled between 1862 and 1864 its overall financial health was called into question. The San Francisco Stock and Exchange Board (created in November 1862) had helped to push stocks prices up after major discoveries in 1862, but, as output appeared to stall in 1864, the Exchange then drove them down. Investors and speculators had thrown a lot of money at the Comstock without, as the Surveyor-General’s report insinuated, much serious scrutiny of the Lode’s financial potential. Too many mines and too many mills and too few profitable ores precipitated a crash. Bankruptcy, tight money, unemployment and out-migration spoiled the party. Now Virginia City had become to those who remained “dull” after several

5 Lord, Comstock Mining and Miners, 126.6 Smith, The Comstock Lode, 32, no source cited for quote. Other materials on pp 28-37, 58-62. Surveyor-General estimated that $45 million worth of ore for a shorter period of five years from 1861-1865. See “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 22-23.7 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 23; Smith, The Comstock Lode, 25-26; Lord cited figures for 1863-1865 that exceeded $11 million in Comstock Mining and Miners, 128.

4

THE COMSTOCK [D]

“splendid” years. But the Comstock was not yet to be declared dead. The downturn in the mid-1860s simply served as an invitation to another group of investors and speculators to buy in. As Smith wrote: “The mines were worth far more than [their] bedrock prices.”8

FIGURE 2MIDDLE SECTION, COMSTOCK LODE, BECKER ATLAS SHEET X

[BRACKETED FIGURES FROM SURVEYOR'S POINT AT A (GOULD & CURRY), CHOLLAR POTOSI EXHAUSTED AT 700', HALE & NORCROSS AT 1,600', SAVAGE AT 1,000',

GOULD & CURRY AT 600', BEST & BELCHER BARREN]

Notes: Depths from surface above mines may be several hundred feet shallower than surveyor's depths.

Comstock statistics become more ample after 1865 in large part because government had a vested interest in knowing how much ore was being produced on the Comstock and in other mining districts. More data did not mean, however, that there was always agreement about how much ore was produced or how many claims were active on the Comstock. Nevada’s Surveyor-General stated the obvious: “It is impossible to give a total yield of ores from the various claims upon the Comstock Lode since its discovery, as but few companies have kept records of the amount raised.”9 But, as Comstock mining assumed a more corporate, industrial character, record keeping expanded and improved, even a few years after the initial discoveries. In particular the State in need of financing for public services had a direct interest in gathering more information. Initially the 8 Smith, The Comstock Lode, 99.9 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 22.

5

THE COMSTOCK [D]

Surveyor-General assembled what financial data he could in his role as monitor of the State’s mineral resources and mining operations. With the establishment of the Office of the Controller, the State’s chief auditing and accounting officer, data on revenues (in which mining taxes came to play a major role) and expenditures were collected regularly and published annually. Finally, by the late 1860s the State appointed (and then elected) a Mineralogist, who having assumed most of the oversight responsibilities assigned originally to the Surveyor-General broadened the statistical database by requesting more detailed financial information from mining companies and then publishing long annual reports. Scattered company accounts combined with numerous legislative reports prior to the 1871 enactment of the net-proceeds tax provide a fairly solid basis for estimating the performance of the mining industry.

The Surveyor-General’s reports, submitted to the biennial legislative session in 1867, contained inventories of Comstock mines (1865) and mills (1866).10 [See Special Appendix at end of chapter for sample pages from two tables.] The 1865 compilation contained names of 46 mines with statistics on the length of the claims (explored and unexplored), the depth of the mines, and the number of engines employed in each mine. According to his findings the 46 mines had claimed about 23,000 feet of the Comstock, and they had explored about half of the Lode thus far claimed. But he warned that some claims included in this inventory were largely unexplored and could be excluded once the actual dimensions of the Lode were fully documented. The average depth of the mines exceeded 400 feet. The shallowest mine – Union - was 80 feet and the deepest – Best & Belcher – was 821 feet.11 He estimated that underground excavations (tunnels, drifts, adits, etc.) had reached 67.5 miles [350,000 feet]. Underground excavations were defined at times as ore-paying and non-ore-paying. The latter was also known as “dead work”. Even though such works were necessary in order to reach the ores, they could prove to be so expensive and unprofitable that many companies failed to cover those costs even after they found ores of moderate yields. The longest tunnel up to this point, according to the Surveyor-General, was Latrobe. It may have been started as early as 1861 and may have reached 3,200 feet by 1865. It was built to drain several small mining properties known as Sides and White & Murphy and perhaps one or two others. It ran from the Lode along the footwall next to Mt Davidson at about 700 feet toward the hanging wall where it surfaced. Little else is known about the tunnel’s early history, although Smith declared 10 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 21; “Annual Report of the Surveyor-General…Year 1866” in Senate Journal and Appendix, 3rd

Legislative Session (1867). The Surveyor-General compiled two tables: “Mines on the Comstock Lode” with more than two-dozen columns of data and “Tabular List of Mills Crushing Ore from the Comstock Lode During the Year 1866” with mills listed by county and more than two dozen columns of data. The tables appear in the 1866 Report following p. 26. Sources for mine table were not precise, although the Surveyor-General admitted that he had not visited the mines themselves since 1863 (1865 Report, p. 22). He also noted that since some mine owners were reluctant to share information, the list and the data were incomplete. Sources for the 1866 mill table were described in the 1866 Report, p. 19. The two annual reports, 1865 and 1866, by the Surveyor-General were bound together in a volume containing the business of the 1867 Legislative Session. It is not clear if the mine table was originally a part of the 1865 Report or a part of the 1866 Report where it was found.11 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 21. Eliot Lord cited some of the above figures from the Surveyor-General’s 1865 report in his Comstock Mining and Miners, although he claimed the year incorrectly to be 1866 instead of 1865. See p. 227 and footnote 3.

6

THE COMSTOCK [D]

that the mines that it was supposed to drain eventually abandoned it.12 Between $13 and $16 million worth of ore was extracted and processed in 1865.13 Even through the bullion was many times greater in value than a half-dozen years earlier, the enormity of the task to locate and recover the ore both in financial and technological terms was becoming more worrisome. The Lode was not a solid, uninterrupted wedge of profitable ore but rather pockets of ore separated by large, barren spaces that had to be explored and maintained at costs that could exceed the value of the output of any given claim along the Lode. A massive, expensive and complex structure was taking shape underground at the same time that an equally impressive city was being built above ground. Worrisome was the risk and uncertainty arising from the cost to build both of these networks. Not enough profit-yielding ores were being found to maintain the profligate ways of the initial organizers of the Comstock industry.

For 1866 Surveyor-General’s statistics on Comstock mining activity were far more detailed than for the previous year. Not only is it possible to establish quarterly figures for ore production and yields, but it also possible to analyze these data on a company-by-company basis. The backdrop for 1866 is the so-called “Panic of 1865”, when mining stocks sold off sharply at the San Francisco Exchange because mining companies were alleged to have squandered opportunities and fortunes through mismanagement, needless lawsuits and unproductive explorations.14 Under these circumstances output can be expected to fall. Unfortunately a single, clean number does not exist. The Surveyor-General reported several different numbers. One number was the quarterly “ore product” of each mine. It was calculated from tons extracted times the per-ton value to equal the “bullion product” of the mine. The total was $11.9 million. But in this only ores yielding $20 or more per ton were counted. Owners of ores yielding less than $20 per ton simply did not report their tonnage or sold the ores on the open market. This amounted to slightly more than $82,000, and the total of the two categories of ores was $12 million. The Surveyor-General offered a third set of numbers - $11.3 million - from Hillyears & Co.’s Stock Circular. All three figures fall between $11 and $12 million, and since some ores yielding less than $20 per ton may not have been included, the total product of all ores could have been $12 million or higher.15 Grant Smith published a figure of $12 million, but Eliot Lord published an even higher figure of more than $14 million.16 The Surveyor-General’s 1866 estimate represented an decline of 8 12 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 22; Smith The Comstock Lode, 46, 146-147. Smith reported that the tunnel had only reached a length of 2,800 feet.13 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 22, reported $13.5 million while Smith in The Comstock Lode, 58, published a figure of $16 million without any specific citation.14 Smith, The Comstock Lode, 58-59. Despite the production of about $16 million in bullion in 1865, speculators and investors alike began to sell off their holdings. The market value of Comstock mining companies fell from near $50 million in 1863 to $12 million in the summer of 1865 and $4 million in December of 1865. Some correction was to be expected in light of much-inflated stock prices plus expensive lawsuits, extravagant outlays for mills and offices, poor management and no new bonanzas.15 “Annual Report of the Surveyor-General…1866” in Senate Journal and Appendix, 3rd Legislative Session (1867), Table following p. 26 and p. 29.16 In The Comstock Lode (p. 99) Smith actually rounded the total up from the $11.7 million, the figure that appeared in his Notebooks. He attributed the information in his Notebook to a report on the Comstock by James G. Hague. See: “Tabular Statements of Assessments, Products and Dividends During 1866, 1867,

7

THE COMSTOCK [D]

percent from his 1865 total, and Smith’s 1866 estimate represented a 25 percent decline from his 1865 figure.17

FIGURE 3OUTPUT ($) BY COMPANY, VARIOUS SOURCES, 1866

Company Output $ Output $ Output $ Output $ % %Smith SG 1 SG 2 SG 3 (SG 2) (Smith)

Yellow Jacket $2,297,233 $2,397,792 $2,397,792 $2,310,000 20.1 18.2Savage 1,814,879 1,721,869 1,722,273 1,805,800 14.4 14.4Gould & Curry 1,624,781 1,583,378 1,583,378 1,605,228 13.3 12.9Crown Point 1,312,471 1,317,248 1,320,926 1,313,057 11.1 10.4Hale & Norcross 1,186,543 1,133,089 1,133,089 1,199,768 9.5 9.4Chollar Potosi 848,751 847,307 856,433 848,750 7.2 6.7Imperial 910,387 699,525 699,525 910,187 5.9 7.2Kentuck 571,507 568,400 568,400 4.8 4.5Empire 422,291 285,578 299,898 486,778 2.5 3.3Ophir 417,472 262,187 262,187 450,000 2.2 3.3Consolidated (21 Feet) 233,700 233,693 240,132 2.0 1.9Eclipse 206,499 206,386 231,374 1.9 1.6Gold Hill Quartz 115,484 115,491 119,839 1.0 0.9Winters, J. D. & Co 95,537 95,554 106,182 0.9 0.8Confidence 304,932 79,715 87,941 303,920 0.7 2.4Piute 84,077 84,082 84,082 0.7 0.7Plato 51,921 51,975 51,975 0.4 0.4Trench 41,019 41,019 41,019 0.3 0.3Bacon 34,606 34,606 34,606 0.3 0.3Segmented Belcher 30,305 30,305 0.3Mexican 28,567 28,667 0.2Bowers 28,555 28,555 28,555 0.2 0.2Challenge 23,299 23,299 0.2Overman 27,953 27,953 0.0 0.2AllenAlphaApple & BatesBaltimore-American

1868 and 1869 of the Leading Claims on the Comstock Lode,” (Copied from James G. Hague’s Report on the Comstock, p. 191), Binder 1, Typescript with revisions in pen or pencil, NC229, Special Collections, Library, University of Nevada, Reno; also “Recorded Production of Little Gold Hill Mines, as far as known, for years 1866 to 1869,” Binder 1, typescript with revisions in pen or pencil, NC229, Special Collections, Library, University of Nevada, Reno. Eliot cited the 1866 “Report of the United States Commissioner of Mines and Mining” in Comstock Mining and Miners, 226, footnote 2. Couch and Carpenter in their publication entitled “Nevada’s Metal and Mineral Production” in University of Nevada Bulletin, 37:4, 132-138, provide production figures for Story County with data for the early years being drawn from figures published in Smith.17 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 23; Smith, The Comstock Lode, 58.

8

THE COMSTOCK [D]

BelcherBest & BelcherBullionBurke, Hamilton & CoCaliforniaCentralCentral #2Consolidated VirginiaExchequerKinneyLady BryantNorth AmericanSidesSierra NevadaUnionUtahWhite & MurphyTotal $12,630,598 $11,869,620 $11,951,877 $11,261,441 100.0 100.0Sources: Grant Smith, Tabular Statements…, 1866, Binder 1, NC229, Special Collections, University of Nevada, Reno; “Annual Report of the Surveyor-General of the State of Nevada for the Year 1866,” in State Journal and Appendix, 3rd Legislative Session (1867), Table following p. 26. Company names in red appear only in Smith and in blue only in Surveyor-General. The Surveyor-General’s Report had three different totals, as explained in text. Percentage rankings for Survey-General’s data from SG 2 or “Total Yielding over $20 per ton, and ores sold”. Blank spaces indicate no production recorded for the company. Since it is not known for certain if companies were active with no production or inactive with no production, those with blank spaces were not included in the rankings. If all the companies with blank spaces were active with no production, then that would change the rankings in a significant fashion. The companies are ranked on the basis of the data from the Surveyor-General. In the adjacent column rankings based on Smith’s data are given. For the top five companies the rankings are the same but the percentages differ slightly.

The early structure of the Comstock mining industry can be laid out in modest detail based on financial statistics for companies with claims on the Lode in 1866 assembled by the Surveyor-General and Smith.18 A total of 45 mining companies appeared on the two lists, as shown in the preceding Table. Of the total 24 or 53 percent reported ore production. Of the remainder it is impossible to determine if they were operating but had no ore production to report for that year or if they had no ore production because they were shut down. In a few cases among the non-producing companies both the Surveyor-General and Smith reported that the companies had raised money through assessments, but that in and of itself did not prove that the companies were actually in operation. What the data suggest, as early as the mid-1860s, is that in any given year only a handful of companies accounted for the bulk of the ore extracted

18 “Annual Report of the Surveyor-General…1866” in Senate Journal and Appendix, 3rd Legislative Session (1867), Table following p. 26, Notes p. 29; Smith, “Tabular Statements”, Binder 1, NC229, Special Collections, Library, University of Nevada, Reno; also “Recorded Production,” Binder 1, NC229, Special Collections, Library, University of Nevada, Reno.

9

THE COMSTOCK [D]

from the Comstock. On this matter both lists agree. The Surveyor-General had 43 operations and Smith had 36. The former included nine operations that did not appear on Smith’s list, and latter included two not on the Surveyor-General’s list. Of the nine on the Surveyor-General’s list only two recorded ore production for a total of 0.5 percent, an insignificant amount. The two companies in Smith’s list but not on the Surveyor-General’s list reported no ore production. According to the Surveyor-General’s data the total output in 1866 was between $11.2 million and $12.0 million (numbers rounded up). Smith, on the other hand, came up with a total output of $12.6 million. Since their sources were different, their totals should not be expected to agree.19 A figure between $12 and $13 million is reasonable in light of the available evidence.

Although the figures from the Surveyor-General and Smith on total production as well as company-by-company production (based on the value of the bullion in dollars) differed, the rankings of the companies were quite similar. In comparing the two datasets I have used the Surveyor-General’s figures for all ores. He divided the ores into two classes: bullion from ores that yielded more than $20 per ton and bullion from ores that “sold” because they yielded $20 per ton or less (Product SG 2 in Figure 12).20 Thus the totals being compared are $11,951,877 from the Surveyor-General and $12,630,598 from Smith. (The totals being used will affect the respective rankings.) The Yellow Jacket mine on the southern end of the Comstock near the Virginia City border accounted for one fifth of the total output: $2.4 million for 20 percent of the total on the Surveyor-General’s list versus $2.3 million or 18 percent on Smith’s list. Behind Yellow Jacket was Savage with $1.7-1.8 million or 14 percent, Gould & Curry with $1.6 million or 13 percent, Crown Point with $1.3 million or 11 percent and Hale & Norcross with $1.1-1.2 million or 9 percent. Taken together these five accounted for $8.2 million or two-thirds of the total ore. Another eight mines produced 27-28 percent of the total, and the remainder accounted for less than 1 percent each of the total. To recapitulate both lists contains 15 to 20 mines with no reported production at all. The rankings will undergo numerous changes over the next 20 years. Some of the high producers will remain active players and others will cease operations. Among non-producing mines several will arise like Phoenix to enjoy great bonanzas. The number of producing mines in any given year was 19 Smith’s data were taken from US Mint records in San Francisco, some of which appeared in a report written by James D. Hague for Clarence King. The Surveyor-General’s data were taken from the records of Story County’s assessor, who levied a tax of 0.75 percent against two classes of ores: those worth more than $20 or more per ton and those worth $20 or less. The Table (“Annual Report of the Surveyor-General …1866” in Senate Journal and Appendix, 3rd Legislative Session, 1867, Table followed p. 26, under Notes p. 29, involved some elaborate calculations, not all of which were correct or consistent. In paying their taxes producers reported to the assessor the tons of the ores that they had processed and the per-ton values each quarter. The per-ton values multiplied times the tons processed equaled the so-called “bullion product”. In checking the results some errors were found in multiplying the tons by the per-ton averages. Thus, the total “bullion product” was probably off by thousands and perhaps tens of thousands of dollars. That would mean that the value of the bullion for each producer and the total value for the Comstock should be higher than reported in the Surveyor-General’s Table. Even after this correction the Surveyor-General’s total was lower than Smith’s total. This would be the case even if the “bullion product” consisting of ores worth more than $20 per ton were added to “Ores Sold” consisting of ores worth $20 or less per ton. A third total on the surveyor-General’s Table was from Hillyears & Co.’s Stock Circular. It was even lower - $11.3 million versus $11.9 and $12.0 million – because it did not include production from a dozen medium-size and small operations.20 See the above footnote.

10

THE COMSTOCK [D]

always small compared to the alleged number of active mining operations, and the concentration of production became more pronounced, especially as mergers and acquisitions of mining properties accelerated.

FIGURE 4COPY OF UPPER SECTION OF SAVAGE, GOULD & CURRY AND BEST &

BELCHER MINES, BECKER'S ATLAS, XVI[Purpose to illustrate how shallow ore bodies were in early years. Two depths: without parentheses, from mine surface; with parentheses from Gould & Curry survey point. Tiered colors=depths: green on top of red, on top of brown, on top of yellow, approx 100 to 900 feet. Colors repeat at lower depths. View: looking down from surface. Savage's ore bodies from 200 to 900 feet; Gould & Curry from 0 to 500 feet; Best & Belcher barren. Slanted dark line (west to east) claim borders. Tunneling – drifts, winzes, upraises – at various levels show extent of underground exploring.]

11

THE COMSTOCK [D]

FIGURE 5QUARTERLY TONNAGE AND YIELDS IN EXCESS

OF $20 PER-TON BY COMPANY, 1866.[Surveyor-General Data]

Sources: See footnote 19.

The Surveyor-General’s report from 1866 contained other useful information on how the industry was developing. For tax purposes companies had to report the tons of ore that they had processed or sold at the end of each quarter, and from these data quarterly production figures can be assembled for the entire Comstock and for individual companies.21 In the wake of the “Panic of 1865” Comstock ore tonnage was lower at the beginning of the year than at the end; 1866 turned out to be a year of recovery. This was evidenced in the quarterly production figures: tonnage of ore processed or sold advanced 5 percent from 82,000 tons in the first quarter to 86,000 in the second, 25 percent to

21 The rate of taxation on the proceeds was three-quarters of 1 percent.

12

Companies 1st Q Per Ton 2nd Q Per Ton 3rd Q Per Ton 4th Q Per Ton Total Per Ton

2,658.0 $26.17 5,796.0 $38.34 7,974.0 $49.16 8,457.1 $53.12 24,885.1 $45.53Savage 7,224.0 $50.23 6,042.0 $45.84 9,197.0 $46.61 16,038.0 $40.67 38,501.0 $44.69Crown Point 8,133.0 $44.06 8,368.3 $40.23 6,956.0 $33.65 10,737.0 $36.15 34,194.3 $38.52Mexican 100.0 $30.00 676.0 $37.79 776.0 $36.83Kentuck 1,043.0 $42.50 2,526.2 $31.50 6,350.6 $37.56 7,656.0 $26.89 17,575.8 $32.34Ophir 1,596.0 $44.91 4,562.5 $28.28 1,878.0 $27.10 430.0 $26.94 8,466.5 $30.96Yellow Jacket 10,045.0 $29.41 17,681.3 $28.70 26,859.0 $35.28 23,985.5 $27.07 78,570.8 $30.52

13,547.0 $32.64 11,897.0 $37.60 15,100.0 $25.00 13,883.0 $23.00 54,427.0 $29.09Challenge 854.7 $27.26 854.7 $27.26Imperial 6,597.0 $23.54 4,173.0 $31.55 7,216.0 $23.15 8,353.0 $29.39 26,339.0 $26.56

3,598.0 $26.55 3,598.0 $26.55

712.0 $28.25 1,849.0 $21.55 1,079.0 $31.16 734.0 $29.84 4,374.0 $26.40Trench 1,624.5 $25.25 1,624.5 $25.25Bacon 1,370.0 $25.26 1,370.0 $25.22

1,262.5 $24.00 1,262.5 $24.00Chollar-Potosi 8,144.0 $24.66 10,553.8 $23.87 7,811.5 $21.09 9,164.5 $22.51 35,673.8 $23.76Confidence 1,362.0 $22.27 2,126.0 $26.23 3,488.0 $22.85

1,797.0 $21.87 2,660.0 $23.88 3,100.0 $22.13 2,848.0 $21.88 10,405.0 $22.46Empire 4,023.0 $23.00 4,768.0 $21.33 4,228.0 $21.50 13,019.0 $21.93Eclipse 1,617.5 $24.67 960.0 $21.17 2,830.0 $20.85 4,180.0 $20.87 9,587.5 $21.53Plato 767.0 $24.50 1,653.0 $20.06 2,420.0 $21.47Piute 920.5 $21.82 3,056.0 $20.94 3,976.5 $21.14Bowers 1,415.0 $20.18 1,415.0 $20.18Totals 75,858.0 83,205.5 107,046.1 110,694.1 376,803.8Average $31.59 $31.88 $31.93 $30.62 16,382.8 $31.72Median $24.96 $28.49 $26.83 $26.94 8,466.5 $26.40

Hale & Norcross

Gould & Curry

Winters, J. D. & CoGold Hill Quartz

Segmented Belcher

Consolidated (21 Feet)

THE COMSTOCK [D]

108,000 tons in the third and finally 4 percent to 112,000 in the fourth Even though the annual production for 1866 was off by 25 percent compared to 1865 the quarterly upward trend, spurred by new discoveries, could only have been heartening to both the mining and the investing community. Twenty-three companies reported taxable ore production of 388,000 tons for an average of 17,000 tons per company. Ninety-seven percent or 377,000 tons belonged to the class of processed ores ($20 per ton and above) and 3 percent to the class of sold ores. For both classes the yield-per ton by which Comstock productivity was measured was $31.72.22 This is a rough estimate because the data in the Surveyor-General’s report from which this average has been computed contained some arithmetic errors.

New ore discoveries, of course, were the most powerful force to revive interest in the Comstock among miners and investors. Discoveries at Hale & Norcross and Crown Point played that role in 1866. In the case of Crown Point its discovery spilled over into Yellow Jacket so that both mines were working the same deposit, although at different depths. These discoveries added to the knowledge of the configuration of the Lode. The picture that was emerging from the underground was more complex and quixotic than the original rendition. Miners were learning that the Lode had vast stretches of barren ground that almost at random contained concentrated pockets of rich ores that upon discovery could pay for the costs that had accrued in searching for them. In other words, money had to be spent on explorations without any guarantee of eventual returns. On top of that they were learning that as their explorations reached the range of 500 to 1,000 feet they were better served by angling away from the head wall at the foot of Mt Davidson toward the hanging wall at the outer edge. The Comstock was not a solid, inexhaustible, perpendicular mineral formation. The riches were in pockets spread along several miles from the northern to the southern tip and across a width of several thousand feet. Most importantly, while several ore pockets may lie at approximately the same depth, they were seldom connected. Hopes rested on the discoveries of the pockets, but they also had to embrace with a cyclical regimen that deposits would be mined out before new ones turned up. A cycle of bonanzas and borrascas ruled the Comstock until the Lode had given up its riches. Hence, in 1866 after the “panic of 1865” and the hand-ringing over the future of the Comstock that it induced the new discoveries ignited a new enthusiasm. Stock prices had plummeted in 1865, and gloom dominated the forecasts at the outset of 1866. Three large companies - Ophir, Gould & Curry and Chollar Potosi – with mines under Virginia City found little or no profitable ores as they opened explorations below 500 feet. On the other hand another Virginia City mine, Savage, was able to report that an ore deposit, which it shared with Gould & Curry, continued in a southerly direction away from Gould & Curry for another 500 feet to almost the 1,000-foot level. In addition Savage shared with Hale & Norcross on its southern border an ore deposit that was situated between 500 and 1,500 feet. Except for a small patch of ore above 500 feet near the surface, Hale & Norcross owned mainly barren ground until just below the 500-foot level where like Savage it struck a bonanza. Gold Hill was about 400 22 Lord reported an average of $29.50 for 1866. His total tonnage was 480,239 (extracted and milled) with a value of $14.2 million. His total bullion from information published by the U. S. Commissioner of the Mint was higher than the totals from the Surveyor-General and from Smith. His total tonnage was extrapolated from “Official Reports of ten mining companies, representing more than two-thirds of the total yield”. The average was calculated by dividing the total bullion by the total tonnage.

13

THE COMSTOCK [D]

feet lower in elevation than Virginia City, the high point of the Lode. Its mining companies between Alpha on the north and Belcher on the south including many of the small claims discussed above were also probing more deeply and discovered ores between 400 and 900 feet. (800 to 1,300 feet from the Virginia City survey point). While the northern Gold Hill mines will find little of value below 900 feet the southern mines (Yellow Jacket, Crown Point, Kentuck and Belcher) will find great riches. The year 1866 would be a bridge to a brighter future even though the pitfalls made that far from obvious. Of the 23 companies with taxable bullion five had per-ton averages above $31.77, the producing-mine average, and 18 had averages below. In other words these were the best performers by a measure often used to determine profitability. They were Hale & Norcross, Savage, Crown Point, Mexican and Kentuck. Combined they produced slightly more than 126,000 tons or a third of the total, and their bullion upon which taxes were paid was worth more than $5 million or 42 percent of the total. Some contrasts among the five are worth noting: Hale & Norcross ranked first in per-ton output at $45.53 and seventh in tonnage with less than 25,000 tons (6.6 percent of total); Mexican had the lowest tonnage at 776 (a fraction of 1 percent) but the fourth highest yield at $36.94.23

Turning from per-ton values to total tonnage a different line-up of companies emerges. Some heavy producers had markedly lower per-ton values. In total tonnage eight companies exceeded the group average of 16,383 tons. The highest producer was Yellow Jacket at nearly 79,000 tons with a per-ton value about one dollar below the average for the 23 companies. The next highest was Gould & Curry at nearly 55,000 tons and a per-ton value more than $2.50 below. Chollar-Potosí was third in total tonnage but sixteenth in per-ton value. Hale & Norcross with the highest per-ton value ranked seventh in total tonnage. All 23 companies, however, could have made money since the list included only operations with yields greater than $20 per ton, the dollar value that miners were using as the break-even point.

Quarterly figures from the Surveyor General’s 1866 data add a small bit more of color. There are differences between the mean and median in each quarter: first quarter was $31.59 versus $24.96 respectively; the second $31.88 and $28.49; the third $31.93 and $26.83; and the fourth $30.62 and $26.94. The bonanzas mines post-1871 will have such high per-ton yields compared to the rest of the mines with the result of a greater differential in the mean and median computations. The differential also existed in 1866 but to a lesser degree. The most productive mines were Savage in quarters one and two and Hale & Norcross in quarters three and four. Four different mines occupied the lowest rung. Savage reported yields of $50.23 per ton in the first quarter and $45.58 in the second while Bowers and Piute reported yields of $20.18 and $20.94 respectively. In the third and fourth quarters Hale & Norcross achieved yields of $49.16 and $53.12 and Plato and Eclipse came in at $20.06 and $20.87. In its youth the Comstock had a narrower spread between the highest yielding mines and the lowest yielding ones.

The ultimate question was how much per ton was necessary to realize profitability? Obviously that figure depended on many factors that would change over time. In his 1866 report the Surveyor-General followed the format of the county assessor:

23 Mexican shared a fairly rich deposit with Ophir, but its share was exceedingly small and soon exhausted. See Smith, The Comstock Lode, 83.

14

THE COMSTOCK [D]

ores were classified as those that yielded more than $20 per ton and those that were sold. It was assumed that ores had to yield more than $20 per ton in order to realize a profit. (There was no guarantee, of course, but generally higher yields ensured greater profits.) What about ores at $20 per ton and less? Were they ever profitable? In his notes the Surveyor-General suggested that the break-even point for Comstock ore might have been closer to $15 per ton than $20 per ton. It should be pointed out that the ores classified as “sold” (3 percent of the total) had a range of $2.50 per ton to $10 per ton. Even though the sales of the ores were taxable at the same rate as the ores at $20 and above, they may have been sold because they could have cost the companies more to mill than they could return in bullion. Their sale price was not their per-ton value. It is worth noting that none of the ore sales were between $10 and $20 per ton. Perhaps some if not all these ores had per-ton values of between $10 and $20, and yet in the face of such uncertainty it may have been compelling to get rid of questionable ores at some price than to risk the cost of refining them. The Surveyor-General himself raised the possibility that not all ores under $20 were actually sold. Rather they were refined, especially if they had the potential to yield $15 to $20 per ton, but not necessarily reported since the assessor (and the Surveyor-General) distinguished between ores above and below $20 per ton. (Remember, this was pre-1871 when a more stringent net-proceeds tax was enacted.) If it was held that ores needed to reach the threshold of $20 per ton to represent profitability, then collecting taxes on ores under $20 was probably not of the highest priority. Even though the Surveyor-General was seemingly interested in the fate of ores under $20 per ton, he did not initiate any policy recommendations to crack down on whatever fraud was being practiced. How much of the lesser ores was refined but escaped taxation will never be known, and even if it could be recovered, it would probably not alter the summaries that can now be compiled. For better or worse, $20-per-ton remained the generally-accepted break-even point for mining operations, although the actual figure probably varied from time to time and could be several dollars higher or lower.24

A second set of figures was often invoked in any consideration of mining profits: the return in bullion per foot of the length of the claim. In the earliest years the size of a claim was limited, but by the middle of the 1860s as lode mining replaced panning claims were merged and consolidated. Basically the length was a north-south measurement along the Lode while the width was an east-west measurement from the footwall to the hanging wall. In accord with the findings of the Surveyor-General in 1866 the 43 mining companies with and without recorded production claimed more than 30,000 feet of Comstock Lode from a point north of Virginia City to a point south of Gold Hill. Exactly how long the Lode was remained a matter of dispute, but a length of four to six miles was generally agreed upon. The northern and southern ends the Lode split before petering out, and much of the debate over the length of the Lode concerned where the end points were. By 1866 the heart of the Lode was known to be under Virginia City southward into Gold Hill. Virtually all the Lode from north to south was claimed, and the boundaries of the claims were still being litigated. Based on the information provided to the Surveyor-General claims averaged about 700 feet. Of the 23 companies with recorded production 24 Accompanying the Surveyor-General’s tables were revenue and cost data for several mines. “Annual Report of the Surveyor-General…1866” in Senate Journal and Appendix, 3rd Legislative Session (1867), 33-36. He indicated that he lacked the resources to try to track data for all the companies. That made any crack down on evasive tax-payers even less likely.

15

THE COMSTOCK [D]

their claims amounted to only 7,700 feet or a quarter of the total. They averaged 335 feet in length, and they yielded on average $3,255 worth of bullion per foot. Variations in the lengths of the claims were significant. The longest claim among all 43 mines was Baltimore American, but it reported no (taxable) bullion and in addition the Surveyor-General did not believe that Baltimore American’s claim was valid. The shortest claim of 10 feet belonged to Plato, a mine with bullion production. Among the 23 companies with bullion production Chollar Potosi had the greatest length at 1,434 feet with a yield of $579 per foot and the aforementioned Plato the shortest length with a yield of $5,198 per foot. The mining company known as Consolidated With 21 Feet had highest yield based on length at $11,435 for each foot, while Ophir had the lowest with $186 for each of its 1,400 feet. The mine with the greatest total yield was Yellow Jacket at $2.4 million with a length of 943 feet and a yield per foot of $2,542. The mine with the lowest total yield was Challenger at $23,299 with a length of 50 feet and a yield per foot of $466. Some of ground claimed by the 43 mining companies was still in dispute as late as 1866. Gould & Curry, for example, claimed 1,200 feet but only 921 feet was undisputed.25

Trying to make investment decisions on the basis of the length of the claim was risky. The obvious risk for companies owning little ground was the rapid depletion of their underground holdings. The unpredictable distribution of the ore along the Lode led companies to try to acquire as much ground as possible. Since the Lode was not a continuous and solid wedge of profitable ore, the future for companies with small claims, no matter how impressive their yields per foot, was dubious. In fact most of the companies with modest-sized claims in 1866 ceased operations or merged with adjoining companies because their underground assets were soon exhausted. Another consideration was that high yields per foot did not necessary translate into high yields per ton. In the case of Consolidated With 21 Feet its 11,000 tons of ore yielded bullion worth more than $240,000 or $22.50 per ton almost ten dollars below the average of the producing mines. Its yield per ton peaked in the second quarter at $23.88, and by the end of the year its yield was no higher than it had been at the beginning of the year at $21.87. All but one company (Kentuck) with yields per ton above the Comstock average of $31.72 had yields per foot below the Comstock average of $3,255. Hale & Norcross with a yield of over $45 per ton but only a yield of $2,800 per foot was probably a more profitable investment than Consolidated With 21 Feet. Although information of dividend payments may not be totally accurate for 1866, what has survived indicates that Hale & Norcross paid dividends of nearly $300,000 and Consolidated With 21 Feet paid no dividends. As problematic as the yield-per-foot was as a measure of productivity, it continued to be used among stock traders and speculators. Companies often allotted shares by footage. In some cases companies issued one share per foot, and in others they issued as much as 20 shares or more per foot. Bullion per foot became convenient shorthand for gauging and comparing stock values.26

25 “Annual Report of the Surveyor-General…1866” in Senate Journal and Appendix, 3rd Legislative Session (1867), Table following p. 26 and Notes p. 29.26 All of the calculations made from Table after p. 26, “Annual Report of the Surveyor-General…1866” in Senate Journal and Appendix, 3rd Legislative Session (1867). Consolidated With 21 Feet was part of a group of small claims along the so-called Red Ledge in Gold Hill. Their owners resisted consolidation and remained independent and profitable during the first half of the 1860s, but as their underground assets were depleted, they began to lose money as well as their independence. In the second half of the 1860s many of

16

THE COMSTOCK [D]

For 1866 the Surveyor-General cited seven dividend-paying companies with a total outlay of $1.8 million, and Grant Smith cited eight with a total of $1.9 million. (Missing from the former’s list was Kentuck.) Despite the differences in the two sources they were in agreement that about 15 percent of the total bullion product was paid out in dividends. Yellow Jacket paid out $390,000 in dividends or 17 percent of its total bullion product. Following Yellow Jacket were Savage and Hale & Norcross with $360,000 ($320,000 in Smith) and $350,000 respectively. Savage’s dividend distribution was 21 percent (only 17 percent in Smith) of the total bullion product and Hale & Norcross’s was 30 percent. Hale & Norcross, it will be recalled, had the highest per-ton yield of all the ore-reporting companies, and this may well explain why shareholders earned as much as they did. Empire, one of the cluster of small mines in Gold Hill, paid out the least amount – 11 percent if the total product of the Surveyor-General is used versus 8 percent if Smith’s is used. The remaining companies - Gould & Curry, Imperial, Crown Point and Kentuck from Smith’s database – had dividend distribution that fell between 15 and 25 percent. Chollar Potosi, which had bullion worth between $800,000 and $900,000, paid no dividends. Ophir, one of the original bonanza mines, on bullion valued at between $300,000 and $400,000 paid no dividends either. Most of the Gold Hill small claims reported bullion but paid no dividends. By contemporary standards these were generous if not excessive returns. The average payout among seven dividend-paying companies for which the Surveyor-General listed shares issued was over $600 per share. The highest was Savage, which paid nearly $2,200 per share of its 800 total. The lowest was Imperial, which had 4,000 shares and paid $175. Hale & Norcross with the highest per-ton figure distributed more than $1,400 per share, and Yellow Jacket with the highest bullion value distributed nearly $2,000 per share. At one level paying huge dividends could drain companies of monies that should have been set aside as capital reserves for future explorations or rehabilitations. Given the risks, investors and in particular the principals who often owned most of the stock may well have preferred to be rewarded immediately when the money was available instead of plowing any surplus back into the operation in hopes that such reinvestment might lead to an income and dividend stream that flowed steadily and consistently for many years. Experience taught investors that bonanzas could seldom be predicted or sustained. It was very much a business of now, not later. Excessive dividend payments may also have served as enticements not only to assuage stockholders’ fear about the viability of the company but also to attract new investors.27

If dividends were rewards, assessments were penalties. Companies used assessments to raise working capital. Companies replaced prospectors and panners largely because they had the capacity and authority to raise capital through the issuance and sale of stock. The stockholder owned a stake in the company, and that entitled him to share the profits and also obligated him to assume the debts. And debts began to

these small claims were merged into several large companies. Smith, The Comstock Lode, 94-98. Also Adolph Sutro’s map in connection with his proposal to build a tunnel to drain the Comstock in Smith, The Comstock Lode, 100. Map in Special Collections, Library, University of Nevada, Reno.27 “Annual Report of the Surveyor-General…1866” in Senate Journal and Appendix, 3rd Legislative Session (1867), Table following p. 26; Smith, “Tabular Statements”, Binder 1, NC229, Special Collections, Library, University of Nevada, Reno. The percentages differ not so much because the two sources have different dividend figures but rather because they have different bullion figures.

17

THE COMSTOCK [D]

accumulate almost immediately. Some companies faced the horrifying prospect of having bought up claims with barren ground, but since the character of the Lode and the location of its ore was barely understood, companies had little choice or incentive to change course so long as people were willing to put up the capital. In addition there was the matter of wasteful spending in anticipation of striking it rich. The Surveyor-General noted in his 1865 report that few companies were keeping or had kept records that allowed them to accurately measure the state of their financial health.28 Eliot Lord was even harsher in his criticism of how company officers spent money. The lavishness in the construction of works and offices, he wrote, “was in part natural and in accord with the prodigal temper of the time, and partly exaggerated…in order to assure the minds of stockholders of the unprecedented value of their stock and to dazzle and impress possible investors, for a plausible outward show of prosperity is worth as much as to a mine as to an insurance office.”29 The result was that assessments against stockholders grew in size and frequency. In 1866 the Surveyor-General found that 11 of the 43 companies assessed their stockholders for a total of $1.2 million, an average of $120,000 per company. Ophir’s assessment at $185,000 was the highest and Baltimore-American the lowest at $13,000. Of the ten companies only four – Bacon, Confidence, Ophir and Yellow Jacket – actually reported ore production. Even the critics of companies’ financial shenanigans recognized that assessments could be legitimate and ultimately produce good results. Assessments in one year without any reportable ores could simply mean that a company was undertaking repairs or explorations that would lead to production in the following years. Suspicions were aroused when stockholders continued to be assessed and the company produced little or no profitable ores. Ophir, for example, had been one of the bonanza companies in the early 1860s based upon a large ore deposit from the surface to about 500 feet. By the middle 1860s the bonanza was fading. Except for a small stretch of ore between 500 and 650 feet Ophir owned mostly barren ground below 500 feet. Not only had Ophir run out of ore, it had also run into water that was expensive to pump and virtually endless. The assessments in 1866 equaled from 40 to 70 percent of the total bullion product (several figures exist), not an encouraging picture. Bacon assessments of $18,000 was more than half of what the mine produced in the first quarter, the only quarter in which it had any reportable ores. Confidence assessed its stockholders an amount that was nearly equal to its output of bullion in first and second quarters after which it had no bullion to report. Finally, Yellow Jacket was more complicated. Its bullion had a value of about $2.4 million against $180,000 in assessments. It also paid dividends of $390,000 that were slightly double its assessments. Hence the stockholders’ return was cut in half if the assessments were taken into account. The remaining seven companies – Union, Bullion, Exchequer, Alpha, Overman, Belcher and Baltimore-American – present a somewhat mixed picture. Union, Bullion, Exchequer and Baltimore-American owned virtually barren ground. Overman may have yielded bullion ($28,000) at less than $20 per ton and therefore escaped the Surveyor-General’s compilation. Belcher was then exploring barren ground, but unbeknownst to the company in 1866 it had much brighter prospects at much greater depths.30

28 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 22-23.29 Lord, Comstock Mining and Miners, 126-127.30 Both the Surveyor-General and Smith show Overman with bullion income of $27,953. The source for the Surveyor-general was not the county assessment rolls but the market circular known as Hillyears & Co.

18

THE COMSTOCK [D]

The profile of Comstock mining in 1866 was constructed from solid but not perfect reports, one in 1865 followed by another in 1866, submitted by the Surveyor-General to the Nevada Legislature in 1867. It can be used as a base year for analysis of the evolution of the structure of the industry over the next 20 years. What is evident from the reports plus additional information from Eliot Lord, Grant Smith and other contemporary and historical observers mining companies, incorporated in California and largely financed from San Francisco, had assumed control of the Comstock. Only a few of the companies actually owned ore-bearing ground. In the rush that followed the discoveries in 1859 and 1860 all of the Lode and much of the land surrounding it were claimed. By 1865 or 1866, as the geology of the Comstock was being more clearly defined, it was becoming apparent that most claims were worthless. Some of the earliest bonanza claims were in decline, and the discovery of new claims occurred much deeper underground than anyone had anticipated even several years before. Deep lode mining required capital, and while many companies failed to be good stewards of the money that they raised, they were necessary for mining on the Comstock to take the next step. In 1866 five companies owned 70 percent of the bullion reported to the county assessor. These five companies owned about 4,000 linear feet of the Lode or 13 to 14 percent of the Lode that was assumed to be about 30,000 feet in length. Owning the right ground was obviously crucial to the prosperity of any company. But since no company could accurately predict where the next bonanza would occur, they had to extend their control as much as possible across the Comstock. In some cases companies with adjoining claims were merged into a single, large company, and in other cases companies with adjoining or disconnected claims were brought under the control of several stockholders or a group of stockholders much like a holding company. The Comstock’s most productive years lay ahead and only after the structure of mining was revamped..

Lacking data on company operations comparable to the 1865-1866 compilations for the remainder of the decade, we turn to Grant Smith’s aforementioned tabular report that included not only 1866 but also 1867 through 1869. As discussed earlier, his data were assembled from official publications, market newsletters and newspaper reports. The promise of recovery in 1866 was borne out in 1867 as the total bullion reached $13.8 to $14.6 million, surely the highest yet for the Comstock.31 Of the three-dozen mining

Where the Surveyor-General cited data from Hillyears & Co. along side of the county data the figures from the former were generally higher, an indication that Hillyears & Co. included ores not sold but valued at less than $20 per ton. Overman was the only instance where county data on bullion product was totally lacking. Smith may well have used the same source – Hillyears & Co. - or a similar source. His assessment data generally agreed with the Surveyor-General’s, the notable exception being Overman. “Annual Report of the Surveyor-General…1866,” in Senate Journal and Appendix, 3rd Legislative Session (1867), Table following p. 26 and Notes p. 29; Smith, “Tabular Statements”, Binder 1, NC229, Special Collections, Library, University of Nevada, Reno.31 Since the State of Nevada received part of the revenue from mining taxes, the Controller’s annual report now included quarterly production data county by county. His 1867 data showed that Story County recorded 448,000 tons worth about $13.8 million or $30.52 per ton. “Biennial Report of the Controller of the State of Nevada for the Third and Fourth Fiscal Years 1867 and 1868,” in Senate Journal and Appendix, 4th Legislative Session, 1869, 121-123 for 1867. Eliot Lord claimed to have used the same database except he reported about 451,000 tons that also yielded about $13.8 million or $30.60 per ton, nearly the same as the year before. Lord, Comstock Mining and Miners, 416.

19

THE COMSTOCK [D]

companies on Smith’s list more than half reported bullion production. Savage and Chollar Potosi led the way with bullion worth $3.7 million (26 percent) and $2.7 million (18 percent) respectively. These figures represented a doubling in bullion for Savage and a tripling for Chollar Potosi over the previous year. Savage’s ore holdings between 500 and 1,000 feet on both its north and south boundaries proved to be substantial with veins ranging from 10 to 80 feet in width. In its annual report (for fiscal year 1867-68) the company also reported that the richness of the ores fluctuated and was beginning to decline at the lower levels.32 Chollar Potosi’s 1867 record output was a flash in the pan because the ore came from an area near the surface that had been missed in earlier explorations. Below the 500- to 600-foot levels where the major explorations were then taking place, Chollar Potosi had only barren ground. This will show up in later tabulations.33 The previous leader, Yellow Jacket, was third with $1.7 million worth of bullion or about 12 percent of the total bullion. This was a decline of 25 percent from 1866. The so-called “old works” up to 700 feet had been largely exhausted and abandoned, and while good ores were being extracted from 800 to 900 feet and the vein matter below 900 feet was promising. Yellow Jacket’s next bonanza was still several hundred feet deeper.34 Fourth on the list was Kentuck, a small claim of about 100 feet in length between Yellow Jacket and Crown Point. Its 1867 production in bullion was 100 percent higher than 1866 when it ranked eighth. It shared rich deposit of ore with Yellow Jacket and Crown Point between 600 and 900 feet. Smith called this one of the “surest venture ever known on the Comstock” because of its location.35 The fifth highest producer in 1867 was Imperial, the largest of the cluster of small Gold Hill mines north of Yellow Jacket. It registered slightly less than Kentuck and slightly more than Hale & Norcross, which was sixth, and boasted a 22 percent increase over 1866. As the State Mineralogist’s report underscored, the future was not bright for Imperial and the associated mines. Its shaft, jointly built with Empire, had reached 900 to 1,000 feet but had also encountered water at 900-foot level. Below that virtually no millable or profitable ores were found. Imperial did well in 1867 because it had more recoverable ores between 500 and 700 feet than the surrounding mines. When those ores were exhausted, Imperial and the related companies had nothing but barren ground. Other large operations from 1866 and before suffered declines in 1867. Hale & Norcross dropped 8 percent, Crown Point 30 percent. Gould & Curry 62 percent and by far the most significant Ophir 100 percent ($417,000 to $4,100 in bullion). Crown Point and Hale & Norcross will recover, but Gould & Curry and Ophir were virtually finished as ore producers. In his 1867 annual report the President of Gould & Curry, Alpheus Bull, painted a glum future:

Explorations extensively and vigorously prosecuted in various parts of the mine, in search of new bodies of mineral, have led to the absorption of the entire receipts of the past year.

32 “Biennial Report of the State Mineralogist of the State of Nevada for the Years 1867 and 1868” in Senate Journal and Appendix, 4th Legislative Session, 1869, 30.33 “Biennial Report of the State Mineralogist...1867 and 1868” in Senate Journal and Appendix, 4th

Legislative Session, 1869, 25-26.34 “Biennial Report of the State Mineralogist...1867 and 1868” in Senate Journal and Appendix, 4th

Legislative Session, 1869, 31.35 Smith, The Comstock Lode, 105.

20

THE COMSTOCK [D]

The result of these costly explorations has not, I regret to say, been of a very encouraging character, no important deposits of ore having been discovered through these developments, not were any very interesting flattering indications met with of the existence of such.36

The other measures – assessments and dividends – shed further light on 1867. Nineteen companies authorized assessments totaling $1.2 million. Both the number and the total were slightly higher than in 1866. Nine companies distributed dividends in the amount of nearly $4 million. Both the number and the total were slightly higher than in

more company announced dividends than in 1866, but the total outlay was nearly twice as great. Nor surprisingly Savage had no assessments and paid out $1.6 million in dividends, a five-fold increase. Chollar Potosi assessed its stockholders $42,000 and then distributed dividends of $420,000 after authorizing neither assessments nor dividends in 1866. Yellow Jacket again imposed large (in fact the largest) assessments of $240,000 and allotted slightly higher dividends of $300,000 than assessments. Finally, as in 1866, Kentuck and Imperial made no assessments but issued dividends two to three times higher than the previous year. The troubled mines of Gould & Curry and Ophir assessed their stockholders $120,000 and $184,800 respectively but experienced sharp declines in output and had no surplus to

distribute. For the second year Bullion had assessments exceeding $100,000 and no production. In terms of bullion yields and assessment-dividend rations 1867 was better than 1866. The concentration of production among the top five companies also grew from 52 percent to 72 percent. The obvious loss of several established companies had to be unsettling within the mining and investing communities. Expectations had to be more muted than before.

There is considerable disparity in the extant figures for the total bullion product in 1868, but there is no doubt that output of the Comstock mines declined from 1867. The question that cannot be precisely answered is by how much did the Comstock decline? Smith’s bullion totals, which more than likely came from U. S. Mint data, were about $9 million or a 38 percent drop from his 1867 figure.37 Lord, citing data gathered by the State Controller, came up with a total of $12.4 million for a drop of 11 percent.38 The Controller’s total, however, was not what Lord cited, but at $9.4 million was nearly identical to Smith’s.39 Even though it is not possible to resolve the conflicting data, it would appear that the Comstock suffered a rather severe and sudden contraction in 1868. 36 “Biennial Report of the State Mineralogist...1867 and 1868” in Senate Journal and Appendix, 4th

Legislative Session, 1869, 29, 31.37 Smith, “Tabular Statements” and “Recorded Production of Little Gold Hill Mines”, Binder 1, NC229, Special Collections, Library, University of Nevada, Reno. To repeat, Smith drew his data from a report on the Comstock by Hague (p. 191) with supplemental information from the U. S. Mint. He made it clear that these data did not always agree with data from annual company reports because calendar years and fiscal years did not always coincide.38 Lord, Comstock Mining and Miners, 416.

21

Illustration 2: Chollar Interior

THE COMSTOCK [D]

With the reversal came a change in the rankings. Savage was still the top producer with an even higher proportion (28 percent) of the total. But Savage’s output was 33 percent lower in 1868 than in 1867. That amounted to more than $1.2 million and represented a substantial portion of the loss in output between 1867 and 1868. But Savage was not the only casualty in 1868. Chollar Potosi and Yellow Jacket fell from second and third place respectively in 1867 to fourth and fifth place in the following year. Chollar Potosi’s output fell by 67 percent or about $1.8 million and Yellow Jacket’s by 54 percent or nearly $1 million. With these three large producers one can account for nearly all the difference between 1867 and 1868. The two bright spots were Kentuck, which ranked second with 14 percent, and Crown Point, which ranked third with 12 percent. But their totals were only slightly higher than what they were the year before. Other companies that experienced sharp downturns were Imperial (-38 percent), Hale & Norcross (-64 percent) and Gould & Curry (-95 percent). Several companies had significant increases: Bacon (737 percent), Bowers (107 percent) and Overman (83 percent), but their production combined only equaled $700,000, hardly large enough to make up for the losses noted above. Ophir, Trench and J. D. Winter & Co. fell off the list of producing companies, and although Sierra Nevada and Segmented Belcher now joined the list, they accounted for a trifling 0.3 percent of the total. It was a heavy year for assessments and a moderate year for dividends. For each dollar of assessment the Comstock recorded $5 in bullion in 1868 compared to $1 in $10 from the previous two years. Hale & Norcross witnessed a three-fold increase in assessments, from $60,000 to $200,000 as production fell from $1.1 million to $400,000 and dividends from $60,000 to zero. Yellow Jacket continued to authorize large assessments - $150,000 in 1868 on top of $420,000 in the two previous years – but also equally large dividends - $360,000 on top of $700,000. Savage paid the highest dividends ($1.2 million) followed by Kentuck ($480,000) and Crown Point ($360,000). Crown Point assessed its stockholder $90,000; neither Savage nor Kentuck posted assessments. Not much in the 1868 figures was especially encouraging. Was this further proof of the cycle of bonanzas and borrascas, observed in 1865, 1866 and 1867, or were the bonanzas so brief and paltry that the borrascas were actually pointing to an unmistakable pattern of diminishing resources? In retrospect we can observe from the geological maps that between 500 and 1,200 feet only a half-dozen Comstock companies possessed ground that had moderately profitable ores. Based on the pre-ton yields, however, those ores appeared to be of declining grades.40

In 1869 the contraction continued, more so the result of an exogenous event rather than worsening economic fundamentals. All the known sources put the dollar value at between $6.7 million and $7.8 million. Smith’s data indicated a 13 percent drop from 1868 to 1869, while the Controller’s data showed a 29 percent decrease. The downturn

39 “Biennial Report of the Controller…1867 and 1868” in Senate Journal and Appendix, 4th Legislative Session, 1869, 49-50 for 1868. Lord claimed that his 1868 figures were taken from the Controller’s annual report. In fact they do not agree with the figures published by the Controller, as discussed in the text. It appears that Lord took the total tonnage for Story County from the Controller’s annual report and multiplied that by an average yield per ton of $36.78 to get $12.4 million. His per-ton yield does not agree with the Controller’s calculation, which was $28.26 per ton. At the lower yield the total bullion product would be $9.4 million, a figure that was just slightly higher than Smith’s figure.40 Company data found in Smith, “Tabular Statements” and “Recorded Production of Little Gold Hill Mines”, Binder 1, NC229, Special Collections, Library, University of Nevada, Reno.

22

THE COMSTOCK [D]

was confirmed in other data: tonnage fell from about 338,000 to about 280,000, and per-ton yields from $28 to $23. What is not manifest in the statistics is the tragedy that struck the Comstock. An April fire at the 800-foot level in Yellow Jacket cost the lives of at least 37 workers, and not only closed down Yellow Jacket’s operation on its southern boundary but also those of Crown Point and Kentuck, which worked the same vein as Yellow Jacket.41 Of the three mines Crown Point suffered the most with a 90 percent decline in output for the year in large part because its performance prior to the fire was hardly stellar. Kentuck, by contrast, experienced a smaller 33 percent decline because of a stronger first quarter. Yellow Jacket fared the best of all three by doubling its output because it made a discovery north of the fire that allowed its underground operations to be maintained. The year turned out to be less disastrous than it might have been because Hale & Norcross found a large deposit between 500 and 1,000 feet. Overall about the same number of companies (15 versus 14) reported bullion in 1869 as in 1868. The leader turned out to be Yellow Jacket with nearly 20 percent of the total in 1869 and a rise of 88 percent over 1868, although its 1869 figure of $1.5 million in bullion was by Smith’s own reckoning a rough estimate. It was followed by Chollar Potosi with 18 percent and an increase of 54 percent from 1868 to 1869 as it continued to expand its old, shallow works under 500 feet. Savage came in with 15 percent of the total but registered a sharp 50 percent drop from the previous year. Hale & Norcross with 13 percent saw its output increase by 162 percent. Finally, the fire-ravaged Kentuck had 11 percent but in fact produced a third less bullion. Other notable changes were Gould & Curry whose output skyrocketed by almost a 1,100 percent from $30,000 to $350,000, the last gasp of a company that had run out of exploitable ores. Sierra Nevada too had an impressive upswing from $23,000 to $152,000 for more than 550 percent change. Two new ore-producing mines – Occidental with 2.7 percent of total and Belcher with 0.2 percent – appeared on the list in 1869. The remainder of the list continued to see their output slide or turned from positive in 1868 to negative in 1869. Smith’s assessment and dividend tabulations showed that 20 companies assessed their stockholders for $1.4 million, just slightly below 1868, and of this number 10 produced bullion. Yellow Jacket had the highest assessment at $360,000 or a quarter of the total. Belcher, Crown Point, Imperial, Ophir and Overman had assessments that exceeded $100,000, and all but Ophir produced some ore. Companies with production but no assessments were Chollar Potosi, Gould & Curry, Hale & Norcross, Savage and Sierra Nevada. On the dividend side, seven companies (of the 15 ore-producing mines) paid dividends totaling about $1.2 million. Yellow Jacket had the largest dividend of $360,000 (that equaled its assessment) followed by Chollar Potosi and Savage. Four of the companies paying dividends had no assessments; the remaining three did. Although the fire contributed to the lowest production since 1862, the underlying trend all along the Comstock was even more disturbing. As mines reached 1,000 feet and lower, new bonanzas were few and far between.42

41 Smith, Lord and DeQuille all covered the fire. Smith, The Comstock Lode, 122-123, Lord, Comstock Mining and Miners, 269-277, and DeQuille, The Big Bonanza, 176-183. Also James, The Roar and the Silence, 84-90, who cites aforementioned sources but also various newspaper reports.42 Company data again from Smith, “Tabular Statements” and “Recorded Production of Little Gold Hill Mines”, Binder 1, NC229, Special Collections, Library, University of Nevada, Reno.

23

THE COMSTOCK [D]

FIGURE 6BULLION PRODUCT BY COMPANY

1866-1869[From Grant Smith's Notebooks]

Mines 1866 ($) % Total 1867 ($) % Total % Chg 1868 ($) % Total % ChgSavage 1,814,879 14.4% 3,737,100 25.7% 105.9% 2,534,868 28.2% -32.2%

Yellow Jacket 2,297,233 18.2% 1,729,277 11.9% -24.7% 800,000 8.9% -53.7%Chollar Potosi 848,751 6.7% 2,668,885 18.3% 214.4% 885,076 9.9% -66.8%

Kentuck 571,507 4.5% 1,140,742 7.8% 99.6% 1,259,707 14.0% 10.4%Hale & Norcross 1,186,543 9.4% 1,097,297 7.5% -7.5% 392,400 4.4% -64.2%

Crown Point 1,312,471 10.4% 920,718 6.3% -29.8% 1,086,230 12.1% 18.0%Imperial 910,387 7.2% 1,106,496 7.6% 21.5% 684,040 7.6% -38.2%

Gould & Curry 1,624,781 12.9% 614,621 4.2% -62.2% 29,557 0.3% -95.2%Empire 422,291 3.3% 278,607 1.9% -34.0% 213,771 2.4% -23.3%

Overman 27,953 0.2% 192,318 1.3% 588.0% 352,590 3.9% 83.3%Consolidated (21

Feet) 233,700 1.9% 440,790 3.0% 88.6% 56,970 0.6% -87.1%

Bacon 34,606 0.3% 34,250 0.2% -1.0% 286,800 3.2% 737.4%Confidence 304,932 2.4% 142,049 1.0% -53.4% 110,668 1.2% -22.1%

Ophir 417,472 3.3% 4,108 0.0% -99.0%Gold Hill Quartz 115,484 0.9% 106,399 0.7% -7.9% 103,686 1.2% -2.5%

Eclipse 206,499 1.6% 101,327 0.7% -50.9% 81,431 0.9% -19.6%Occidental

Winters, J. D. & Co 95,537 0.8% 89,950 0.6% -5.8%

Sierra Nevada 22,805 0.3%Plato 51,921 0.4% 75,350 0.5% 45.1% 15,728 0.2% -79.1%

Bowers 28,555 0.2% 28,300 0.2% -0.9% 58,676 0.7% 107.3%Piute 84,077 0.7% 0.0%

Trench 41,019 0.3% 40,600 0.3% -1.0% 0.0%Belcher 18,312 0.0%

Segmented Belcher 4,371 0.05%

AlphaBaltimore-American

Best & BelcherBullion

CaliforniaCentral

Consolidated Virginia

ExchequerLady Bryant

North AmericanSides

White & MurphyTOTALS 12,630,598 100.0% 14,549,184 100.0% 15.2% 8,979,374 100.0% -38.3

Mines 1869 ($) % Total % Chg Total % TotalSavage 1,162,803 14.8% -54.1% 9,249,650 21.0%

24

THE COMSTOCK [D]

Yellow Jacket 1,560,000 19.8% 95.0% 6,386,510 14.5%Chollar Potosi 1,366,385 17.4% 54.4% 5,769,097 13.1%Kentuck 828,834 10.5% -34.2% 3,800,790 8.6%Hale & Norcross 1,029,812 13.1% 162.4% 3,706,052 8.4%Crown Point 105,718 1.3% -90.3% 3,425,137 7.8%Imperial 273,727 3.5% -60.0% 2,974,650 6.8%Gould & Curry 350,000 4.4% 1084.2% 2,618,959 5.9%Empire 138,046 1.8% -35.4% 1,052,715 2.4%Overman 336,485 4.3% -4.6% 909,346 2.1%Consolidated (21 Feet) 731,460 1.7%Bacon 250,000 3.2% -12.8% 605,656 1.4%Confidence 18,889 0.2% -82.9% 576,538 1.3%Ophir 421,580 1.0%Gold Hill Quartz 65,207 0.8% -37.1% 390,776 0.9%Eclipse 389,257 0.9%Occidental 210,000 2.7% 210,000 0.5%Winters, J. D. & Co 185,487 0.4%Sierra Nevada 151,360 1.9% 563.7% 174,165 0.4%Plato 142,999 0.3%Bowers 115,531 0.3%Piute 84,077 0.2%Trench 81,619 0.2%Belcher 18,312 0.2% 36,624 0.1%Segmented Belcher 4,371 0.0%AlphaBaltimore-AmericanBest & BelcherBullionCaliforniaCentralConsolidated VirginiaExchequerLady BryantNorth AmericanSidesWhite & MurphyTOTALS 7,865,578 100.0% -12.4% 44,024,734 100.0%Sources: Smith, “Tabular Statements” and “Recorded Production of Little Gold Hill Mines”, Binder 1, NC229, Special Collections, Library, University of Nevada, Reno. The list of mines from report by Surveyor-General (1866), see footnote 30. His 1866 figures and Smith's do not agree. Smith's figures from James Hague. I have not tried to reconcile the differences. Smith's figures appear in different sections of his Notebooks. Because of how I have arranged the yearly numbers and because I have corrected for arithmetical errors, my totals will not agree with other published versions. For these years company data can best be described as a rough measure of company production.

The Comstock’s second decade did not begin auspiciously. During the last half of the 1860s bullion product had fallen by a third. The two top producers – Savage and Yellow Jacket – had seen a decline of more than a third in bullion. The fifth-ranking company - Hale & Norcross - had suffered a smaller decline of 13 percent decline. Other operations (at least based upon estimates) from the first half of the 1860s like Gould & Curry, Imperial, Ophir and the Gold Hill small claims had ceased to be major players.

25

THE COMSTOCK [D]

Several had for the most part ceased operations. Not all was negative, however. Two companies – Chollar Potosi and Kentuck – had experienced significant increases of 61 percent and 45 percent respectively between 1866 and 1869. Perhaps some encouragement could be drawn from the gains in percentage terms at Overman and Bacon, although they were and would remain marginal operations. Certainly the fire played a role when figures from 1869 are compared to those from 1866 (Crown Point was down 92 percent), but far more telling was the failure to uncover new rich deposits, especially on the northern end of the Comstock Lode as companies began to push their explorations to 1,000 feet and below. Although companies continued to find vein matter and in a few cases notable ore concentrations these were often of such low grade (heavy with base metals) and spread so broadly and thinly across the Lode that they could be processed only at great cost and little profit. The scarcity of rich ores was becoming a serious problem. Mining on the Comstock was clearly an episodic venture. Mines opened and closed with regularity, and only a handful had long productive periods before giving out completely. Smith portrayed 1870 as the “darkest” year in the history of the Comstock. Certainly it was the darkest year to date. (Some very dark years lay ahead.) According to the State Controller tonnage fell again by 15 percent to 239,000, and bullion reported to the county assessor was worth about $6.9 million or $28.38 a ton. The total dollar return was about the same as 1869, although if anything positive could be said about 1870 it would be that the yield per ton had recovered from the low of 1869 back into the high $20’s. Smith had a total bullion figure of $8.3 million, an increase over 1869 and comparable to 1868, without citing any source. Smith probably was quoting Lord or the report of the U. S. Commissioner of the Mint. Lord included two sets of figures: $6.8 million from the State Controller and $8.3 million (identical to Smith) from the Mint.43

Lord repeatedly accused mining companies and their principals of hoodwinking investors and the public at large with adverse consequences for all. As Lord himself recognized, the investors probably encouraged shady mining practices since they paid little heed to how much it cost to extract and refine a ton of ore. He cited the example of Gould & Curry, one of the pre-eminent Comstock companies in 1863 and 1864. No matter how marginal the quality of ore the instructions from Gold & Curry’s president was “snake it out”, a metaphor for extracting, hoisting and delivering as much ore as possible without any regard to quality or cost. The paradox was that the processed ore came in at $70 to 80 per ton, twice the average Comstock yield, and even though costs were high and margins were thin, the company paid out dividends of nearly $3 million. Lord calculated that had the officers and stockholders followed a more prudent course, the company would have made even more money. But prudence would have required a longer perspective that neither the officers nor stockholders shared. It turned out that Gould & Curry was sitting on barren soil below the 500-foot level. No matter how prudent that company had tried to be it would have run out of ore. Lord did not detail what a more prudent course would have entailed except in general terms he believed that had the officers made the cost of extracting and processing the ore the benchmark for 43 “Biennial Report of the Controller…1869 and 1870” in Senate Journal and Appendix, 5th Legislative Session, 1871, 56-57 (1870) and “Report of the Controller…1872 and 1873” in Appendix to Senate Journal, 6th Legislative Session, 1873, 204 (1870); Lord, Comstock Mining and Miners, 416; and Smith The Comstock Lode, 126.

26

THE COMSTOCK [D]

how they operated the mine the outcome might have been different. How many mines engaged in “snaking it out” is unknown. It is unlikely that Gould & Curry’s president, Alpheus Bull, was the only Comstock entrepreneur who understood that paying dividends whatever the cost was a given. Mining on the Comstock proved to be an episodic affair– a dozen pockets of ores, moderately rich to rich in grade surrounded by barren or much less rich matter – that left the majority of the mining companies without a natural product that could sustain viable operation.44

Perhaps the most revealing information on the Comstock’s gloomy prospects concerned the market for stocks and in particular the Lode’s two largest investors. Smith wrote that the total value of all the stocks of the leading mining companies was $4 million instead of tens of millions, as was the case in the previous decade. Stocks in some longstanding mining companies sold for as little as $1 or $2 per share. Stockholders were exercising the option of selling their shares in lieu of paying assessments, usually to the principals, and this practice put financial pressure on the principals who may have ended up with more (depreciating) stock but no capital to repair, maintain and expand the mines. William Sharon and William Ralston controlled more mining (and milling) properties than anyone on the Comstock. Ralston, as the head of the Bank of California, was the banker, and Sharon was the miner. Mines under their control at various times from the middle 1860s through the early 1870s included Belcher, Crown Point, Yellow Jacket, Kentuck, Chollar Potosi, Gould & Curry and Consolidated Virginia. In 1870, however, these properties had become the playground of the devil. Belcher, Gould & Curry and Consolidated Virginia were exploring barren ground; Crown Point was virtually shut down because of the 1869 fire; Yellow Jacket lost much of its underground workings on its southern border to the fire but enjoyed a reprieve with new workings on its northern border; Kentuck was also a victim of the fire but even worse had exhausted its ore holdings; only Chollar Potosi, continuing to find descent ores in rather shallow ground, made any money. “Panic-stricken” was how Smith described their demeanor in 1870. Lord too weighed in on the plight of Ralston and Sharon in 1870 (some of which appeared in Smith). The Bank of California had invested about $3 million of its $5 million in capital in Comstock properties, and without income from their mining properties in particular the survival of the bank was in question.45 An additional risk for Ralston and Sharon was that while they owned enough stock to control a property, they did not always own a majority of the stock. Under these circumstances they could lose control of a property if outsiders began to buy up the stock. In short, as leveraged as they were, any downturn could leave them vulnerable to the same strategies that they had used to gain control of so many mining properties. They needed a bonanza, but as it turned out in 1870 the important finds were in two mines that they did not own – Hale & Norcross and Savage.

44 Lord, Comstock Mining and Miners, 121-129.45 Smith The Comstock Lode, 127, and Lord, Comstock Mining and Miners, 283-284.

27

THE COMSTOCK [D]

Special Appendix:Below are samples from Surveyor-General's Tables of “Mines on the Comstock Lode” (1865-1866) and of “Tabular List of Mills Crushing Ore from Mines on the Comstock Lode During the Year 1866. For Spources, see footnote 11.

MINES

MILLS

28

THE COMSTOCK [E]

Chapter 5Statistical Profile of Mining Industry:

Second Stage 1870-1875

Toward the end of 1870 after months of dismal statistics and pessimistic forecasts a mine increasingly held in low regard by many investors and speculators made a discovery that would breathe new life (once again) into the Comstock. Crown Point’s stopes on its northern border (with Kentuck and Yellow Jacket) not only had been thoroughly worked but had also been severely damaged in the 1869 fire. The scuttlebutt was that since it was being financed by assessments, it would soon be closed down permanently. At approximately 1,100 feet deep (ca. 1,460-foot level measured from the peak in Virginia City) a promising discovery was made on its southern border with Belcher. Both mines were under the control of William Sharon and William C Ralston, although they did not own a majority of the stock in either company. The discovery turned out to be huge and rich. It extended from about 950 feet from the surface (1,400-foot level) to about 1,500 feet (1,900-foot level). The seam extended 400 feet into Belcher and 375 feet into Crown Point from the Crown Point-Belcher boundary. Its width (east to west) was from 100 to 125 feet. In a tug-of-war between Sharon and Ralston and their financial allies, Belcher ended up in the possession of Sharon and Ralston and Crown Point in the possession of J P Jones, the superintendent of Crown Point under Sharon and Ralston, and Alvinza Haywood, a San Francisco speculator who owned shares in both Belcher and Crown Point. The Comstock now had the bonanza that had been sought since the mid-1860s. Because the ore contained a high percentage of gold the yields were as great as $45 to $65 per ton.1 The impact of the discovery was clearly discernible from tonnage and bullion figures. Tons of “worked” ores rose from 239,000 in 1870 to 445,000 in 1871, an increase of 86 percent; bullion values grew from $6.9 million to $10.7 million or 55 percent.2

FIGURE 1BULLION OWNERSHIP 1871

Bullion Owner Tonnage Value ($) Share (%) Yield/Ton ($)Belcher 18,474 $1,198,921 11.3 $64.90

Yellow Jacket 47,585 1,576,613 14.8 33.13Crown Point 60,000 1,970,885 18.5 32.85

Chollar-Potosi 68,635 2,233,390 20.0 32.54Gould & Curry 2,058 47,020 0.5 22.85

Savage 49,746 1,045,487 9.8 21.02Segmented Belcher 3,699 71,167 0.7 19.24

Hale & Norcross 54,123 947,701 8.9 17.51Kentuck 9,183 140,070 1.3 15.25

American 2,233 32,117 0.3 14.38

1 “Biennial Report of the State Mineralogist of the State Of Nevada, for the Years 1871 and 1872,” in Appendix to Senate Journal, 6th Legislative Session, 1873, 131-132.2 “Biennial Report of the Controller of the State of Nevada for the Fifth and Sixth Fiscal Years 1869 and 1870,” in Senate Journal and Appendix, 5th Legislative Session, 1871, 56-57 (1870); “Report of the Controller…1872 and 1871,” in Appendix to Senate Journal, 6th Legislative Session, 1873, 204 (1870); and “Report of the Controller…1872 and 1871,” in Appendix to Senate Journal, 6th Legislative Session, 1873, 206-220 (1871).

1

THE COMSTOCK [E]

Empire 8,701 123,505 1.2 14.19Union Mill & Mining 2,500 34,828 0.3 13.93

Lady Bryan 800 10,804 0.1 13.51Caledonia 16,614 212,773 2.0 12.81

Gold Hill Quartz 74 887 0.0 11.99Overman 9,591 108,241 1.0 11.29

Parke & Bowie 45,609 509,934 4.8 11.18Succor 12,700 140,94 1.3 11.10

J. L. Webster 183 1,893 0.0 10.34J. L. Rogers 262 2,593 0.0 9.90

Midas 680 6,120 0.1 9.00Imperial 2,651 23,838 0.2 8.99

Sierra Nevada 18,294 147,117 1.4 8.04S. N. Jennings 116 906 0.0 7.81

Hartford 2,492 19,147 0.2 7.68Luzerne 7,238 37,807 0.4 5.22

Calculated Totals 444,241 $10,644,705 Mean $23.96Recorded Totals 444,553 $10,644,704 Median $13.16

Sources: See footnote 1. The Mineralogist’s Report contained ton, pounds and value for each mine each quarter, 1871. Ranking by yield per ton. Percentage rounding to one-tenth reduces some figures to zero.

In compiling his list of producing mines in 1871 the State Mineralogist consulted the county records, as had other commentators in the past. (Since his Report was prepared before the 1875 fire, he could have had access to the Story County tax rolls.) In accord with the new net-proceeds bullion tax (approved 28 February 1871) all mine proceeds were taxed. In the past yields below $20 per ton could be exempted from taxes. The new more broadly-based tax, as reported by the

Mineralogists contained 26 names of mines producing bullion or owners of billion. Many of names of the mines are familiar. The average yield per ton was just shy of $24, but only four mines had output that exceeded the average. Eighty-five percent of the mines

failed to reach the average. Since the four companies that exceeded the average accounted for 76 percent of the bullion, their per-ton yields had an inordinate effect on the overall average. If the median were used as a measure of the yield, the figure would only be $13 per ton, slightly more than half the value of the mean. Some prominent companies from the 1860s fell below the calculated mean: Gould & Curry, Savage, Hale &

Norcross, Kentuck, Gold Hill Quartz, Overman and Imperial. The most interesting

2

Figure B Section, Abstract Statement

Illustration 2: Section, Abstract Statement

Figure AIllustration 1: Section, Abstract Statement

THE COMSTOCK [E]

statistics from this much more inclusive list concern per-ton yields. The five largest producers from 1866 through 1869 were Savage, Yellow Jacket, Chollar Potosi, Kentuck and Hale & Norcross, and they accounted for about two-thirds of the bullion output. In 1871 the five top producers by total value (Column 3, Figure 1) were Chollar Potosi, Crown Point, Yellow Jacket, Belcher and Savage with 76 percent of the total. Chollar Potosi had been the ranking producer in 1870 on the basis of incomplete data, and it remained in that position in 1871, although its share had fallen from a third to a fifth. Its share would continue to fall throughout the first half of the 1870s. Similarly Yellow Jacket and Savage would begin their decline as well in the early 1870s. Belcher, which had no more than a fraction of a percent of the bullion reported in the second half of the 1860s, would jump into fourth place with 11 percent ($1.2 million) and Crown Point, which had about 8 percent of the total bullion from 1866 through 1869 and ranked sixth, reported 19 percent ($2 million) of the total bullion and ranked second in 1871.3

The mine-by-mine accounting is incomplete for 1871 because the October 1875 fire destroyed the basic documentation and only one Abstract Statement (submitted to the state by the Story County Assessor) has been found. The Mineralogists Report added bullion production mine-by-mine for all four quarters but only in tonnage and value. Other data contained in the net-proceeds tax documentation is missing except for the first quarter. Since more and more of the analysis of the Comstock from 1871 onward will be based on a reading of the net-proceeds tax rolls kept by the Story County Assessor’s Office and submitted to the state in the form of the Abstract Statements, it will be useful now to look more closely at the categories of data collected and what these data actually reveal about the mines and mills on the Comstock.4 The first extant Abstract for Story County covered January-March, 1871, the initial quarter after the implementation of the new tax law.5 From January to March, 1871, 19 “Owners” registered their bullion with the county assessor. Four of these were designated as “tailings” operations, although they paid the same tax as the mining operations. The total ore for the quarter was 116,000 tons (Mineralogist reported slightly less) with a bullion value of $2.6 million. This represented about a quarter of the tonnage for the year but more than a third of the bullion. The per-ton yield was $22 with the lowest from Belcher - $3.70 per ton on only 279 tons - and the highest from Chollar Potosi - $36.46 per on more than 24,000 tons.6 Tailings accounted for 8 percent of the total ore with per-ton averages between $8 and $12, far below the quarterly average. One mill, Parke & Bowie, accounted for 85 percent of the total tailings. Total costs for extraction and reduction (tailings mills were exempted from these

3 Smith reported two sets of production figures: From James Wheeler’s report (526-536) by company supplemented by data from county assessment rolls he reported $8.1 million in bullion. In another place he reported a total of $9.6 million in bullion when broken down by gold and silver. See Smith, Binder 1, NC 229, Special Collections, Library, University of Nevada, Reno, a part of the Tabular Statement previously noted.4 The 1871 law spelled out the information that all county assessors had to collect and submit, and in Story County the ledgers in which the information was entered followed the guidelines almost exactly. See “An Act providing for the taxation of the net proceeds of mines,” approved February 28, 1871, in Laws of Nevada…, 2:225-228, especially 226.5 The foregoing discussion will be drawn from document entitled “Abstract Statement From the Quarterly Assessment Roll of the proceeds of mines of Story County for the Quarter Ending March 31st 1871,” Nevada State Archives.6 Chollar Potosi had two entries: one of 20,897 tons at $39.25 per ton and another of 3,150 tons at $17.89.

3

THE COMSTOCK [E]

provisions), which mine owners were required to declare, reached $1.9 million, or about three-quarters of the return in bullion. In first official quarter under the new 1871 law 13 operations reported costs that exceeded yields on a per-ton basis. The most severe disparity involved one of the oldest Comstock companies, Gould & Curry. Its cost per ton had reached $52 while its yield per ton was $20. It was not the major player that it once was, however, because its 1,713 tons represented 1.5 percent of the total tonnage. The other mines with operations in the red had losses (costs exceeding receipts) that ranged from a few cents to $9 per ton. Mines not in the red had operating profits (receipts exceeding costs) in the range of 50 cents to $22 per ton. Chollar Potosi, the leading producer, scored the greatest return. Its reported total costs were $398,000: $106,000 or $4 per ton in extraction costs and $291,000 or $12 per ton in reduction costs. That meant the company having spent under $17 per ton for a return of over $36 per ton enjoyed an operating profit of $19 per ton. No other operation matched the performance of Chollar Potosi.7 A gross operating profit for all the operations of $700,000 or about $6 per ton worked was not significant and would have to improve if the Comstock was to recover fully. In the first quarter there was no sign that Belcher and Crown Point, which would ultimately lead that recovery, were poised to do so.

FIGURE 2BULLION OWNERSHIP 1872

BULLION OWNER Tonnage Value ($) Share (%) Yield/Ton($)Belcher 83,195 $4,794,659 38.0 $57.63

Crown Point 110,762 4,598,850 36.4 41.52Yellow Jacket 6,025 148,551 1.2 24.66

Woodville 1,152 24,675 0.2 21.42Chollar Potosi 44,350 752,011 6.0 16.96

McKenzie, James 140 2,338 0.0 16.70Hale & Norcross 38,065 617,325 4.9 16.22

Empire 11,248 177,379 1.4 15.77Savage 53,083 811,867 6.4 15.29

Kentuck 11,138 140,848 1.1 12.65Elholm 540 6,325 0.1 11.71

Midas (Cook & Geyer) 583 6,482 0.1 11.12Parke & Bowie 34,460 335,395 2.7 9.73

Succor 2,000 17,000 0.1 8.50Rogers, J. L. 775 6,283 0.0 8.11Gold Hill Q 750 6,061 0.0 8.08

Sierra Nevada 18,380 122,576 1.0 6.67Luzerne 600 3,000 0.0 5.00

Silver Hill 3,458 17,046 0.1 4.93Stevenson 1,884 8,478 0.1 4.50Challenge 380 1,125 0.0 2.96

Union Mill & Mining 0 32,000

7 Tailings operations did not report any extraction costs since they bought ores that they then processed.

4

THE COMSTOCK [E]

Calculated Totals 422,968 $12,630,274 99.7 $29.86Sources: From Abstract Statements submitted to State Controller 1st, 3rd & 4th quarters by Story County, Nevada State Archives and from the Mineralogist’s Report for 2nd Quarter, see footnote 1. The quarters where date from the Abstracts and from the Mineralogist’s Report overlap, the entries and totals do not always agree. With the original ledgers, lost in the 1875 fire, there is not way to make corrections. In some cases the problems arise because the arithmetic is wrong. Ranking by yield per ton. Percentage rounding to one-tenth reduces some figures to zero.

The rising output that began in 1871 continued into 1872. It added another 19 percent reaching $12.6 million in bullion. Tonnage also rose by almost the same percentage to 423,000. Per-ton yields remained constant at about $30.8 About two-dozen operations (mines or tailings mills) can be identified in the second year since the net-proceeds tax took effect. Belcher and Crown Point ranked first and second in total value and value per ton. Belcher produced 83,000 tons that yielded $4.8 million in bullion or $58 per ton while Crown Point produced 111,000 tons worth $4.6 million or $42 per ton. In combination they accounted for 75 percent of the total. The other major producers by total value – Savage ($812,000), Chollar Potosi ($752,012) and Hale & Norcross ($617,325) - were far behind with yields per ton that were in the mid-teens, well below the mean for all producers in 1872 and even below the standard break-even of $20 per ton. They combined for about 17 percent of the total. The top five firms had more than 90 percent of the ore, further evidence of the growing concentration of the mining business as the depths increased.

The discoveries at Belcher and Crown Point had, as one might expect, a direct and positive effect on the stock market. Smith wrote that the “Boom of 1872” was manifest in the fact that 150 mining stocks listed on the San Francisco Exchange moved up in the first half of the year from a value of under $20 million to more than $80 million, and some of these stocks were not even located on the Comstock. Stock in Belcher and Crown Point in particular rose from several hundred dollars per share to $1,500 to $2,000 per share. While the bonanzas at Belcher and Crown Point were real, the reactions of investors and speculators went beyond the pale. Other Comstock mines began to intimate and in one or two cases to promote discoveries of ores between the 1,200- and 1,500-foot levels where the holdings of Belcher and Crown Point lay. Another bonanza – even greater than Belcher and Crown Point - will be launched at these levels in Consolidated Virginia and California on the northern end of the Lode within a year or two, but in between the two groups of mines, on the north and the south, except for a small patch in Hale and Norcross, no other exploitable discoveries would ever be made. Like every other “vortex of speculation” a correction in the market took hold. High-flying stocks plummeted during the second half of 1872. The prices of Belcher and Crown Point also tumbled, but this was more in response to is a ten-fold increase in Belcher shares and an eight-fold increase in Crown Point shares, issued by the companies’ Boards, than to

8 “Report of the Controller...1871 and 1872” in Appendix to Senate Journal, 6th Legislative Session, 1873, 92-103 (1872) and “Annual Report of the Controller…[1873 and 1874]” Appendix to Senate And Assembly Journal, 7th Legislative Session, 1875, 82 (1872). Smith’s notes in Binder 1, NC 229, Special Collections, Library, University of Nevada, Reno, contained an 1872 figure of $12.1 million, and Lord in Comstock Mining and Miners (416) had figures that ranged from $12.2 million to $13.6.

5

THE COMSTOCK [E]

market conditions. Both mines continued to produce and to pay dividends as the rest of the Comstock struggled.9

FIGURE 3BELCHER MINE

\

A year after the rejuvenation of the Comstock had begun in 1871 the figures underscored why a new spirit prevailed. In the first quarter of 1872 the new leading producers were Belcher and Crown Point. Belcher hoisted nearly 21,000 tons worth $1.1 million and Crown Point 19,000 tons worth slightly less than $1 million. The per-ton yields were $52 and $54 respectively. Chollar Potosi, the leading producer the year before, hoisted only 7,800 tons worth about $165,000 or $19 per ton. Total tonnage actually fell by 7 percent to 98,000 but bullion value rose by 11 percent to $2.9 million. The average per ton had risen from $23 to $30. It was the richness of the ores that dispelled the gloom of the past few years, even though there was little evidence that yet that high-yielding ores resided at these levels across the Lode. At this stage the emerging bonanza was narrowly confined to the southern end of the Comstock Lode. On the northern end not only had Chollar Potosi slipped significantly (nearly a 45 percent loss in yield) but Savage also saw its yields dip further to about $18 per ton. The higher quarterly average in per-ton yields stemmed directly from the rich ores being hoisted at Belcher and Crown Point. Without them the average receipts for the remaining operations fell to $17. Total expenditures were reported to be $2.2 million or $22 per ton, about the same value as the first quarter of 1871. Costs per ton at Belcher reached $36 per ton and were much higher than the average, while those at Crown Point were about the same as 9 See Smith’s notes in Binder 1, NC 229, Special Collections, Library, University of Nevada, Reno for company-by-company records and The Comstock Lode, 131-133, for a discussion of the “Boom of 1872”. For additional comments see Lord, Comstock Mining and Miners, chapter 15.

6

THE COMSTOCK [E]

the average. Despite their high costs on a per-ton basis these companies still had very large operating surpluses: Belcher’s costs amounted to 69 percent of the receipts while Crown Point’s were only 46 percent. As a result of these differences, Crown Point’s profits were nearly twice those at Belcher. The remaining companies as a group had no operating surpluses and actually spent 8 percent more money than they received. The losses were both small and large from 26 cents to $20 per ton. Yellow Jacket, another former prominent mine in the vicinity of Belcher and Crown Point, had the highest cost per ton at nearly twice its revenue per ton. The production leader of the previous year, Chollar Potosi, managed to squeeze out a gross profit of about 9 percent: bullion receipts amounted to $21 per ton and operational costs to more than $19 per ton or between $1 and $2 per ton. Two other large producers from the late 1860s, Hale & Norcross and Savage, had expenses that exceeded receipts by 22 and 24 percent respectively. Of the 10 profitable operations 7 reported profits of a 33 cents to $1.60 per ton. In terms of revenues and costs based on declarations by owners before the county assessor, the overall health of the Comstock was suspect.10

By the third and fourth quarters of 1872 the pattern observed in the first quarter had undergone some changes. Belcher and Crown Point continued to be the leaders. In the final six months Belcher hoisted 41,000 tons or 20,000 per quarter worth $2.5 million at an even higher per-ton yield of $63 compared to the first quarter. By contrast Crown Point raised 57,000 tons or 18,000 per quarter worth $1.8 million at a considerably lower yield of $32 a ton. Total output for the first two quarter was 206,000 tons and was worth $5.8 million with a per-ton yield of $28. Since the per-ton yield for the first quarter alone was $30 the lower per-ton yields of the second quarter had pulled down the average for the first half of the year. Per-ton ratios for the rest of the companies during the second quarter were comparable to the first quarter at about $13 and $14 per ton. Even with higher yields at Belcher, the smaller of the two bonanza sites, the decline at Crown Point was significant with respect to overall yields. Moreover, the bonanzas at Belcher and Crown Point diverted attention from the fact that the rest of the Comstock was producing little profitable ore, and that would remain the case until the greatest of all bonanzas began a year or so later at Consolidated Virginia. In the third and fourth quarters Crown Point extracted 30 percent more ore than Belcher, but the latter had yields that were almost twice as great as the former had. The ore deposits at Crown Point were not rising or holding steady. Other formerly prominent mines - Chollar Potosi, Hale & Norcross and Savage – saw their luster tarnish further. Their yields were sub-par (between $14 and $18 per ton) when compared against all the mines and slightly better than average when the list excluded Belcher and Crown Point. A substantial contribution in tailings appeared in the fourth quarter under the Parke & Bowie Company with 14,000 tons worth $9.50 per ton or $132,000. In the third quarter overall costs rose to 90 percent of the receipts and then in the fourth quarter fell back to 77 percent. Both figures were higher than the first quarter. Costs as a percentage of bullion values at the two leading producers in the third and fourth quarters compared to the first quarter moved in opposite directions. At Belcher they dropped from 71 percent to 48 percent but at Crown Point they ballooned 10 The data for the first, third and fourth quarters of 1872 appear in Abstracts Statements, Nevada State Archives. In the first quarter two different entries appear for Chollar Potosi and Gold Hill Quartz Mining. The two sets of figures have been combined into a single set for each operation even though the separate entries may have represented what individual owners of the mining properties had declared.

7

THE COMSTOCK [E]

from 44 percent to 78 percent. There is no obvious explanation for this switch. More than likely it was an indication that the grade of ore had changed. At the other major producers – Chollar Potosi, Hale & Norcross and Savage - in those final two quarters costs continued to outpace receipts. At Savage the costs were 72 percent higher than revenues and at Chollar Potosi and Hale & Norcross they were 30 percent higher. Of the 16 companies with taxable bullion in the last half of 1872 eight had expenditures that exceeded receipts with the worst performance by Yellow Jacket, which spent $111,000 to retrieve and process $45,000 worth of ore.11

As the Comstock’s second decade opened, the prospects were mixed. The shared bonanza at Belcher and Crown Point raised the productivity bar significantly. No other companies had ever enjoyed such high annual receipts (in dollars). For the moment, however, no other companies made similar discoveries. The Comstock was in fact slipping into a sea of red ink. In spite of that the up-tick in production from 1870 to 1871 and then from 1871 to 1872 emboldened the promoters and speculators in San Francisco. Certainly after a decade of probing hundreds of feet below the surface Comstock miners had a clearer understanding of how the Lode was formed. In the early years the expectation that increasingly richer ores would be found at increasingly greater depths was openly dismissed. By the second decade, however, the psychology had changed completely. Rich ores had been located between the 500- and the 1,000-foot levels and now between the 1,000- and the 1,500-foot levels. What miners failed to come to terms with readily, not only on the Comstock but also in other rich mining regions, was that discoveries at given depths could be scattered and limited. As Eliot Lord observed: “It is a curious fact in the history of mining that the opening up of a bonanza in any part of a district generally causes a rise in the market value of all mines in that district.” Thus, the Belcher-Crown Point discovery below the 1,000-foot level launched a flurry of promotions and explorations among the other companies at these depths. “In the case of a lode like the Comstock there was no reason why the development of an ore-body in the section owned by the Crown Point company should cause the section of the Ophir Company [on the other end of the lode] to become more valuable….” Of course, as hindsight showed and Lord recalled: “There was no likelihood that the Crown Point ore-body would extend more than a few hundred feet north of the boundary line of the mine, and yet it was such an encouraging indication of the probable richness of the unexplored fissure that the quoted value of nearly all the mines on the lode bounded upward as soon as the importance of the new development was generally realized.”12 Under these circumstances the upward shift in values of mining properties was fraudulent, more the result of manipulation by speculators and owners than of concrete discoveries. One of San Francisco’s most notorious and successful “stock-jobbers”, Alvinza Haywood, the new proprietor along with J. P. Jones of Crown Point, took advantage of the emerging euphoria to fabricate a discovery at Savage early in 1872 to boost the price of the stock as well as the senatorial candidacy of Jones. Savage like Crown Point had belonged to the stable of mining properties owned by William Sharon. Jones had in fact been Sharon’s superintendent at Crown Point. Crown Point’s bonanza was real. Savage was a fraud

11 See the preceding footnote. Grant Smith’s contain full-year data for some of the firms discussed in the text in Binder 1, NC 229, Special Collections, Library, University of Nevada, Reno.12 Lord, Comstock Mining and Miners, 284-285.

8

THE COMSTOCK [E]

orchestrated by Haywood, who gave an order to buy (“unlimited”) shares of Savage stock, then at $62 per share. Did this mean that Savage was in bonanza? In fact it had, according to Lord, cut into a small body of rich ore but nothing more. Still Haywood ordered the miners be confined, an old and often discredited practice to conceal the truth, and denied the public, in particular the press, admittance to the mine. Several mining properties to the north including Ophir possessed little value but pursued similar strategies. Eventually the ruse was revealed through the efforts of disgruntled stockholders, jealous owners and nosy journalists, and while the bonanzas at Belcher and Crown Point stood the test of time and repaid their investors handsomely Savage and Ophir fell into further disrepair. Savage’s performance for the first quarter of 1872 was hardly noteworthy. Its ore earned less than $18 per ton, and its costs were at least $50,000 greater than its receipts. The San Francisco Bulletin reported in its 7 May edition that despite a revival of interest in Comstock mining only two mines, Belcher and Crown Point, were paying dividends at the time. (Equally telling was the fact that these two mines were among four – the two others were in Pinochet, Nevada - out of 150 mining claims across the West that could pay dividends). Their stocks were also greatly overvalued and fell with the rest. On 19 May the San Francisco Chronicle declared that the parties connected with Savage were to blame for launching a spiral of speculation that left San Francisco in financial shambles. This was not the first time nor would it be the last time the Exchange and the Comstock were out of step with each other. Stock prices seldom reflected the worth of the mines or the health of the industry, and only a few mines paid dividends in any given year.13 In fact, though, the bonanza at Belcher and Crown Point, irrespective of the stock speculators, acted as a spur to others who launched new explorations at levels similar to where the bonanza had occurred.

FIGURE 3BULLION OWNERSHIP 1873

Bullion Owners Tons Value ($) Share (%) Yield per Ton ($)Belcher 154,664 $10,779,171 49.1 69.69

Crown Point 142,267 8,317,285 37.9 58.46Con sol. Virginia 11,297 644,582 2.9 57.06

Challenge 113 3,425 0.0 30.31Imperial 424 8,343 0.1 19.68

Hale & Norcross 31,734 593,600 2.7 18.71Woodville 2,878 51,442 0.2 17.87

Chollar Potosi 33,234 566,968 2.6 17.06Savage 7,649 94,576 0.4 12.36Empire 11,680 142,399 0.6 12.19

Caledonia 10,344 124,255 0.6 12.01Gould & Curry 2,956 35,217 0.2 11.91

Jennings, George 300 3,325 0,0 11.0813 Both Smith (The Comstock Lode) and Lord (Comstock Mining and Miners) wrote about the rise and fall of Comstock mining in 1872, and while their basic recording of the events and personalities was similar, they differed in some details and emphases. Smith was relatively brief, 132-133, with a focus on the contest between Haywood-Jones and Sharon. Lord devoted Chapter 15, “A Fortunate Deliverance,” to the upswing of the early 1870s with more details about mining operations and stock transactions during 1872.

9

THE COMSTOCK [E]

Cousins, Charles 129 1,403 0.0 10.88Silver Hill 10,284 107,854 0.5 10.49

Park & Bowie 28,710 253,344 1.2 8.82Justice 6,328 53,293 0.2 8.42Trophy 240 1,948 0.0 8.12

Occidental 1,478 10,752 0.1 7.27Sierra Nevada 20,731 132,365 0.6 6.38

Stevenson, C. C. 350 2,100 0.0 6.00Succor 1,500 4,500 0.0 3.00

Union Mill & Mining 8,300 7,975 0.1 0.96

Calculated Totals 486,090 $21,940,122 100.0Recorded Totals 486,598 $21,940,124

Mean 45.14Median 11.96

Sources: See footnote 14. Percentage rounding to one-tenth reduces some figures to zero.

The full potential of the discoveries at Belcher and Crown Point was revealed in 1873. The biennial reports of the State Mineralogist and of the State Controller submitted to the 1875 Nevada Legislature are the main sources for production data. Story County raised 487,000 tons of ore for what constituted a decline of 7 percent from 1872. The yield, however, was the highest yet on record at $45 per ton for a total bullion value of $22 million, up 79 percent from the previous year. The richness of Belcher ($70 per ton) and Crown Point ($58 per ton) was now fully manifest. Nearly half of the bullion came from the ores of Belcher, and another 38 percent from the ores of Crown Point. That left less than 13 percent from the remaining 20 mine and mill owners who declared taxable ore. The top five producers – Belcher, Crown Point, Consolidated Virginia, Hale & Norcross and Chollar Potosi – combined for 95 percent of the total bullion in dollars, the highest such concentration recorded to date for the Comstock. Three of the top five, however, only accounted for 8 percent against 87 percent of the total for the two leading producers. Seventeen of the 23 owners reported less than 1 percent each of the total bullion. The aforementioned 17 mine-and-mill owners presented a dismal performance of $6 per ton. There is little doubt that the year of 1873 belonged to Belcher and Crown Point without which the Comstock would have been on the verge of collapse and abandonment. Even old standbys like Hale & Norcross, Chollar Potosi, Savage and Gould & Curry had yields in the teens. With hindsight we know what is ahead, the first indication of which showed up in the fourth quarter. Consolidated Virginia, the new venture of John Mackinaw, James Fair et al. showed up in the assessment rolls with only 11,000 tons (2 percent of the total), but it earned about $57 per ton, just slightly below Crown Point’s yield. Mackinaw and Fair were in the edge of the biggest and richest ore vein in the history of the Comstock at approximately the same level (1,200 to 1,600 feet) as the Belcher and Crown Point bonanzas.14

14 The 1873 data from “Biennial Report of the State Mineralogist…1873 and 1874” in Appendix to the Journals of Senate and Assembly, 7th Legislative Session, 1875, 156-157. Grant Smith also collected data for 1873, presumably as noted above from Wheeler’s treatise. It is far less complete than the Mineralogist’s

10

THE COMSTOCK [E]

The 1873 Mineralogist’s Report was one of the most detailed that Henry Whitehall, who served longest tenure from 1871 through 1878, had ever prepared. All the Nevada counties received attention in his report, but Story County received the most. His survey was compiled from visits and interviews plus printed materials such as annual reports to company stockholders. Tables and charts, drawn mainly from the annual reports, gave precise details on receipts and expenses for some of the largest operations. Because the Mineralogist’s Report covered the two-year period 1873-1874 it did not always draw a distinction between events and activities in 1873 as opposed to 1874. Moreover, since some of his information came from annual reports and since some of the annual reports followed fiscal years that differed from calendar years, underground operations such as uncovering new ore bodies or extending drifts, cross-cuts and winzes were not precisely tagged in terms of the calendar. One unambiguous message to emerge from the survey, however, was that companies were undertaking more and more work at the levels and in the directions relating to the bonanzas at Belcher and Crown Point. Comstock miners had come to believe that even greater riches lay deeper in the Lode, and the success at Belcher and Crown Point plus what was known about work at Consolidated Virginia confirmed their expectations and justified their efforts.15 The optimists and the charlatans were not deterred by the fact that no discoveries that could be portrayed as bonanzas along the Lode below the 1,000-foot level in 1873 or 1874 except for the three mines noted above. And yet companies were investing in extensive explorations between the 1,000- and 1,500-foot levels between the football and the hanging wall as well as pushing below the 1,500-foot level to the 2,000-foot level. Considerable work was underway in Ophir, a much troubled mine since the mid-1860s, and several promising ore bodies were alluded to between the 1,300- and the 1,500-foot levels in its 1873-1874 annual report. Very little came of these discoveries, and while Ophir will remain an active operation, it will be so because it will mainly serve as a conduit to the California mine on its southern border. California, not Ophir, will share the body of ore that was stimulating so much interest in Consolidated Virginia.16 Summaries of activities in other mines should have moderated the enthusiasm. The President of Gould & Curry declared that although its operations “have been prosecuted without interruption, no pay body of ore has been developed, so that to provide for current expenses, and to meet outlays for such improvements…, recourse has necessarily been had to assessments [to raise capital].” Still he was optimistic, as perhaps company presidents had to be. The mine had at least 11 stations, the deepest being at the 1,600-foot level, and all it had found was vein matter that might yield between $1 and $9 per ton or virtual barrenness.17 Gould & Curry’s southern neighbor, Savage, had sunk one of the deepest shaft on the Comstock, to 2,081 feet, and had purchased new equipment to rise the shaft and ventilate the mine,

report.15 The reader is reminded here to distinguish between the actual depth of a mine and the level that it had reached. The level was measured from the high point in Virginia City (ca. Ophir), and since the Lode sloped north to south by 400 to 500 feet between the northern end (Virginia City) and the southern end (Gold Hill) the 2,000-foot level at Ophir may actually approximate 2,000 feet, but the 2,000-foot level at Belcher may only be 1,500 to 1,600 feet underground.16 “Biennial Report of the State Mineralogist…1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 101-102.17 “Biennial Report of the State Mineralogist…1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 125-126.

11

THE COMSTOCK [E]

but tellingly the sections that should have yielded ores, as quoted by the Mineralogist from a report by the company’s superintendent, produced only meager results.18 The assessments revealed that tonnage was approximately 7,000 with a yield of about $14 per ton19. On its southern border Savage’s neighbor, Hale & Norcross, had dropped a shaft to the 2,100-foot level, was continuing to construct (in cooperation with Savage) various connecting tunnels and could not announce any “encouraging results”.20 Further to the south at Chollar Potosi the President wrote that “the present fiscal year has been barren of congratulatory results”, and what ore has been extracted came from the old stopes in the upper levels even though the company was spending money to renovate and extend the shaft below 1,200-foot level. Between Chollar Potosi and Crown Point and Belcher in Gold Hill the prospects were not better. According to Imperials President, the “company’s ground has been prosecuted vigorously” without finding a “paying body of ore”. He maintained the prospects were bright because the vein matter at the 1,850-foot level looked so “strong and well-defined” that it would become paying ore at the 2,000-foot level. It did not, of course.21 Between Imperial and Crown Point was the ground that once drove the mighty Yellow Jacket. After 18 assessments to raise $1.9 million (along with dividend payments totaling of $2.2 million) the mine had nearly reached the 1,800-foot level (actual distance, between 1,300 and 1,400 feet) only to find water instead of ore.22 One section of his survey Whitehall entitled “Going for the Bottomless Pit”. He noted that it was startling to think about how deep the mines had reached and yet how little thought was given to it.23 In 1873 (and 1874) the barrenness that was being uniformly encountered below the 1,600-foot level was a reality that few entertained seriously. In retrospect it is fairly easy to grasp the futility of these efforts, and yet that approach may actually be a misreading of history. Company presidents and superintendents knew what they had found and they may well have known how vulnerable their forecasts were, but in the long history of mining discoveries, especially bonanzas often led owners of ground adjacent or nearby to make bold predictions. The fact was that miners, even the most skilled, did not know what they would find. Hope (more than fraud or deception perhaps) motivated the mining community until the silver lining was completely destroyed.

Despite the troubling details in the Mineralogist’s report on Comstock mining in 1873 the bonanza mines of Belcher and Crown Point and the new bonanza candidate, Consolidated Virginia, helped to forge a countervailing positive attitude. Most of the report was taken up not in discussion of poorly performing mines but of the bonanzas themselves. Belcher and Crown Point together covered 16 pages of Whitehill’s survey and included detailed operational and financial data far exceeding anything relating to the 18 “Biennial Report of the State Mineralogist…1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 122-123.19 Two sets of numbers exist for Savage, a recorded set and a calculated set.20 “Biennial Report of the State Mineralogist…1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 120-121.21 “Biennial Report of the State Mineralogist…1873 and 1874” in Appendix to Journals of Senate and Assembly, Legislative Session, 1875, 119-120.22 “Biennial Report of the State Mineralogist…1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 124-125.23 “Biennial Report of the State Mineralogist…1873 and 1874”in Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 123.

12

THE COMSTOCK [E]

other companies. Consolidated Virginia (and California as well since the report covered 1874 when work had begun on that property) also received extensive coverage. From reading these sections plus a section summarizing Baron von Richthofen’s geological investigations of nearly a decade earlier would certainly be sufficient to assuage whatever negative outlook might be drawn from the actual state of most Comstock operations. The view of many Comstockians was that the Lode was on the verge of its greatest venture. In a sense that was true, for the bonanzas then underway would be unprecedented. But they were also limited. That was what the activists and pundits were ignoring in the Mineralogist’s survey. Indeed rehabilitative efforts at the three (or four) bonanza mines had been so extensive and successful that they obscured negative indicators. At Crown Point, for example, during the fiscal year from May 1873 to May 1874 1,200 feet of drifts, 500 feet of crosscuts, 200 feet of raises and 1,500 feet of winzes were constructed along with retimbering 2,500 feet of drifts. A new hoisting reel 21 feet and 6 inches in diameter was said to be the largest on the West Coast. Its face had a “spiral groove of sufficient capacity to wind a two-inch steel rope to work the mine to a depth of three thousand feet.” It was driven by a “pair of twenty by forty-two link-motion engines” and was so strong that it could hoist 12 tons of ore per load. Given the expense of such installations how could one doubt that the ground was rich in ore that simply awaited bigger and better machines? From the financial accounts (to be examined in the next chapter) made available to the Mineralogist, all mining and milling costs came to approximately $20 or $21 per ton whereas return in bullion was between $50 and $60 per ton. Gross profits were obviously extraordinary for a mine that some had written off as folly. Its neighbor, Belcher, had an equally impressive year. The operational activities were reported with fewer details at Belcher than at Crown Point, although Belcher’s finances were described as fully as Crown Point’s. The most serious problem was the replacement of the air shaft, which a fire had destroyed the year before. In 1873 the new shaft had reached the 600-foot level (ca 150-200 feet from the surface) and was to connect with an upraise at the 850-foot level. The matter of proper ventilation in Comstock mines continued to baffle miners and engineers, and at Belcher, since the ores were being extracted from levels between 1,400 and 1,900 feet considerably more work had to be done on the air shaft in the coming years. Since air was also needed to run the new Burleigh compressors and drills (considered to be the most efficient on the West Coast), a six-inch pipe had been installed for a distance of 1,400 feet so that it could allow work at the 1,800- and 1,900-foot levels. Belcher like Crown Point reported mining and milling the ores cost between $20 and $21 per ton, but its yield in bullion was nearly $70 per ton. Belcher was proving to be the richer of the two mines in large part because it produced more gold than silver.24

As important as Belcher and Crown Point were to the Comstock’s emergent recovery, the rehabilitation on the Lode’s northern end at Consolidated Virginia and later at California was becoming the headline. It was not lost on the local mining community that the new bonanza was launched at approximately the same level, the 1,200-foot level, as the Lode’s southern bonanzas. Belcher-Crown Point and Consolidated Virginia-California became the bookends for what many had hoped and assumed would be a

24 Crown Point was discussed in “Biennial Report of the State Mineralogist…1873 and 1874,” in Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 103-112, and Belcher 112-118.

13

THE COMSTOCK [E]

general bonanza from Gold Hill to Virginia City even though the ever widening and deepening explorations along the Lode had yielded few positive results. In his report the Mineralogist excerpted portions of articles found in three regional newspapers – Territorial Enterprise, Gold Hill News, and Independent. In addition he quoted a large part of the annual report by the superintendent, who in this case was one of the owners and a long-time well-known local, James Fair. Some figures on receipts and disbursements were also cited. The enterprise, which Fair, Mackay, James Flood and William O’Brien were building, would become a Comstock behemoth. By the end of 1873 Consolidated Virginia’s main shaft (between E and F Streets) had reached 1,550 feet of which more than 1,000 feet had been sunk in 1872 and 1873. What permitted the rapid expansion of the main shaft was the absence of water. Two nearby mines, Gould & Curry and Ophir, which connected to Consolidated Virginia and its adjoining mine California at the 1,200- through the 1,500-foot levels, had pumps of sufficient size to drain that section of the Comstock. According to Dan DeQuille he first saw the ore body in October 1873 by way of a drift from Gould & Curry’s mine (through Best & Belcher to the south) that traversed the ore body at the 1,200-foot level, although this figure may refer not to the distance from the standard surveyor’s point on the Gould & Curry property but to the distance from the surface of the Consolidated Virginia property probably at the site of the main shaft.25 In any event within a matter of months drifts were constructed northward from the Gould & Curry side as well as southward from Consolidated Virginia’s main shaft. It was soon apparent that the ore body extended northward into California but not as far as Ophir and it did not extend southward, even though many held out hope that as the explorations continued in an easterly direction toward the hanging wall the ore body would reconstitute itself southward through Gould & Curry and northward to Union Consolidated where the Lode then split. Within Consolidated Virginia’s claim the heart of the ore body was at 1,500 feet below the surface (at 1,636-foor level), and the massive wall of ore rose up to 1,200 feet on an angle and extended northward into California at 1,500 feet but not beyond. It would reach a depth of about 1,650 feet. From the earliest days, even before the discoverers knew its actual dimensions, this was seen as an unprecedented discovery. It not only spread over hundreds of feet in nearly every direction, but it was also of unparalleled purity and richness. It was almost as if the underground in this section of the Lode was an unbounded solid ore mass. Not surprisingly, then, the massiveness of the ore body was matched by the massiveness of the technology and construction required to mine and to mill the ore. Both print journalists and company officials spared no effort to describe the dimensions of the machines and the buildings: a boiler was called “monstrous”, the main shaft with three cages could hoist 1,400 tons daily, the foundation for the shaft engine, which itself weighed 50 tons, was said to contain 450 cubic years of masonry and to weigh in at 600 tons and the shaft that drove the dozens of stamps or hammers that broke

25 The surveyor’s point known as “datum point A” on the surveys by George Becker in the early 1880s was actually higher by about 150 feet (the difference varied depending on where the measurement was made from the surface of Consolidated Virginia’s property). The 1,200-foot-level in the above citation would be about 1,050 feet from the surface. This was probably not where the ore body existed. More than likely the 1,200-foot level referred to distance from the surface and the corresponding surveyor’s distance would be about 1,350 (more precisely 1,336 from Becker’s survey. For how the distances were reported see Lord, Comstock Mining and Miners, (311), Smith, The Comstock Lode, 158-159 and G. F. Becker and published as Atlas, Atlas Sheet 15.

14

THE COMSTOCK [E]

up the ores was 24 inches wide and 160 long. There was nothing modest about the plans drawn up and executed by W. H. Patton, the chief designer and engineer, nor about the expenditure of the hundreds of thousands of dollars needed to build this colossus, and for good reason. The Superintendent’s Report referred to the quality and quantity of ore during 1873 as exceeding “in value…any other mine which has ever come under my knowledge or observation.” The in-mine assays, which yielded results always several times greater than the actual value of bullion in dollars, from the 1,550-foot level ranged from $200 to $800 per ton. In the end at Consolidated Virginia in the last quarter of 1873, when it paid mining-proceeds taxes for the first time, the yield in bullion came in at $57 per ton, which was less than $10 below Belcher and more than $20 above Crown Point for the same quarter. Of course the full scope of the unfolding bonanza remained to be charted, but it was already regarded as equal to and perhaps as superior to anything that had preceded it.26

The following year, 1874, will actually serve as a pause in the Comstock’s new cycle of bonanzas. Since 1872 Belcher and Crown Point had led the way, and in 1873 Consolidated Virginia joined the bonanza parade, although as Dan DeQuille cautioned in a now famous 29 October 1873 article in the Territorial Enterprise: “…a first-class mine is fast being developed in the Consolidated Virginia, but of course we can see into the ore deposit no further than the openings that have been made.”27 The database itself is less ample. The Mineralogist’s Report lacked mine-by-mine statistics for the fourth quarter since the taxes were not paid until the first quarter of 1875 when the Legislature was already in session. The next report (1875-1876) did not contain mine-by-mine data as was included in the 1873-1874 Report. The October 1875 fire destroyed the courthouse files, and the only Abstract Statement for 1874 covered the first quarter, some of which appeared in the Mineralogist’s Report. The more abbreviated dataset assembled by the State Controller provides the basic information of ore production. The totals for 1874 compared to 1873 revealed that ore tonnage rose about 10 percent to 534,000 tons while bullion value fell slightly by a half of a percent to $22.5 million. The average yield per ton was $42 in 1874 compared to $47 in 1873. Even with incomplete data, however, some patterns can be discerned. Belcher and Crown Point remained the leaders in spite of the excitement at Consolidated Virginia. In the first three quarters Belcher reported more than 127,000 tons worth $7.7 million or $60 per ton, well above the average yield. Crown Point had less impressive figures at 122,000 worth $5.1 million or $42 per ton, and its yield fell below the average. What helped to boost the average yield per ton was not only the high figure for Belcher (with 33 percent of the tonnage and 46 percent of the value) but also the high figure for Consolidated Virginia (with 17 percent of the tonnage and 19 percent of the value) Against standards used by the mining companies as to how big a 26 “Biennial Report of the State Mineralogist...1873 and 1874”in Appendix to the Journals of the Senate and the Assembly, 7th Legislative Session, 1875, 130-138, 156-157. Tonnage and bullion figures from the county assessment rolls that appear in the Mineralogist’s Report (156-157) were slightly lower than the tonnage and bullion figures that appeared in the company ledgers. The per-ton yield in dollars may have been as high as $59. Bullion Records, Consolidated Virginia Mining Company, Oct 1873-Nov 1875, NC99/1/3/2, Special Collections, Library, University of Nevada, Reno..27 According to Grant Smith (The Comstock Lode, 154) the article with this quotation appeared in the 27 October issue of the Daily Territorial Enterprise under the Headline “Consolidated Virginia—A Look Through the Long Forbidden Lower Levels—The Ore Bodies and Breasts, Winzes and Drifts—Rich Developments.”

15

THE COMSTOCK [E]

yield was necessary on average to guarantee a profit (between $20 and $30 per ton) Crown Point’s figure was still significantly above the mark.28

When the first three quarters are disaggregated from the aforementioned totals, a pattern emerges that will further alter the structure of Comstock mining. The first observation is that only 13 bullion owners appeared on the list – 11 mines and 2 tailings mills. This was the smallest number in a decade. Seven of the mines had bullion registrations in all three quarters while the remaining four missed at least one quarter. The number of operating mines with taxable bullion was shrinking and would remain on the low side of a range of one to two dozen for many years ahead. The second observation is that the quarterly yields per ton of the two leaders indicated the possibility that they had peaked and would begin to decline. With historical hindsight one can see that was what happened over the next few years. The 1874 quarterly figures (not including, of course, the fourth quarter) already pointed to the waning of the bonanza on the southern end. The performance at Belcher and Crown Point was uneven: Belcher’s per-ton yield dropped from $65 in the first quarter to $57 in the second and then rose to $60 in the third, and Crown Point’s dropped from $47 to $14 and rose to $37. The third observation is that Consolidated Virginia’s per-ton yields were rising from quarter to quarter from $41 to $50 to $61. Indeed because we have access to Consolidated Virginia’s own company accounts we know that in the fourth quarter it continued to rise to $63 per ton. The final observation is that if the top three bullion owners were removed from the totals, the remaining operations would account for 20 percent of the tonnage and 6 percent of the bullion for a yield of $14 per ton. Despite the evidence for a continuing bonanza on its southern end and an emerging bonanza on its northern end the Comstock had little to had little to celebrate in between. The Lode continued to play out its drama of a few hugely profitable operations surrounded by an array of impoverished operators.29

The year 1874 represented a turning point, in a real sense the final turning point, for Comstock mining. It witnessed the launching of the biggest bonanza yet and ever. It must have made even the saltiest of the old-timers starry-eyed. Eliot Lord, who could scold Comstock owners and investors as severely as anyone, wrote in rapture of new bonanza on properties that for years had yielded virtually nothing: even some like Dan DeQuille had written as if they knew all along the body was there.

The miner’s pick and drill are more potent than the magician’s wand [having previously referred to the Persian tale of young Aladdin]. Under their resistless touch bars of the treasure-house were broken through and its hoard revealed to the dazzled eyes of the invaders. The wonder grew as its depths were searched out foot by foot. The bonanza was cut at a point

28 The fourth highest of $32 per ton was from Ophir ore on only 4,700 tons, about 1 percent of the total. A small part of the ore body being worked in Consolidated Virginia and California extended northern into Ophir property. Ophir’s main contribution was that its main shaft and several southern drifts were used in the renovation and for the ventilation of Consolidated Virginia and California.29 “Biennial Report of the State Mineralogist...1873 and 1874” n Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 176-177and Bullion Records, Consolidated Virginia Mining Company, Oct 1873-Nov 1875, NC99/1/3/2 and Dec 1875-Nov 1878, NC99/1/3/4, Special Collections, Library, University of Nevada, Reno.

16

THE COMSTOCK [E]

1,167 feet below the surface, and as the shaft went down it was pierced again at the 1,200-foot level; still the same body of ore was found, but wider and longer than above. One hundred feet deeper, and prying pick and drill told the same story; yet another hundred feet, and the mass appeared to be still swelling. When, finally, the 1,500-foot level was reached and ore richer than any before met with was disclosed, the fancy of the coolest brains ran wide.30

The obvious question was how long would this marvel continue. Lord’s response was somewhat uncharacteristic for a man who already knew the outcome and continually distrusted the Comstock community’s inability to forecast: “its expansion seemed to keep pace with the most sanguine imaginings.” He then offered a quasi-statistical accounting of the progress: drifts were cut lengthwise and even after passing the northern boundary [into California property] there was no evidence of “barren rock”; crosscuts indicated a width of 150 to 320 feet; winze after winze “perforated level after level” to improve the air and to load the tram. Hundreds of workers scurried about inside the mine and on the surface, and dozens of buildings were being constructed, renovated and enlarged to handle the flood of ore being extracted.31 There was uniform agreement among writers, contemporaneous and later, that the opening of Consolidated Virginia’s stopes to the public (at least the journalistic public) was an event of extraordinary revelation.

Once Lord turned his attention to financial matters again, in particular stock prices, his mood changed. In 1870, he reported Consolidated Virginia stock sold for $15 per share, and after the discovery was announced in 1873 it rose to $115 per share in November 1874 and then quadrupled to $610 per share by the end of 1874. It rose nearly another $100 in early 1875. Given the outstanding shares the value of Consolidated Virginia was put at $75 to $76 million, more than the value of all the ores ever extracted from the mine. Its companion mine, California, saw its stock rise to $780 per share to make it worth $84 million, also more than it ever produced in ores. The total value of mining stock traded in San Francisco in 1874 may have reached several hundred million dollars. Even with the greatest of bonanzas underway, stock prices had once again entered a fantasy world. Lord concluded that “many mines were not worth a dollar intrinsically, and all were overvalued” In his view that included Consolidated Virginia and California. Money being spent to speculate in stocks and drive up prices was money not available for capital improvement, which was the Comstock’s urgent need. Lord further observed that “blind confidence was changed first to doubt and then to alarm within the same week. Stock prices tumbled. Consolidated Virginia and California, as powerful a cash machine as they were, witnessed a decline from $700 to $497 for the former and $780 to $280. It is worth noting that California had not yet officially started production. But other mining-company stocks dropped through the floor as well, some by

30 Lord, Comstock Mining and Miners, 311, citing Don DeQuille, The Big Bonanza, and the Superintendent’s Report, Consolidated Virginia Mining Company, 31 December 1874, as some of his sources. The figures probably refer to measurements from the surface of the property. DeQuille and others stated that they had been encouraging development of these properties for years, but such remarks are somewhat gratuitous in that locating these veins in an underground that was scores of square miles in size required the patience and skill of long-time miners like Fair and Mackay. 31 Lord, Comstock Mining and Miners, 311-314.

17

THE COMSTOCK [E]

as much as 200 percent. As Lord had repeatedly warned his reader, estimating or forecasting production ahead of actual mining and milling the ore was hazardous and foolish.32 Investments should be based on proven reverses rather than hyperbolic predictions. He rightly pointed that it did not matter how volatile stock prices were in the case of Consolidated Virginia and California, for even though speculators and investors may have lost money gambling in the companies’ stocks the mine themselves were producing the richest ores and the highest profits ever.33 The principals and other investors were paid huge dividends. Unfortunately for the rest of the Comstock the end was already at hand. One can applaud Lord’s (and at times Smith’s and DeQuille’s) verbal spanking of irresponsible speculators and uninformed investors, but even if the mining community had undergone a sudden conversion toward prudence and scrutiny where would they have put their money? Stock trading then as now was not necessarily related to the business at hand. It is not clear that had the stock-market crowd followed a different path they would have made a difference in the eventual outcome of Comstock mining. Perhaps a more rational approach could have improved profitability, reduced waste and corruption, broadened the pool of those who shared in the huge payouts and even extended the life of the Comstock (one of Lord’s assertions), but how such an approach could have been pursued especially in an age of laissez-faire economics was never laid out even by the critics themselves. It was assumed perhaps naïvely that people inherently desired to behave in less wasteful pursuits to optimize their own self-interest. In the real world that was not the case.

32 Lord, Comstock Mining and Miners, 315-319.33 Lord, Comstock Mining and Miners, 319.

18

THE COMSTOCK [F]

Chapter 6Statistical Profile of Mining Industry:

Third Stage 1875-1880, Final Stage 1880-1885

As the year 1875 opened, the Comstock appeared to be re-energized. If the first half of the 1870’s belonged to Belcher and Crown Point, the second half belonged to Consolidated Virginia and California. The latter’s holdings were so vast that sunny predictions of inexhaustible supplies seemed the only natural and rational position to take. After the pause of 1874 the value of bullion in Story County rose in 1875 by 16 percent to $26 million. Tonnage, which had risen by 10 percent in 1874, increased by less than 5 percent in 1875 to 558,000. That meant, of course, the per-ton figure had gone up from $42 in 1874 to $47 in 1875. The latter figure was comparable to that reported in 1873. These changes were not spectacular when measured against the doubling of bullion values between 1872 and 1873 but nonetheless important as indicators of the resumption of growth in output. Behind the gross numbers for tonnage and bullion, however, was the most startling story: Belcher and Crown Point had lost their leadership role as their output plummeted by one-half and one-third respectively. By contrast Consolidated Virginia vaulted into first with nearly a three-fold increase in tonnage (169,000) and a five-fold increase in bullion ($16.9 million). A ton of ore from Consolidated Virginia yielded about $100 in bullion. Never before had the dollar value of a ton of ore in the course of a year reached $100. Assays inside the mines were often reported to be in the hundreds of dollars per ton, and such assays had been reported in the press and other publications in the past but had never been realized once the ores were processed. The average for the Comstock between 1867 and 1885 was $36 per ton while the median was $25 per ton. In previous bonanzas such as Belcher the ratio was as high as $60 to $65 per ton. Consolidated Virginia’s achievement had converted fantasies about the “gigantic scale” (in the words of the State Mineralogist) of the Comstock’s ore reserves into realities.1

And reports from Consolidated Virginia’s companion mine, California, only affirmed what many were coming to accept as the new gospel – the ore bodies grew richer as the depths increased.

FIGURE 1BULLION OWNERSHIP WITH QUARTERLY YIELDS, 1875

Mine or Mill 1Q 2Q 3Q 4Q Totals % %Yield Yield Yield Yield Tons Value Yield Tons Yield

Consolidated Virginia $96.81 $89.68 $102.60 $119.66 169,065 $16,916,006 $100.06 30.3 65.0Ophir 26.24 28.02 43.60 45.72 46,682 1,682,990 36.05 8.4 6.5

Belcher 26.11 21.66 31.19 33.03 123,780 3,383,874 27.34 22.2 13.0Imperial 20.00 27.14 3,127 82,006 26.23 0.6 0.3Justice 23.14 729 16,866 23.14 0.1 0.1

Crown Point 21.04 20.63 20.18 17.01 155,361 3,101,604 19.96 27.8 11.9Andes 18.75 876 16,425 18.75 0.2 0.1

Hale & Norcross 16.57 17.47 5,797 98,722 17.03 1.1 0.4Chollar Potosi 17.10 19.14 14.93 16.43 18,850 317,383 16.84 3.4 1.2Yellow Jacket 16.00 761 12,176 16.00 0.1 0.1

1 “Biennial Report of the State Mineralogist…1875 and 1876” in Appendix to Journals of Senate and the Assembly, 2 vols., 8th Legislative Session, 1877, 1:120 (1875).

1

THE COMSTOCK [F]

Vivian 15.72 1,488 23,397 15.72 0.3 0.1Empire 14.02 13.00 13.00 12.78 11,090 146,960 13.25 2.0 0.6

Express Mill [T] 15.22 9.50 4,400 56,679 12.88 0.8 0.2Woodville 12.50 1,296 16,200 12.50 0.2 0.1

Bowers 11.38 11.67 11.33 955 10,950 11.47 0.2 0.1Railroad Mill [T] 15.25 8.00 11.00 12,800 134,700 10.52 2.3 0.5

Stevenson, C. C. [T] 5.19 5.00 1,200 6,100 5.08 0.2 0.0Calculated Totals $42.69 $43.55 $55.02 $46.05 558,257 $26,023,038 $46.61 100.2 100.2Recorded Total 558,256 $26,023,037

Sources: The County Records Microfilm Project, ST 67 Story County. in Special Collections, Library, University of Nevada, Reno. T identified as tailings mill. Percentage rounding to one-tenth reduces some figures to zero.

When production statistics are examined firm by firm, a less rosy and a more troubling future may be discerned. The number of firms with assessable bullion during the year remained small at 14. Nine firms paid taxes in the first quarter, seven in the second quarter, nine again in the third quarter and 11 in the fourth quarter. Tonnage and value rose between the first and second quarters; tonnage fell in the third while value continued to rise; and both tonnage and value fell in the fourth quarter. The October fire clearly had some impact on operations during the fourth quarter. The fire, confined mainly to Virginia City, destroyed buildings and facilities on the surface and timbering in several shafts, but most of the underground facilities were untouched. The ore was kept in the ground until the shafts could be repaired sufficiently to move the ore out of the mines and into the mills. The fire was certainly a major disruption but not a permanent one. It was encouraging that the fire did not bring Comstock production to a standstill, and it was equally encouraging that the bonanza on the northern end, now concentrated in Consolidated Virginia but rapidly being expanded to California and perhaps eventually even to include Ophir, was as big as it was. On the southern end the bonanzas appeared to be absolutely waning. Consolidated Virginia sprang to the top with only 30 percent of the ore but 65 percent of the bullion as yields came in at more than $100 per ton. Second on the list in per-ton yields was Ophir, which had been among the marginal producers for several years. In tonnage and bullion both Belcher and Crown Point far surpassed Ophir but their yields had fallen to $27 and $20 per ton respectively, the lowest since 1870. Belcher’s quarterly figures were more encouraging than Crown Point’s. The former yields had fallen and then recovered during the course of the year whereas the latter’s had steadily fallen. Without Consolidated Virginia’s yield of $100 per ton the average for the other operations would be $23 per ton and the median would be $17 per ton. These were not figures that could be predictive of long-term growth. But clearly it was difficult to look ahead and not to factor in the events surrounding Consolidated Virginia and California. In spite of the damage from the fire to the mine the yields from Consolidated Virginia were extraordinary: $97 per ton in the first quarter, $90 in the second, $103 in the third and $120 in the fourth. No operation had achieved such productivity. Success at Consolidated Virginia reinforced the expectations that greater wealth would be found in deeper ground in a matter of time and with a sufficient application of capital and technology.2

2 “Biennial Report of the State Mineralogist...1875 and 1876” in Appendix to Journals of Senate and Assembly, 3 vols., 8th Legislative Session, 1877, 1:200-201, 208-209 (1875). Supplemental data found in Bullion Records, Consolidated Virginia Mining Company, Oct 1873-Nov 1875, NC99/1/3/2, and Dec

2

THE COMSTOCK [F]

In the final two quarters of 1875, based on information provided by the bullion owners, the yield in dollars per ton of ore was $51 whereas the cost per ton to extract, transport and refine that ore was $25.3 This was a healthy gross profit margin even if cost data were not verifiable. When data from Consolidated Virginia are stripped out of the bullion and cost figures, a somewhat different picture emerges. One point to observe is that although the fire may surely have boosted Consolidated Virginia’s costs (surface

buildings damaged or destroyed and its shaft filled with dirt to prevent an interior fire) between the third and fourth quarter, the overall operations may have suffered much less if at all. In the third quarter mines produced ores worth $55 per ton at a cost of $23 per ton. Gross profits of $32 per ton was significantly influenced by the performance at Consolidated Virginia, which with bullion receipts of $102 per ton and mining and milling expenses of $28 per ton realized gross profits of $74 per ton. When Consolidated Virginia’s data are removed from the calculations, the other Comstock firms received on average $24 per ton at a cost of $21 per ton for a modest gross profit of $$3 per

ton. Of this group Ophir, which ranked fourth in tonnage, had the highest gross profits of $24 per ton followed by Belcher, which ranked third in tonnage, with $6 to $7 per ton gross profits. Among the worst performers was Chollar Potosi, which reported a loss of $24 per ton on a few thousand tons. Crown Point, second in tonnage, just barely broke even with receipts and costs running at about $20 per ton.

The fire of October 1875 could have closed down the Comstock if it had ignited the interiors of the mines. It did not. While property losses on the surface were large, such losses inside the mines were small. Most severely affected among the producing mines were those like Ophir and Consolidated Virginia on the northern branch, where the fire began. Mines on the southern branch were unaffected for the most part. Total tonnage fell by 11 percent compared to the third quarter mainly because tonnage at Consolidated Virginia and Ophir were off by nearly half. Per-ton yields also declined to an average of $46 (from $55) while per-ton costs, not surprisingly, rose to $28 (from $23). Belcher became the largest producer in tonnage with a modest rise in per-ton income from $30 to $33. In contrast Crown Point with the second highest tonnage saw yields continue to decrease from $20 to $17 per ton. Belcher’s gross profits more than doubled to $13 per ton. Next door, Crown Point now officially dropped into the red with operating losses of more than $3 per ton. Chollar Potosi, much closer to the fire, actually witnessed a drop in operating losses from $23 per ton to $8 per ton. The big question: how did Consolidated Virginia perform? The upper part of the shaft had to be repaired and the housing, cables and other equipment had to be replaced. But Consolidated Virginia could maintain

1875-Nov 1878, NC99/1/3/4, Special Collections, Library, University of Nevada, Reno.3 The Mineralogist’s Legislative Reports of company operations for 1873-1876 did not contain the cost and tax data that were included in the assessments rolls maintained by the county assessor and in the Quarterly Abstracts submitted to the State Controller. In the aftermath of the October 1875 fire the first complete assessment roll for Story County was for the third quarter of 1875. That was possible because the registration of data and the payment of taxes for the third quarter were not due until the end of the fourth quarter of 1875, more than two months after the fire.

3

Illustration 1: John Mackay

THE COMSTOCK [F]

underground operations by using the network of tunnels that connected its operations with other mines and shafts. During the quarter the company reported that 27,000 tons of ore were lifted and refined at an astonishing per-ton yield of $120. Company costs rose, as one might expect, to $62 per ton from $28 the previous quarter, but even so that left a gross profit of $57 per ton, down from $74. These were extraordinary numbers by historic standards and even more so against the backdrop of a devastating fire. The performance of the Comstock absent the Consolidated Virginia data was about the same as the third quarter: receipts dropped to $24 from $25 per ton but costs also dropped from $21 to $19 per ton. There was understandably exuberance about the speedy recovery of the mining sector after the fire, although the underlying patterns observable in the yearly data should have advised caution.4

FIGURE 2MIDDLE SECTION, COMSTOCK LODE, BECKER ATLAS, SHEET X[BRACKETED FIGURES FROM SURVEYOR'S POINT AT A (GOULD & CURRY),

CONSOLIDATED VIRGINIA & CALIFORNIA EXHAUSTED AT 1,800' TO 2,000'(COMPARED TO HALE & NORCROSS & SAVAGE)]

4 The discussion concerning the third and fourth quarters drawn mainly from assessments in The County Records Microfilm Project, ST 67 Story County. in Special Collections, Library, University of Nevada, Reno. The actual ledgers can be consulted at the Assessor’s Office, Story County Court House, Virginia City, Nevada.

4

THE COMSTOCK [F]

During the next two years 1876 and 1877 Comstock production of gold and silver achieved its historic highs. In 1876 more than $38 million worth of bullion was registered to Comstock companies, and in 1877 a slightly smaller figure of $37 million was registered. The first figure represented a 46 percent increase over 1875, and the second figure represented less than a 3 percent decline. Twenty-five names of mines, mills or individuals appear as taxpayers in the 1876 assessment rolls, the highest such number in several years. Half of the names were mining companies, reporting bullion from ores produced in their own mines. The other half consisted of bullion from tailings mills. On the tailings list were names identified as mills and names identified only as individuals, who may well have operated tailings mills. Tailings, as discussed earlier, were ores that escaped amalgamation, and to be processed required additional milling beyond ordinary operations. The rise in the number of tailings mills in 1876 was most certainly related to the unprecedented volume of ore being extracted and processed. The more that was available to be milled, the more that was lost in sluices and channels that moved the ores from the stamps into the refineries. Compared to the previous year, which set a record for Comstock production, about 3 percent of the tonnage was treated in tailings mills. That jumped to between 5 and 6 percent in 1876. The actual number of mines reporting taxable bullion was one less in 1876 than 1875. Four mines from the 1875 list did not show up on the 1876 list while three mines, not new to the Comstock but not on the 1875 list, appeared in 1876. The newcomer that mattered, of course, was California, the property between Consolidated Virginia and Ophir that shared the ore body that made Consolidated Virginia the Comstock’s richest mine. Consolidated Virginia and California along with Ophir accounted for 55 percent of the ore and 85 percent of the bullion. California’s performance in its “official” first year (actually 10 months) almost matched Consolidated Virginia’s performance after three years: it had one-fifth of the ore and one-third of the bullion compared to Consolidated Virginia’s 23 percent and 44 percent. Consolidated Virginia’s per-ton yield rose to $114 in 1876 (up from $100 in 1875), and California had a yield of $106 per ton. Ophir was far behind at $34 per ton, a decline of several dollars per ton from 1875. Belcher had the second highest tonnage after Consolidated Virginia and ahead of California, but it could only muster $21 per ton, the lowest since the 1860s. Other former major producers – Chollar Potosi and Crown Point – came in under $20 per ton. Three small operations in Gold Hill reported yields between $27 and $36 per ton. The annual average yield based on the tax rolls reached $61 per ton, the highest ever recorded. If the yields at Consolidated Virginia and California were backed out of the calculation, the Comstock average remained in the lower twenties ($23 per ton). Clearly what drove the Comstock to new highs in registered bullion were Consolidated Virginia and California.5

On the cost side the picture demands some explanation. A ton of ore cost on average about $26 to extract, refine and transport against a return of $61 per ton in bullion, as noted above. That left $35 per ton in gross profits. But the data from Consolidated Virginia and California strongly influenced those numbers. In cost per ton Consolidated Virginia and California ranked third and fourth respectively behind 5 Even though the 1877 Mineralogist’s Report contained the 1876 production figures from the tax rolls, it did not include the fourth quarter (taxes not due until the end of the first quarter 1877 after the Legislature had met and adjourned) and did not include costs. I have used instead the data from the actual assessment rolls on microfilm. See above footnote.

5

THE COMSTOCK [F]

Overman and Chollar Potosi. In reality only a few cents separated Overman from Consolidated Virginia. California, on the other hand, at $29 per ton was $6 under the top three. Both Consolidated Virginia and California had operating costs per ton that were higher than the Comstock average. On the other side of the comparative ledger their per-ton return (receipts minus expenses) was double the calculated average for all Comstock operations. Again to remove Consolidated Virginia and California from the calculations provides a different perspective on the Comstock cost structure. Bullion remittances for all the operations minus Consolidated Virginia and California averaged $23 per ton and the expenses amounted to $21 per ton with gross profit margins of about $2 per ton, a far less impressive figure than $35 per ton. Other former major producers operated at losses. Chollar Potosi had a loss of $15 per ton and Crown Point $6 per ton. Belcher had a slight profit of between $1 and $2 per ton. Ophir continued to show reasonably good profitability at $11 per ton, and Imperial (in Gold Hill) on only 4,300 tons of ore reported a favorable difference between receipts and costs of about $17 per ton. Seventeen of the assessed operations had ratios of expenses to receipts that exceeded 80 percent and nine of them had ratios in which expenses were greater than receipts. The average for all the operations was 43 percent. Even with high expenses per ton at Consolidated Virginia and California, their ratios of expenses to receipts were the lowest: 27 percent at California and 30 percent at Consolidated Virginia. Consolidated Virginia, California and several other small mines were profitable in 1876 along with a handful of millers. But the bonanzas at Consolidated Virginia and California, as spectacular as they were, remained isolated events.

FIGURE 3BULLION OWNERSHIP WITH QUARTERLY YIELDS, 1876

Mine or Mill 1Q 2Q 3Q 4Q Total % %Yield Yield Yield Yield Tons Value Yield Tons Value

Consolidated Virginia $128.00 $109.00 $97.00 $95.00 146,384 $16,657,165 $113.79 23.4 43.8California 155.00 97.00 83.00 126,936 13,400,841 105.57 20.3 35.2

Imperial (C. C. Stevenson) 14.00 30.42 62.00 4320.35 159,387 36.89 0.7 0.4Ophir 40.00 36.00 35.00 24.00 71,095 2,386,891 33.57 11.3 6.3

Overman 30.29 25.00 1,918 56,169 29.29 0.3 0.2Justice 31.00 31.00 26.00 30,730 856,592 27.87 4.9 2.3Belcher 26.00 21.00 18.00 16.00 131,223 2,821,076 21.50 20.9 7.4

Chollar Potosi 20.00 20.00 19.00 19.00 24,637 485,360 19.70 3.9 1.3Courser, J. C. [T] 22.00 13.00 182 3,375 18.54 0.1 0.0

Lady Bryan 17.00 225 3,940 17.51 0.1 0.0Ames, John [T] 16.00 250 4,225 16.90 0.1 0.1

Vivian 16.00 673 10,768 16.00 0.1 0.1Crown Point 16.00 15.00 13.00 11.00 56,921 905,947 15.92 9.1 2.4

Watson & Co. [T] 5.00 80 1,200 15.00 0.0 0.0Yellow Jacket (C. H. Golding) 13.00 863 11,668 13.52 0.2 0.0

Jennings, G. N. [T] 14.00 11.00 8.00 13.00 538 7,025 13.06 0.1 0.0Empire (C. C. Stevenson) 13.00 2,525 32,850 \13.01 0.4 0.1

Elholm, Andrew [T] 13.00 9.00 600 7,070 11.78 0.1 0.0Omega Mill [T] 13.00 9.00 1,607 15,205 9.46 0.3 0.1Express Mill [T] 9.00 9.00 9,833 86,770 8.82 1.6 0.2Railroad Mill [T] 7.00 9.00 13,276 112,175 8.45 2.1 0.3

6

THE COMSTOCK [F]

Dickman, E. [T] 8.00 28 224 8.00 0.0 0.0Russell Bros [T] 9.00 10.00 8.00 591 4,725 7.99 0.1 0.0

Partridge Hayes [T] 7.00 149 1,043 7.00 0.0 0.0Stevenson, C. C. [T] 5.00 7.00 1,290 6,450 5.00 0.2 0.0

Calculated Totals 626,874 $38,038,141 60.68 100.3 100.2Mean (by company) $26.08 31.45 28.75 14.50 16.44

Median (by company) $16.00 20.00 15.50 26.83 15.46Sources: The County Records Microfilm Project, ST 67 Story County, in Special Collections, Library, University of Nevada, Reno. T identified as tailings mill. Percentage rounding to one-tenth reduces some figures to zero.

The centennial year, 1876, was a triumphal year for the Comstock and for Virginia City in particular. After the fire the city had rebuilt quickly, and since the mines had escaped interior damage, they resumed operations almost immediately. Journalists, officials and visitors wrote glowingly of what was ahead for the Comstock against the backdrop of the productivity of Consolidated Virginia and California, the properties of what came to be known as The Bonanza Firm.More than once did the pundits predict that the Lode could produce as much as $50 million in bullion a year for a decade or more.6

As so often happened during flush times, however, the optimism in Virginia City turned into a bear trap on the stock market in San Francisco. For 1876 Lord listed about six-dozen Comstock companies whose stocks traded that year on the San Francisco Exchange.7 The majority of the companies with stock trades as listed by Lord could be matched up with companies with claims (or patents) as shown on maps and surveys of Comstock from the period.8 Of those 11 had bullion declarations. Consolidated Virginia with nearly $17 million saw its stock prices drop from $90 in March to $35.50 per share in December. Its yield fell from $128 per ton to $95 per ton (still a most handsome return) from the first to the fourth quarter as its cost (as reported to the county assessor) rose from $24 per ton in the first quarter, to $39 in the second and to $73 in the third before falling back to $31 in the fourth. At its companion mine, California, the story was similar although of a different magnitude. Per-ton yields dropped from $155 in the second quarter (its first full quarter) to $83 in the fourth while per-ton expenses rose from $27 to $32 per ton in the same period. Belcher had an annual yield of $22 per ton and an annual cost of $20 per ton, but in each quarter yields had dropped and costs had increased per ton. The stock had a high price of $40 in March and a low of $8.50 in December. For Crown Point it was even worse as yields plummeted and costs skyrocketed during the four quarters. Its stock declined from $29 in January to $5.50 in December. The only company to end the year with a higher stock price than at any time during the year was Overman, and it is not clear why this should have happened. Its stock rose from $53.50 in

6 Both Lord and Smith cited articles and reports, which proved to be exaggerated and unfounded as time passed. Lord, Comstock Mining and Miners, 314-321, and Smith, The Comstock Lode, 182-186, 197-199.7 Lord, Comstock Mining and Miners, Table V, 430-432. Smith stated that as many as 135 stocks were quoted, although he did not provide a list. The Comstock Lode, 199.8 A popular 1876 publication that has appeared in many Comstock histories was “Graphic Chart of the Comstock Mines, by Treadwell, for San Francisco Newsletter, 3 June 1876. On file in Special Collections, Library, University of Nevada, Reno, G4352 C6 1876 T7. There was also the later, official survey by the team under the direction of Becker and published as Atlas, Atlas Sheet 3. The two surveys were in basic agreement concerning the principal mining claims on the Lode itself. The Becker survey covered more of the surrounding area (since it included the Washoe District, which was larger than the Comstock Lode, and it also distinguished between claims or patents approved and those applied for.

7

THE COMSTOCK [F]

June to $122 in December. It produced about 2,000 tons of ore during the second and third quarters at a combined loss of $6 per ton. It is worth noting that several dozen other companies had stock transactions, in most cases at lower prices at the end of the year than at the beginning, and no ore or bullion registrations. They could have produced ores that were sold to millers who processed them and then paid taxes on them. The tailings millers on the 1876 assessment rolls accounted for less than 4 per cent of the total ore. Three companies – Consolidated Virginia, California and Belcher - paid dividends in 1876, and many of the rest of the mining companies were imposing assessments rather than paying dividends. But the San Francisco bears, led by James Keene, had already taken aim on the stocks of Consolidated Virginia and California, and their declining prices set the tone for the market. The bears had a more favorable view of California than Consolidated Virginia on the grounds that the former was just starting to lift ores from levels that had made Consolidated Virginia rich and the latter had observed a diminution of ores and yields below the 1,550- or 1,600-foot levels. Although California’s ores were somewhat deeper, they were nonetheless an extension of the Consolidated Virginia ore body, and presumably California like its companion would by some estimates within a year or two also be in contraction. Several companies whose stocks were traded did business in Lyon County, adjacent to Story County’s southern boundaries, around Silver City, and their assessments, of course, would not appear on Story County’s rolls. As a matter of record, however, for the year 1876 Lyon County’s assessment rolls revealed almost no ore or bullion production from the mines around Silver City and south of it even though stocks in some of the companies located there traded in San Francisco.9

Little light can be shed on the dozen or so companies with stock transactions but no identifiable Comstock claims. With 300 to 400 claims on the various surveys as well as changes in names and titles some errors can be expected. Moreover there is no assurance that despite his diligence Lord correctly copied from the stock-reporting services that he used the names of the companies under which the stocks were issued. As the speculators in San Francisco declared the Comstock vulnerable, the citizens of Story County and particularly Virginia City enjoyed one of the most prosperous years in their short history, perhaps the most prosperous ever. Thousands were employed in the mines, albeit most of them in the two bonanza mines; new construction was in evidence along the city streets and in the surrounding hillsides; throngs of citizens mixed with conveyances of every sort and description that filled the city streets; the mood by numerous accounts was upbeat and high spirited.

By any historic standard 1877 was another banner year on the Comstock. Tonnage rose by 1 to 3 percent (two sets of figures exist), and bullion fell slightly by about 3 percent. The per-ton yield also fell to $58 (give or take a few cents), down from 9 My figures for 1876 come directly from the assessment rolls in The County Records Microfilm Project, ST 67, Special Collections, Library, University of Nevada, Reno. State Mineralogists Report covering only three of the four quarters in 1876 listed one company, Silver City Mining, with 100 tons worth about $2,300. Silver City appeared on the aforementioned surveys but not as a company trading stock at least under that name compiled by Lord. Lyon had a substantial quantity of bullion from tailings, and that was not unusual since the county had a large concentration of tailings from amalgamation mills. The Mineralogist did not list the tailings production by mill. “Biennial Report of the State Mineralogist...1875 and 1876” in Appendix to Journals of Senate and Assembly, 2 vols., 8th Session of the Legislature of the State of Nevada, 1877, 218-219, 222-223 (1876) and Lord, Comstock Mining and Miners, Table V, 430-432.

8

THE COMSTOCK [F]

$61 the previous year. Taken together the two years 1876 and 1877 saw ore production worth about $76 million or about 30 percent of the total known bullion product of the Comstock. The devil, of course, was hidden in the details.

California rocketed ahead of Consolidated Virginia with a record 214,000 tons worth $19 million. The yield was between $88 and $89 per ton, not a record for the bonanza mines but extraordinary nonetheless. The per-ton yield of between $89 and $90 at Consolidated Virginia actually beat California’s yield, but compared to the previous year Consolidated Virginia’s return in bullion per ton dropped more than California’s. On the cost side California’s per-ton expenses fell by 7 percent from $29 to $27, while Consolidated Virginia’s fell by 14 percent from $35 to $30 per ton. Consolidated Virginia’s overall costs remained higher than California’s as it had the previous year. On a quarterly basis both mines had mixed results in terms of yields. California’s returns in bullion was $110 per ton in the first quarter, followed by two declining quarters - $92 in the second and $74, the lowest to date, in the third – and finally ending with a recovery up to $82. Consolidated Virginia’s pattern was different: a first quarter figure of $73 per ton, probably the lowest or among the lowest in three years, was followed by a rise to $95 and then to $106 in the second and third quarters with a decline to $78 in the final quarter, about where it had begun in the first quarter. In terms of costs California continued to do better with quarterly per-ton costs ranging between $25 and $30 compared to Consolidated Virginia’s $26 to $35. It is well known, of course, that after paying out more than one million dollars per month in dividends Consolidated Virginia suspended such payments for four months in 1877. For the market bears and perhaps for many other close observers there was little doubt what was happening. Consolidated Virginia had peaked, and unless new discoveries were made at much greater depths the Comstock’s greatest mine would fade into oblivion. And California, even though it broke several records in 1877 and in particular paid nearly $15 million in dividends, would eventually follow the course of its companion. Stocks prices certainly reflected these eventualities. The high price for Consolidated Virginia stock in 1877 was set in January at $55 and the low in November at less than $22. California fared no better: $55 was its high and $23 its low.10

FIGURE 4BULLION OWNERSHIP WITH QUARTERLY YIELDS, 1877

Mine or Mill 1Q 2Q 3Q 4Q Total Total Total % %Yield Yield Yield Yield Tons Value Yield Tons Value

Consolidated Virginia $73.00 $95.00 $106.00 $78.00 153,166 $13,726,251 $89.62 24.2 37.1California 110.00 92.00 74.00 82.00 213,682 18,893,843 88.42 33.7 51.0Overman 26.00 283 7,453 26.35 0.1 0.0

Ophir 18.00 29.00 21.00 37.00 6,164 158,016 25.63 1.0 0.4Belcher 28.00 23.00 24.00 15.00 16,147 413,742 25.62 2.6 1.1Justice 20.00 13.00 17.00 16.00 127,378 2,338,057 18.36 20.1 6.3

Crown Point 18.00 4,185 76,120 18.19 0.7 0.2Chollar Potosi 18.00 15.00 15.00 15.00 30,607 511,589 16.71 4.8 1.4

10 Yearly and quarterly data from The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno, and stock prices from Lord, Comstock Mining and Miners, Table V, 433.

9

THE COMSTOCK [F]

Andres 15.00 936 14,040 15.00 0.2 0.1Mariposa Mill [T] 15.00 14.00 15.00 9,056 134,136 14.81 1.4 0.4

Stevenson, C. C.[T] 13.00 14.00 3,830 55,802 14.57 0.6 0.2Imperial 14.00 2,997 41,958 14.00 0.5 0.1

Empire (C. C. Stevenson) 13.00 3,968 55,274 13.93 0.6 0.2Trojan 9.00 11.00 3,003 33,842 11.27 0.5 0.1

Omega Mill [T] 8.00 11.00 9.00 35,537 361,051 10.16 5.6 1.0Railroad Mill [T] 9.00 11.00 7,692 77,991 10.14 1.2 0.2

Jennings, G. N. [T] 10.00 8.00 1,090 10,546 9.68 0.2 0.1Express Mill [T] 9.00 9.00 11.00 9.00 10,177 95,825 9.42 1.6 0.3

Partridge Hayes [T] 9.00 3,686 33,184 9.00 0.6 0.1Bassett Bros [T] 10.00 281 2,181 7.76 0.1 0.0

Calculated Totals 633,866 $37,040,901 $58.44 100.3 100.3Mean (by company) $31.30 27.58 $26.23 $24.93 $22.43

Median (by company) $18.00 14.00 $15.00 $15.00 $14.69Sources: The County Records Microfilm Project, ST 67 Story County, in Special Collections, Library, University of Nevada, Reno. T identified as tailings mill. Percentage rounding to one-tenth reduces some figures to zero.

But the Comstock’s malaise was greater than was revealed in the deteriorating finances at Consolidated Virginia and California. Twenty companies appeared on Story County’s assessment rolls for 1877, and again as in 1876 close to half of the reporting operations were tailings mills. he mean bullion value for all operations was $58 per ton, the median was only $15 per ton. Remove Consolidated Virginia and Consolidated from the calculation, and the mean falls to $16 per ton and the median to $14 per ton. Among the well-known, well-established mining operations Belcher recorded an 88 percent decline in ore production to 16,000 tons although yields rose about 20 percent to $25 per ton. Two other mines – Ophir and Overman - with reasonably high yields of between $25 and $26 per ton reported sharp declines in ore output by as much as 90 percent. The other major mines – Chollar Potosi, Crown Point, Justice and Imperial – had yields between $15 and $20 per ton. One interesting piece of data was that Justice, a Gold Hill mine on the southern branch, accounted for a fifth of the tonnage and if Consolidated Virginia and California were excluded for half of the tonnage among the remaining operations. Its yield was $17 per ton for a total of $2.3 million or the third highest bullion total. But Justice declared that its costs were almost equal to its receipts. Consolidated Virginia and California, of course, had costs of under $30 per ton and gross profits of $60 per ton. The average cost per ton for all operations was $23 per ton against the average return of $58 per ton. The two bonanza mines clearly pushed up the Comstock-wide gross profits. Without Consolidated Virginia and California the average cost was $17 per ton against the average receipt of $16 per ton for a loss of $1 per ton. Even though Justice had a calculated loss of about 15 cents per ton, the performance of the other mining operations, based on similar calculations, was even less positive. Belcher claimed a huge loss of $15 per ton while Chollar Potosi and Crown Point claimed smaller losses of between $5 and $6 per ton. Ophir had a profit of $6 to $7 per ton on 6,000 tons, which represented a decline of more than 90 percent from the previous year. It was not clear where the next

10

THE COMSTOCK [F]

discoveries would occur to sustain ore production at the lofty levels set in 1876 and 1877.11

By 1877 the geological configuration of the Comstock Lode and the surrounding ground was far better understood than a decade before when Baron von Richthofen and others had made their predictions. Recurrent cycles of bonanzas and borrascas every few years had, quite naturally, inspired hope that the cycles would continue as the companies probed more deeply. The new twist, of course, was that the main core of the Comstock Lode had been squeezed out of existence at the 1,000-foot level, and the new discoveries below the 1,000-foot level had occurred in an eastward shift, that is, away from the footwall toward the hanging wall. The angular nature of the ore-bearing quartz vein posed a conundrum: what direction would the Lode take as the explorations breached the 2,000-foot level and below. Miners knew where they had been and what they had found, but they knew far less about where they were going. To many it was inconceivable that the richness of the Comstock would simply cease, for as the previous 15 years had amply demonstrated the Comstock had reinvented itself repeatedly. The State Mineralogist summarized the history of Comstock bonanzas with details about location, size and value in his 1877 Legislative Report by quoting a long passage from what he described without a full citation the Mining Review.12

Ophir and Mexican: surface discovery extending 500 feet underground; width of ore body 15 feet; cubical content 112,000 tons; value $22 million.

Gould & Curry: surface discovery extending 500 feet; width 15 feet; length 500 feet; cubical content 190,000 tons; value $37.5 million.

Savage: continuation of Gould & Curry but less rich; ore extending to the bottom of the mine, now 2,300 feet.

Hale & Norcross: strike at depth of 450 feet [550-foot level] extending to 1,200-foot level; width 10 feet; length 200 feet; cubical content 75,000 tons; value $5 million.

Chollar Potosi: strike at depth of 500 feet extending 1,700 feet with few interruptions; cubical content 1,500,000 tons; value $22 million.

Gold Hill: surface discovery extending 500 feet; cubical content 300,000 tons; value $10 million.

Yellow Jacket: surface discovery extending 700 feet; ore body poor and unprofitable; value $5 million.

Kentuck: 300 feet long; 20 feet wide; 400 feet deep [approximately 600-foot level to 1,300-foot level with intervening barren space]; 100,000 tons; value $10 million.

Crown Point and Belcher: discovery at 1,400-foot level extending downward 600 feet; Belcher still producing; cubical content 1,500,000 tons; value $50 million.

Consolidated Virginia & California: still developing; discovery through drifting eastward at the 1,500 foot level; ore body extends above and below drift; length 700 feet; height 600 feet; width 100 feet; in two years value $30 million; expected total value $140 million.13

11 Assessment Rolls in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.12 Not clear from his report what the Mining Review was.13 “Biennial Report of the State Mineralogist...1875 and 1876” in Appendix to Journals of Senate and Assembly, 2 vols., 8th Legislative Session, 1877, 1:120-121.

11

THE COMSTOCK [F]

It was obvious from these summaries (as I have noted several times) that the Comstock’s great ore bodies were not contiguous or uniform across the Lode. More of these ore bodies populated the area between the surface and the 1,000-foot level than below the 1,000-foot level even though the latter were far richer. Experience had taught miners that vast stretches of the Lode and the related areas were barren or uneconomical. Some of the comments were puzzling. In the case of Chollar Potosi working “without interruption” down 1,700 feet was misleading because almost no profitable ores had been found below the 700-foot level even though the main shaft and its connecting incline had reached the 1,700-foot level. Indeed when the Mineralogist was collecting the data the mine was actually losing about $2 per ton on every ton of ore converted to bullion. Even though the superintendent expressed the hope that a significant ore body was in the “neighborhood”, the prospects were bleak. From some of the estimated dimensions of the ore bodies – hundreds of thousands of cubic feet – one can begin to appreciate the grounds for continuing optimism about the future of the Comstock. It is doubtful that the Mineralogists quoted these passages to raise alarms but rather he did so to allay fears that had begun to surface in 1876 over the long-term future of Consolidated Virginia and the failure despite renewed activity to locate new bodies between the 1,000- and 1,500-foot levels and below.

If the unraveling of the latest Comstock bonanza began in 1877, it gathered speed in 1878. Ore tonnage dropped 40 percent to 386,000 tons and bullion income 45 percent to $21 million. The yield remained historically high at $53 per ton, due mainly to the productivity of Consolidated Virginia and California. These bonanza mines represented 68 percent of the tonnage and 93 percent of the bullion. Their dominance continued, although with a less spectacular imprint. Consolidated Virginia had a yield of $64 per ton, down nearly 30 percent from 1877, and California at $80 per ton suffered only a 10 percent decrease. Costs per ton actually fell by 20 percent to $24 at Consolidated Virginia and by a much smaller 4 percent to $26 at California. Unmistakably the growth in production at both bonanza mines had stopped and reversed. This was the second year of downturns at Consolidated Virginia and the first at California. The possibility existed especially at California that the reversals were temporary, except the news from Consolidated Virginia more or less affirmed what the data indicated. California might yet surprise the pundits and the markets, although the evidence for a turn-around was hardly compelling. The companies’ stock sold for as low as $6 to $7 per share during the course of the year.14

In 1878 eight mines and seven mills reported taxable bullion for a total of 15, one of the smallest in recent years. A fifth of the tonnage belonged to the tailings mills with 90 percent of the bullion product from two mills – Mariposa and Omega – both of which were owned by The Firm – Mackay, Fair et al. In addition The Firm owned or controlled Ophir, which only registered 1,300 tons but at a yield of $92 per ton. In short the remaining operations not a part of Mackey-Fair’s combine produced about 49,000 tons worth about $665,000 or $14 per ton, which was not sufficient to cover their costs of $17

14 Assessment Rolls in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.

12

THE COMSTOCK [F]

per ton. Belcher had disappeared from the assessment rolls, and Chollar Potosi and Crown Point between had about 6,500 tons that yielded about $16.50 per ton at a cost of $23 per ton. Except for Consolidated Virginia and California, which paid dividends of $1.4 million and $7.0 million respectively, all the Comstock in operation, those producing and those not producing any taxable ores, had to impose assessments on their stockholders or issue more stock in order to raise capital to stay in business.15

FIGURE 5MIDDLE SECTION, COMSTOCK LODE, BECKER ATLAS SHEET X[BRACKETED FIGURES FROM SURVEYOR'S POINT AT A (GOULD & CURRY),

CALIFORNIA EXHAUSTED AT 1,800' OPHIR (ORIGINAL DIGGINGS) AT 600', MEXICAN BARREN, UNION SMALL PATCH AT 2,600']

15 Assessment Rolls in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno. See Lord, Comstock Mining and Miners, 433-435 for stock prices of all the companies that traded on the San Francisco Exchange. Dividend payments by the bonanza mines show up in their Annual Reports for 1878. For Consolidated Virginia see 9 January 1879, NC99/1/5/1, p. 47, and for California 8 January 1879, NC99/1/5/6, p. 21 in Special Collections, Library, University of Nevada, Reno.

13

THE COMSTOCK [F]

As the curtain descended slowly but relentlessly on the Comstock drama, now two decades old, some continued to hold out hope for a new bonanza. The most successful Comstock miners – Mackay and Fair – turned their attention to Ophir, which they added to their holdings in 1877. During the bonanza at Consolidated Virginia and California Ophir had remained in the hands of William Sharon even though some of its underground works had connected into The Firm operations at California and had served as a conduit for various functions in the restoration of the two mines. After the acquisition of Ophir a vein of ore (named the Hardy Vein after Superintendent William Hardy) was located between the 1,700- and 1,900-foot levels. It lay in a fissure and sloped downward from west to east toward the hanging wall. What excited the discoverers, according to Grant Smith, was that configuration was not unlike that which led to the Consolidated Virginia bonanza.16 The 1878 California Mine Annual Report made reference to a “joint Ophir and California cross-cut” that ran from Ophir into California on a line corresponding to the location of the Hardy Vein in order to test whether it extended “south and upward” into the California mine. It did not, of course. Furthermore the Annual Report made clear that on both the Ophir side and the California side it proved difficult at these depths to prevent the loss of ore simply “from the caving of the ground and the crushing of the timbers.”17 In 1878 Ophir ore came in at an average $92 per ton, but that calculation can be misleading. Ophir only reported bullion in three of the four quarters. For the year it had total tonnage of less than 1,300 tons. In the first quarter the per-ton yield was $120 on less than 100 tons, and by the fourth quarter the per-ton yield had dropped to $80 on less than 900 tons. More telling, however, was the cost per-ton. In 1878 it reached $159 per ton. It was possible, as past experience had shown, that such outlays were necessary in the early stage of a potential bonanza and would be justified in the following years. In 1879 output rose to nearly 20,000 tons. Per-ton yields dropped to about $64 but so too did per-ton costs to about $57. That left an operating profit of about $7 per ton. Unfortunately profitability was short-lived. By the fourth quarter 1879 expenses surpassed receipts, and that trend continued into 1880. The ore body was limited in scope and expensive to extract. The hope of making a new strike at 2,000 feet in Ophir or in the two former bonanza mines to the south had faded by 1880.18

As the bonanza years of the early and middle 1870s receded, the Comstock entered a period of free-fall unlike anything experienced before. Between 1877 and 1881 tonnage fell 83 percent from 634,000 to 109,000 while the value of bullion from the ore fell even more by 96 percent. In a matter of four to five years the Comstock had slid to levels not experienced since the early 1860s. Story County, long the leader in ore and bullion production, had never witnessed a year when its share had dropped below 50 percent of the totals for all the counties, and in 1881 while it remained first it was no longer the dominate player with 27 percent of total tonnage and only 17 percent of total

16 Smith, The Comstock Lode, 213. Some of references that I have found concerning this discovery do not agree fully with what Smith described in pp. 213-215.17 Annual Report, Ophir Mine, 16 January 1878, NC99/1/5/6, p. 17, in Special Collections, Library, University of Nevada, Reno.18 Assessment Rolls in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.

14

THE COMSTOCK [F]

bullion. This downturn had a ring of finality to it. It was both rapid and severe. In 1878 tonnage fell 39 percent and bullion 45 percent; in 1879 41 percent and 35 percent; in 1880 18 percent and 43 percent and finally in 1881 42 percent and 66 percent. On a per-ton basis the figures were more startling: from $58 per ton in 1878 to $13 per ton in 1881. There was not even any pretense of profitability in these numbers. It is important to underscore that during these four years Consolidated Virginia and California continued to be the leading producers even as their own operations were in contraction. No other operating mine or no newly-discovered mine appeared in the role of savior of the Comstock. In the spring of 1881 a fire in Consolidated Virginia closed both Consolidated Virginia and California more or less permanently, and with no other emerging bonanzas the Comstock saw the sharpest declines ever in tonnage and bullion. The ore produced in 1881 on average lost for its owners $7 per ton.19

The mining and investing community could not have found any encouragement in the fact that the State Mineralogist issued his last report to the 9th Session of the State Legislature in 1879. It was his last because the position was abolished as a cost-saving effort by a state government whose revenues, so closely tied to taxes on mining proceeds, were rapidly evaporating. His 1879 report that covered the two-year period, 1877-1878, had a strong historic flavor in that he wrote enthusiastically about past successes on the Comstock and across the State and rather more guardedly about future prospects. He noted that in 20 years (since 1859 presumably) $350 million in gold and silver had been produced, and two-thirds of that since 1871. He also noted that 1877 was a record year for mining in Nevada. He cited a figure of $51 million in gold and silver, a figure that was higher by several million dollars than the Controller’s total of $47 million. In this regard the Mineralogist duly noted without apparent concern that in the following year 1878 total bullion had declined to $35 million (a drop of one-third). In his view the supply of ore was “without limit”.20 As the succeeding years will demonstrate “without limit” proved to be untenable. His summaries of individual mines accentuated both the positive and the negative. It was becoming more costly to mine a ton of ore as the depths increased, and although many capital projects required assessments against the stockholders the potential results were thought to justify the investments in their minds. The new Requa Shaft (known as Combination Shaft on various surveys), in his words “a model of engineering skill and design,” built by Chollar Potosi, Hale & Norcross and Savage Mining Companies, eastern toward the hanging wall from the original outcroppings, had reached 2,400 feet (between 2,500- and 2,600-foot level) at a cost of $1 million. It had four compartments. One was assigned to pumping equipment, and the other three to lifting ore. The influx of water at the lowest levels required the pumps to remove nearly 100,000 gallons of water per day in order for the work to proceed. It was envisioned that the flooding, which had plagued these mines for years, would be more or less permanently solved. A huge tank was to be built at the bottom of the shaft to collect the water that could then to be pumped to the surface or drained into the Surto Tunnel.

19 Assessment Rolls in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.20 “Biennial Report of the State Mineralogist…1877 and 1878” in Appendix to Journals of Senate and Assembly, 9th Legislative Session, 1879, 5. The discrepancy between his figure and the Controller’s totals cannot be explained.

15

THE COMSTOCK [F]

The Mineralogist did not predict what would be found. But he was as in the past sanguine.

The completion of this pumping system will form a new era in the history of the flooded mines. It will lessen the extreme heat of the lower levels by a more thorough ventilation; it will remove the water at present so great as to interfere with the workings; it will insure the mines against any future repetition of the flood. It will make prospecting more easy [sic], developments more valuable, labor more beneficial and thorough. The successful completion…will be one of the greatest engineering triumphs of the Comstock.21

Indeed, the shaft was completed, the connection was made and the mines were (more or less) drained, but despite the triumphal accomplishment no ore was found. Over the next half-dozen years the three mines lifted in combination several tens of thousands of tons of ore that generally returned less in bullion than it cost to extract and refine.

The Mineralogist devoted as much attention to the Sutro Tunnel as any other event during the final two years that his report covered. This project, to build a tunnel for drainage and other services from the present-day location of the town of Sutro four to five miles underground at increasing depths until it connected with the Comstock in the Savage Mine at the 1640-foot level. More will be introduced concerning the tunnel and its creator and promoter, Adolphe Sutro, in the following chapter. When the connection was made after almost a decade of planning and building, the drainage of the Comstock began not through pumps and compressors but through gravity. The water flowed downhill through the tunnel into a s mall stream that connected with the Carson River about 20,000 feet to the east. This was as daring, controversial and expensive a project ever undertaken on the Comstock. As one can readily observe, the main drawback was that it opened far too late. It may well have functioned as Sutro envisioned it had it been built more quickly. Sutro like many others believed that vast reservoir of ore resided at the depths that the tunnel would serve directly as well as at greater depths through a network of tunnels and pumps that would move the water into the main tunnel. The Mineralogist wrote his account of the tunnel in an upbeat tone. The operation of the tunnel, he estimated, would permit the extraction of low-grade ores, estimated to be worth between $50 and $500 million dollars and would offer savings for deep mining of $3 million per year.22 Neither of these along with many other hoped-for results was realized even though the tunnel proved that the primary goal of draining million of gallons of water per day was possible.

In the final years covered in this study, 1881 to 1885, efforts to restore and expand the Comstock continued but generally failed. Tonnage actually rose in each year after 1881: 5 percent in 1882, 27 percent in 1883, 32 percent in 1884 and 24 percent in 1885. From 110,000 tons in 1881 to 239,000 tons in 1885 the increase was 119 percent. 21 “Biennial Report of the State Mineralogist…1877 and 1878” in Appendix to Journals of Senate and Assembly, 9th Legislative Session, 1879, 133.22 “Biennial Report of the State Mineralogist…1877 and 1878” in Appendix to Journals of Senate and Assembly, Legislative Session, 1879, 84-85.

16

THE COMSTOCK [F]

The value of the bullion derived from the ore told a different story. Since the tonnage rose each year the value of the bullion would also be expected to rise. In 1882 it grew by 14 percent, in 1883 by 21 percent, in 1884 by 28 percent and finally in 1885 by 14 percent. Overall it doubled between 1881 and 1885 from $1.5 million to $3.0 million. But the yield per ton actually fell during the period. In 1882 it rose from $13 per ton to $15 per ton and then fell to $14 in 1883, $13 in 1884 and in the final year $12. On costs, as reported by the firms, they exceeded receipts in every year by as much as 10 percent and by as little as 1 percent. For all intents and purposes the Comstock was operating in permanent red ink. There were some interesting individual stories. Consolidated Virginia and California were almost completely out of picture. These mines accounted for no more than a few thousand tons of below average ores. Other Virginia City mines such as Ophir, Hale & Norcross, Savage, Chollar Potosi (specifically Potosi) and even Gould & Curry might have combined totals in the thousands or tens of thousands of tons, but their per-ton yields often fell below the aforementioned annual averages. The notable operations were in Gold Hill on the Lode’s southern branch. The quartet of mines (Yellow Jacket, Kentuck, Crown Point, Belcher), which were so instrumental in launching the bonanza years of the early 1870s, was producing again. Their recovery was not due to new discoveries but rather to reworking old stopes.

Their profit margins, however, were dangerously thin or nonexistent. Between 1881 and 1884 (1885 is excluded because the assessment rolls are difficult to untangle) these four mines reported about 346,000 tons or two-thirds of the total tonnage from all the operations. Their bullion was valued at $5.1 million. Discouragingly it cost $5.2 million to extract and process the ore. In 1881 receipts exceeded costs by approximately 43 cents per ton, in 1882 by 48 cents and in 1883 by 3 cents. In 1884 costs outpaced receipts by 49 cents per ton. Although these figures must be treated as estimates since the actual receipts and expenses of any of these mines cannot be independently verified, they reveal nonetheless the risk that the Comstock now posed. Without new, large, rich discoveries working old seams and stopes was a venture in diminishing utility. They could not be made profitable enough to reestablish the Comstock to its former glory.23

When Joseph Tingley added his Epilogue to a new edition of Grant Smith’s History of the Comstock Lode in 1997, he wrote that even with better technologies and greater resources every effort to recover the Comstock had more or less failed.24

23 Assessment Rolls in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno. Even though problems were encountered in organizing the assessment data for 1885, there is no indication that the ratio between revenues and costs underwent any significant reversal among the producing mines, in particular the Gold Hill quartet.24 Smith, History of the Comstock Lode, 307.

17

THE COMSTOCK [G]

Chapter 7The Business Of Mining:

Claims & Counterclaims, Miners’ Codes, Costly Litigation

Analysis of the emergence of mining on the Comstock in the first quarter century of its history demonstrates not only how cyclical mining was but also how corporate it became. A prospector with a few clothes and tools and a mule or two crisscrossing streams and valleys in search of ores may well have launched the Comstock era, but he gained little of the wealth that the Lode yielded up. As lode mining replaced placer mining, large firms with officers, managers, accountants, stockholders and hundreds of employees came to dominate the industry. Small operations did not completely disappear, but they occupied a minor niche. This had happened as well in California a decade earlier and across Spanish America centuries before. In the last instance despite heavy state intervention success in mining depended on grand entrepreneurs like Antonio López de Quiroga in Peru and Pedro Romero de Terreros in Mexico.1 Despite its egalitarian roots mining in the New World evolved into large-scale operations that gave the industry a visibly oligopolistic if not monopolistic character. By probing the rather extensive archives of company records as well as legislative reports, newspaper articles and local histories one can draw a fairly detailed picture of how well companies organized and managed their resources in order to conquer the Comstock and perhaps advance some explanations why some companies performed better than others.

Thousands of people poured first into the Nevada section of the Utah Territory as news of ore discoveries spread across the west and beyond. They came to a region that had few political institutions or public officials. In a matter of months the entire Comstock Lode and beyond had been claimed. Any contemporary map of the Comstock mining claims will show that the Lode and the region adjacent to it were divided up among hundreds of claimants. One would assume from these maps that ore existed everywhere when in fact the ore was confined primarily to a ledge that started on the north end of Virginia City and continued for several miles through Virginia City and into the hamlet known as Gold Hill. Some ore deposits were found south of Gold Hill and in a few other locations east of the Lode, but they never became important mining sites. With so many claimants and so few procedures in place to monitor their activities disputes over boundaries and titles were common and sometimes deadly. In addition to claim jumpers and location errors there was the simple matter that few if any of the earliest miners, who were making these claims, understood how the ore was distributed through the Comstock. Several years would pass before the engineers and geologists were finally able to come up with a reasonably accurate map of the topography and geology of the Comstock. If the ore been evenly distributed at all depths along the Comstock, the task of managing the Comstock might have been made easier. Certainly more claimants would have enjoyed some benefits. But these ore bodies, wrote Grant Smith “were thinly scattered through the wide Lode [up to 1,000 feet] ‘like plums in a charily pudding’, as [John] Mackay expressed it, and nearly all of them were found in the wide upper section and along or 1 Peter Bakewell, Silver and Entrepreneurship in Seventeenth-Century Potosí, The Life and Times of Antonio López de Quiroga (Albuquerque, NM: University of New Mexico Press, 1988) and Edith Couturier, The Silver King, The Remarkable Life of the Count of Regla in Colonial Mexico (Albuquerque, NM: University of New Mexico Press, 2003).

1

THE COMSTOCK [G]

near the east wall [away from Mt Davidson].”2 The upshot of the peculiar formation of the Comstock Lode along with the obvious disorder that arose out of so many claim seekers and claim jumpers was endless litigation. Consuming millions of dollars in legal fees Smith blamed his own profession: lawyers who “flocked” to the Comstock “like buzzards after carrion and engaged in an orgy of litigation over mining claims, much of it incubated in blackmail and reeking with perjury.”3 The other great observer of the Comstock era was Eliot Lord, whose well-regarded Comstock Mining and Miners devoted two chapters to the litigation issues. He found that the 12 most important companies prior to 1867 were involved in 245 suits, 168 in which they were plaintiffs and 77 in which they were defendants. Many of these suits had to do with claim jumpers, and claim jumping had to do with how boundary lines were drawn and how far those lines extended relative to the dips and turns of the ore ledge underground. Many of the rules governing the apportionment of ore fields were by tradition drawn up by the miners themselves, and the rules for Gold Hill and Virginia City, the two principal Comstock districts, were no better or worse than the rules of other districts. Lord was not impressed by this argument for local control and responsibility. He summarily dismissed it as “vague, inadequate, and blundering.” They protected the “working miner” as much as “the speculator and the sluggard”, and they ignored several centuries of mining legal experience in colonial Spanish America.4 Twenty years after the initial clams had been declared, lawsuits over rightful ownership were still being launched. It should not be ignored, of course, that while the scores of lawsuits and counter-suits were costly in money and time, they did not ever really threaten to shut down the Comstock. A colossal nuisance, no doubt, but not much more than that.

At the time of the California gold rush no federal mining code existed, and few were of the opinion that such a code was needed. Indeed a decade later, as the Comstock was becoming America’s new “gold rush”, still no code had been enacted. Comstock land and the wealth that it contained belonged to the public domain, for which the national government was the responsible agent. What was adopted in California and then in Nevada in the absence of formal national regulations was the “doctrine of prior appropriation”. What this meant with respect to mineral (and water) rights was that the discoverers or “locators” of valuable mineral deposits had the right to exploit them if done so in a diligent and timely manner. To give substance to this doctrine miners created their own mining districts and wrote their own rules governing the discovery, possession and exploitation of the minerals within their districts. They were also known to have written into their mining codes regulations concerning business and personal conduct. This approach fit the nineteenth-century ideal of self-governing localities but did not always work well. Drafting appropriate legislation was far less interesting and remunerative than searching for ore. Besides no matter how serious-minded local officials tried to be the claimants on the Comstock and in other camps were still technically trespassers on federal lands, and as such their claims could be declared invalid. This was especially troublesome to mining companies whose titles to properties, either purchased from original locators or reclaimed from abandoned sites, could be

2 Smith, The Comstock Lode, 75.3 Smith, The Comstock Lode, 66.4 Lord, Comstock Mining and Miners, 177-178.

2

THE COMSTOCK [G]

called into question. As mining companies assumed control of ore production and in the process enriched their officers and stockholders, they became targets for lawsuits. Anyone with a whiff of a claim over or near a profitable ore body had little to lose by filing a lawsuit. Local codes and procedures were simply inadequate for the task. This led Lord to conclude that local codes drawn up by local claimants were “[i]napplicable, inadequate and rudely framed” and while the codes might have been useful had they been enforced properly, they were in fact ignored with regularity. He described this adventure in self-government “as a concession to some imagined necessity for a formal prelude to their foray upon the ledges – a sop, as it were, to an invisible dragon of legal fiction guarding the golden fleece.”5

In 1865 and 1866 at the behest of Nevada Senator William Stewart the Congress enacted legislation that dealt with some of the unresolved legal questions. Stewart was also a Comstock lawyer whose clients were prominent mining companies. The 1865 Act, known as “Law of Possession”, addressed the issue of trespass in areas like the Comstock. The Act declared whenever state or federal litigation occurred over possession of property, once part of the public domain, it “shall [not] be affected by the fact that the paramount title to the lands in which such mines lie is in the United States, but each case shall be adjudged by the law of possession.”6 The importance of this provision was that the local codes, drawn up by the miners themselves, would determine possession of a claim so long as the codes were adhered to in locating the claims. A company could lose its right of possession but only if the facts relative to the locating of a claim required that company’s rights be terminated. For a site to be disputed was not in and of itself sufficient grounds to disqualify a company’s claim. A year later Congress passed additional mining legislation, known as the 1866 Lode Act and drawn up as well by Stewart. One provision, extraordinarily important to the mining companies, exempted lands containing minerals from federal public auctions. Rather these lands and their minerals could be acquired through private sales. Some Congressmen tried to gut this article so that mining companies would be forced to bid for land that they wished to develop. Public auctions on lands thought to be rich in minerals could push up prices far beyond what companies wanted to pay and in the past had paid.7 It is not clear that in post-Civil-War America where the business of mining was viewed as instrumental to the recovery of the economy that the public-auction approach ever had much chance of success against the corporate interests championed by congressmen like Stewart.

Equally important to Comstock miners were the provisions of the 1866 Lode Act that established how claims should be organized. Later legislation, The 1870 Placer Act and The General Mining Law of 1872, addressed further the matter of mining claims. Mining regulations from the earliest years in Spanish America sought to limit how much of a vein a single person could claim. Local mining codes in California and now in Nevada included the same limitations. But drawing a boundary on the surface, as was done in placer mining, did not necessarily describe the course of the vein underground. The crucial measure was the length of the claim along the vein. In federal legislation the 5 Lord, Comstock Mining and Miners, 45.6 Act of 27 February 1865, Chapter 64, Section 9, 13, Statute 441. Available on-line.7 The 1866 Lode Law is discussed by Earl Hill, Esq., under the title “A Brief History of the Nevada Law of Mining” on the following web page, www.library.lp.findlaw.com, dated.7/21/2003, 3.

3

THE COMSTOCK [G]

length was fixed at 200 feet. The width was not fixed, however. Under the so-called “apex” or “extra-lateral” doctrine the claimant was entitled to follow the dips and spurs of a vein underground wherever they went so long as they did not cross either end of the 200-foot boundaries and the apex of the vein was within his claim. One change in the 1872 law was that if any additional veins were discovered within an existing claim they fell under the original claim (so long as the previously noted restrictions were met). This was important because the locator was limited to a single claim along a identifiable vein, and if a second vein appeared within his boundaries he could not claim it without this provision. Another change in the 1872 law was that the word “valuable” was inserted before mineral deposits in the opening sentence to distinguish between deposits that had value and those that did not. Increasingly the quality of the ore came to play a role in whether or not claims would be validated. Federal legislation broke no new ground. In general it simply legitimized prevailing local rules along with all the problems that those rules had created. With respect to quartz or lode mining federal legislation embraced the basic provisions of the Comstock mining codes, not a surprising development given Stewart’s authorship.8

Untangling the claims and counterclaims in the Comstock’s early years is not directly germane to this study. The litigation that these property disputes spawned, however, became an integral part of the Comstock’s economic life. Although the volume of lawsuits declined over time, as court rulings and private dealings served to impose recognizable boundaries on Comstock mining properties, the invocation of a lawsuit remained the weapon of aggrieved claimants as well as scheming opportunists. At times it was difficult to separate the legitimate claims from the fraudulent ones simply because legal documentation (deeds, transfers, conveyances) was unclear and incomplete. One such case was known as Kinney et al. vs. Consolidated Virginia and California Mining Companies (the Mackay-Fair-Flood-O’Brien behemoth). After more than a decade of controversy that predated the actual incorporation of Consolidated Virginia and California Judge Lorenzo Sawyer of the United States Ninth Judicial Circuit (district of California) issued a ruling against Kinney and in favor of Consolidated Virginia and California that also carried a warning.

To conclude, then, after a thorough examination of this case, having gone through the entire testimony from beginning to end, and having read all the material parts, two or more times over, not relying on the abstract of counsel, I think I understand it, and the more thoroughly I examine and comprehend it, the better satisfied I am, that this case is utterly barren of any equities to sustain the claim set forth in the bill.

And then after summarizing the defects in the petition by Kinney and his attorneys – who, he acknowledged, argued with “zeal” and “ability” – Judge Sawyer wrote:

This case I presume will go to the Supreme Court.8 The 1870 Placer Act and The General Mining Law of 1872 are discussed in the previously cited web site, www.library.lp.findlaw.com, dated.7/21/2003, 4-6. See also Joseph Tingley, Mining Districts of Nevada, 2nd ed. (Nevada Bureau of Mines and Geology Report 47, Mackay School of Mines, University of Nevada, Reno, 1998) for additional discussion of legal foundations for Nevada mining districts.

4

THE COMSTOCK [G]

The amount involved – complainants aver, that twenty millions of dollars have been extracted from the premises of which they pray an account – is such that if the parties have any confidence in their claim, they will be very likely to carry it further.

Despite his diligence he closed with the observation that every jurist understood: the record could be read differently from how he read it.

I am very glad to know that there is such a tribunal to correct my errors, if I have fallen into any. If I have made any mistakes, it is certainly unintentional. I have endeavored to get to the merits of this case, to the bottom – to the “bed-rock” – to use a mining phrase appropriate to the occasion….The Supreme Court tries the case de novo without any regard to my decision or rulings, and it will give such judgment as the law and evidence appear to that Court to require.9

In cases like this the evidence could be a combination of verbal and documentary evidence. Judicial (written) records dated from the early 1860s, when Nevada was a territory and Kinney and other property owners were parties to several suits over claims and boundaries before the Story County First District Court. They were included because both Consolidated Virginia and California were created out of these properties plus several adjacent properties. The original claims, however, may have been based on paroles, that is, spoken agreement (after the French verb to speak), rather than written deeds. Sawyer made note of the “parol” custom. “In the case of 420 Mining Company against the Bullion Mining Company (3 Sawyer 658-9), I held that a parol partition followed by possession acquiesced in in accordance with the parol partition, is a valid contract of partition at all in a mining claim.” Since Sawyer was convinced that prior partitions had occurred by way of parols and more importantly had been acquiesced in, the Court would have to accept the parols as valid. “Any other ruling upon parol transfers, followed by possession, would disturb many old and highly valuable titles on the Comstock Lode. There was no necessity then for a deed at the time, if there was an actual transfer of the possession, and an occupation in pursuit thereof acquiesced in.”10

The key was the acquiescence on the part of the parties and in a general sense of the mining community at large. The problem with parols was that transfers could be accomplished without conveyances ever being recorded. Written records were obviously preferred, and indeed when miners established their districts and wrote their codes, they often included a provision that urged the recording of the transactions in the Deed Book. 9 The Court’s ruling plus the documentation is available in a folder of documents entitled Legal Suits, NC99/4/2, Special Collections, Library, University of Nevada, Reno. The above quotes appear in “Opinion of the Hon. Lorenzo Sawyer, Judge of the United States Circuit Court, delivered in open Court, on Thursday, Nov. 1st, A. D. 1877”, concerning case of Kinney et al. vs. The Consolidated Virginia Mining Company et al. 39-40. It is not clear that the case was appealed or if appealed a review was granted by the Supreme Court. What is clear is that Consolidated Virginia and California did not lose the contested property or pay the sum demanded by the plaintiffs. 10 The parol in question here involved Kinney himself, and since it had been granted and accepted, it could not be dismissed because it was a verbal contract “Opinion of L. Sawyer”, Legal Suits, NC99/4/2, 39, Special Collections, Library, University of Nevada, Reno.

5

THE COMSTOCK [G]

But many parols were never so recorded, and judges had to approach the matter pragmatically, since any disavowal of the parol system would hardly moderate the wrangling over claims. Three-fourths of the original Comstock titles, according to Sawyer, were verbal transfers, although such a number is hard to verify. Californians had abandoned the contentious parol system after the mining boom subsided. Since early Nevada miners, mainly from California, were working in an environment without much civil government, they naturally reverted to a procedure that they had known in California. As the riches of the Comstock became more and more obvious, staking a claim as quickly as possible was paramount. Parole, so widely used in California’s Gold Rush, filled a legal void. The Kinney case also raised the issue of opportunism. Parol conveyances aside the Circuit Court file revealed that in an earlier case (1865) between Kinney and Central #2 Mining Company (one of the properties folded into the new California Mining Company) Kinney had gone to court over the same plot of land, about 10 feet by 20 feet, and had lost. Kinney may well have known that he was skating on thin ice because in one of his final court filings he reminded the court that he was among the Comstock’s original locators, and while fame and fortune had eluded him (as had his memory), he deserved to be rewarded if only symbolically for his efforts. A decade later when that piece of land was part of a multi-million dollar bonanza mine his plea went unheeded again.11

When a Californian J. Ross Brown, soon to be the United States Commissioner of Mines visited the Comstock in the summer of 1860, he declared that the rush to stake out every square inch of the Lode had resulted “in a mess of confusion”12 The mess occurred even though from the earliest days as prospectors proceeded northward from the Carson River into the Virginia Range they seemingly understood the need to create a elementary legal and civil framework to manage their disputes and protect their claims. To his end they met in January 1858 at Carson City to organize a mining district known as Columbia. Columbia had a short life because, as miners pushed further north into ground around Silver City, Gold Hill and Virginia City, they set about creating new districts to deal with local circumstances. By the end of the summer 1859, after the discovery of the quartz vein that came to be known as the Ophir Diggings, the Comstock had two districts: Gold Hill on the southern branch of the Lode and Virginia on the northern branch.13 Deed Books or Record Books, as they were called in the documents, were opened in both Gold Hill and Virginia City. Since the Gold Hill was organized before Virginia claims such as the Ophir Diggings (in Virginia City rather than Gold Hill) were originally recorded in the Gold Hill Record Book and then at a later date re-recorded in the Virginia District

11 The Kinney file contained a long brief that included copies of decisions from earlier trials. Copies and summaries of the 1865 trial may be found in attachments to “Opinion of L. Sawyer”, Legal Suits, NC99/4/2, 456-457 in NC99/4/2, 39, Special Collections, Library, University of Nevada, Reno.12 At least according to Lord, Comstock Mining and Mines, 52, who found this phrase in an article or pamphlet entitled “A Peep of Washoe”.13 Some confusion exists over the establishment of these districts. The original districts were American Flats, Gold Hill and Virginia. Sometimes these districts plus several others were known jointly as the Comstock District. Joseph Tingley declares that Virginia was the first district, but I have not been able to verify that. Gold Hill organized on 11 June 1859, and indirect evidence suggests that Virginia organized a few weeks later. There is no doubt that from the summer of 1859 claims, deeds, transfers, etc were entered into what were called Record Books maintained by each district. See Tingley, Mining Districts, also on-line through the Nevada Bureau of Mines and Geology.

6

THE COMSTOCK [G]

Record Book.14 The mere existence of mining districts and deed books did not constitute sufficient order and authority to avoid the mess that Brown lamented during this visit. While mining districts could lay down certain rules and regulations that all miners agreed to abide by, the confusion arose in the field where the procedures by which claims were laid out were hardly precise and reliable. Even if one ignored the chicanery that ensued over claims and boundaries, one was still confronted with rather primitive techniques for staking a claim, marking the boundaries and giving notification. Whatever procedures were enacted, they depended for enforcement on the claimants themselves whose own self-interest could override any adherence to the rules and regulations.

A mining code was first approved in Gold Hill on 11 June 1859 and is worth further examination. There was nothing unique about the code. Its provisions reflected customs and traditions practiced in other mining regions. With respect to lode mining the most important features were: a quartz claim could not exceed 300 feet in length to include “depths and spurs”; each claimant was entitled to one additional claim on all veins so discovered; retaining a claim required work equal to $15 per share within 90 days; registering a claim should be completed in 30 days; and no person shall hold more than one claim along a vein [with the exception of the aforementioned bonus]. The Gold Hill miners revised their code on 4 March 1860. The single-claim provision was reiterated, but the length of the claim was reduced to 200 feet to include all dips, angles and spurs. Quartz claims had to be registered in five days, and they were identified by a stake at each end “where the ledge is visible” with the names of the locators and the number of feet. Where the ledge was not visible, the stake with relevant information should be as close as possible to the ledge. A claimant had to show that work was done for at least three days per month or in the amount of $50.15 During a meeting of Virginia District miners on 14 September 1859 they too ratified a code that embraced some of the provisions of the June version of the Gold Hill code but also contained changes that would appear later in an amended Gold Hill code. It is not clear whether the Virginia District was revising a prior code, and if a prior code existed whether or not it preceded the initial Gold Hill code. In the September version of the Virginia code the length of the quartz claim was fixed at 200 feet. The right to an additional claim remained. Stakes with appropriate information on the parallel end lines was required. To legitimize the claim it had to show work for 3 days a month or a yield of $10 in a month, and if the owners could show $40 he was exempt from working the claim for six months. All claims had to be registered 10 days after they had been located.16

14 See Lord, Comstock Mining and Miners, 59 and footnotes 2 and 3. A document attached to a court file concerning the incorporation of Consolidated Virginia and California in the 1870s refers to a claim, originally recorded in Gold Hill and then re-recorded in the Virginia District in October 1859: “Virginia City Utah Territory October 12th 1859. In accord with the mining laws recently passed the undersigned for themselves and the other owners hereby re-record three hundred feet of mining at Ophir Diggings located as follows….” NC99/4/1/3, 4, Special Collections, Library, University of Nevada, Reno.15 Copy of the Minutes of the Gold Hill Miners, NC99/4/1/1, Special Collections, Library, University of Nevada, Reno. Also Lord, Comstock Mining and Miners, 42-44.16 Lord, Comstock Mining and Miners, 91-92. I have not found an original version of the Virginia District code. Plats and Surveys do exist among Carson County Records, according to James, The Roar and the Silence, footnote 28. I have not seen these documents.

7

THE COMSTOCK [G]

Writing the rules and then applying them were two different and not always complementary activities. The codes, even in the hands of angels, were insufficient in their written form to anticipate and settle all the issues that could arise among claimants. Whether any authority could have written a satisfactory code remains an open question. Lord believed that Spanish colonial mining law was superior to the law emerging in the American West because it provided for more scrutiny and care in the staking and registering of a claim. He was quick to point out the flaws in the Spanish colonial system, but he left no doubt that in the absence of a similar approach the Comstock had created for itself a legal mess. Lord’s knowledge of the Spanish colonial code was largely based on his reading of the Los comentarios de las ordenanzas de minas…, published by the Mexican Creole jurist, Francisco Javier Gamboa in 1761. This is not the place to discuss the pros and cons of Gamboa’s famous work, but let it suffice to say that Lord, the staunch laissez-faire advocate, was using Gamboa to argue for stricter central authority in the enactment and administration of mining-property codes. It is worth pointing out that the laws contained in Gamboa’s commentaries had evolved over two centuries since the silver discoveries at Zacatecas in Mexico and Potosí in Peru (Bolivia today). In the first decades of the colonial industry, for the same reason - absence of formal governmental institutions - as in Nevada, disputed claims abounded. Unlike the United States political system, Spanish colonial institutions and officials were the political extension of the royal government. By the middle of the eighteenth century, when Gamboa wrote the Comentarios, the codes and practices governing mining operations were well established and understood, although disputes continued to percolate into the public forum until the end of the colonial period. What drove the mining ordinances was the Crown’s determination to regulate the business and to protect its interests, especially its financial interest, in that business. The Nevada miners might have benefited from more central authority and governmental intervention but hardly on the level practiced in eighteenth-century Mexico. Lord’s diagnosis of the cause of the “mess of confusion” was probably correct, but his remedy of more governmental inspection and control, if ever enacted, was probably unacceptable to the majority of Nevadans and westerners.17

For Lord confusion began the day after the Gold Hill miners had approved their code. The claim of Peter O’Reilly and Patrick McLaughlin (the so-called Ophir Diggings) that had pushed the miners to assemble in Gold Hill came to include Henry Comstock and Emanuel Penrod, who had bullied their way into a partnership. The claim measured 1,500 feet (300 feet x 4 locators plus a bonus 300 feet for discovery) along the ledge or the outcropping of the vein from the point near where O’Reilly and McLaughlin had made their discovery. According to Lord, while the measurement was certainly within the spirit of the code, the locators failed to follow through. There was no evidence that the stakes with the appropriate information on measurement and ownership were placed on the end lines, and the claim had ever been registered. It was possible of course that the stakes were properly placed but then discarded or stolen and the claim was

17 Lord, Comstock Mining and Miners, 52-55. Gamboa, Comentarios a las Ordenanzas de Minas… (Madrid, 1761).Gamboa wrote the book to highlight what he and others thought was a Mexican mining recession or depression and to advocate a larger role for merchants in owning and operating mining companies. Technically they were forbidden to do so, but in fact they were deeply involved in mining and entrepreneurs like Antonio López de Quiroga and Antonio Romano de Terreros were merchants before they became miners. The production downturn was a modest affair, one of many in the eighteenth century.

8

THE COMSTOCK [G]

properly registered but lost. Claimants were known to remove and replace stakes in order to get the best possible piece of ground, and of course competing claimants were known to engage in nefarious behavior. And since the “public officials” were the miners themselves and the “public offices” were the shops and saloons of the camps, records could easily disappear. Within days other claims were made north and south of the O’Reilly-McLaughlin-Comstock-Penrod claim, and many of those claims were improperly measured or registered and even worse occupied or impinged upon land that had been stake earlier, not as quartz claims but as hill or ravine claims that were measured in square feet rather than in length.18

Except for the first few months after the Gold Hill miners approved their initial codes the 200-foot limit on the length of the claim was in effect. If several locators were working together, they could each claim 200 feet without interruption. Many initial claims were sold to mining company who would legally acquire all the claims of the original discovers. The width did not need to be prescribed on the assumption that the locator would be entitled to the width of the vein whatever that was within the confines of the end lines. Where to place the end lines could be a problem because the outcroppings – the surface manifestations of the underground veins - did not always move in straight lines. Should the measurement of 200 feet (by rope) follow the contour of the outcroppings or be laid down in a straight line from the first stake to the second stake? With all staked measurements, of course, there were risks of the stakes being changed, removed or hidden and the measurements being in error. The width of claims proved to even more troublesome. In the early months claimants had little knowledge of the shape and behavior of the Lode below the surface. Much debated was the question of whether the Lode consisted of a single ledge of ores and other non-mineral-bearing substances (rock, porphyry, clay, etc.) or several distinct ledges? If a single ledge, then the various outcroppings and parallel veins geologically belonged to one structure. If, on the other hand, the Lode consisted of several independent substructures the outcroppings and veins could have several sources. At 500 feet the answer was manifest. The Lode was a single v-shaped ledge - wide at the top and narrow at the bottom. The outcroppings and veins rising from the wedge were in effect connected, even though they were surrounded and separated by matter that contained little or no ore. In brief, what this meant was that many claims from the earliest months were invalid because the original legal locator of a plot 200 or 300 feet long was entitled to the full width of the plot, as measured from the footwall to than hanging wall (west to east). In some cases the width reached as much as 1,000 feet. In the rush to claim as much of the Comstock as fast as possible, many side-by-side claims of 200 or 300 feet in length had been registered. Even before the single-ledge theory was finally adopted many overlapping claims had to be settled. Not only did

18 Lord, Comstock Mining and Miners, 52-55. Various publications summarized Spanish-American mining laws, but Lord was particularly interested in Francisco Xavier Gamboa’s Comentarios a las Ordenanzas de Minas…, published in Madrid in 1761.Gamboa was a Creole jurist who was asked to review the codes in terms of a depressed mining economy in mid-eighteenth-century Mexico. It is held to be a solid evaluation of the legal code, although Gamboa himself recommended changes that would have benefited the merchant class for which he served as an advocate. Clearly Lord was impressed with work of Gamboa and the effectiveness of the colonial mining code, and while he did not recommend that the code be adapted to Nevada he did believe that there were lessons to be learned by studying the way in which the Mexican had evolved.

9

THE COMSTOCK [G]

side-by-side quartz miners argue over the width of claims, but they also had to deal with the claims of placer miners who may have registered or staked on the surface in square feet part of a hillside or a ravine. That miners and governments were less conscientious about the distribution of property along the Comstock than a retrospective view might suggest was needed, they were both ill prepared to institute more orderly procedures. For the miners time needed to work out better procedures was time taken away from the task at hand, and for governments a laissez-faire approach was a natural response until circumstances demanded something else.19

Despite the litigious character of many mining camps, miners devised their own strategies to resolve disputes over clams. Some in the tradition of western lore were settled at the poker tables and in the city streets, but since these activities were seldom recorded in official documents, except perhaps for personal testimonies in later court proceedings, the number is simply a matter of speculation. A common strategy was for disputing claimants to set up partnerships, as O’Reilly & McLaughlin and Comstock & Penrod had, so that work on the claim could proceed without further delay. This quartet may have earned as much as $100,000 in the remainder of 1859 before they began to sell off their shares. O’Reilly may have held out the longest and eventually realized $40,000 for his share. By the spring of 1860 the Ophir Mining Company, organized by San Francisco investors, had assumed control of the vein, which had by now reached 1,400 feet. None of the original locators was involved in the new company, but several of those who had bought their shares were members of the new company. How many of these “arranged” partnerships succeeded to the same degree is not known. The fact was that within a year after the first discoveries many original locators, unprepared for the financial, technological and managerial burdens imposed by quartz mining, either sold their shares or abandoned their claims. The first phase and perhaps the most colorful in the history of the Comstock had come to an end shortly after it had begun.20

The preoccupation with Comstock litigation by contemporaries and historians is understandable. Vast sums spent by some of the Comstock’s most colorful entrepreneurs made for good reading. The fascination as well as the dismay for journalists and historians of the Comstock arose from the numbers themselves. Smith stated that nine companies were involved in 359 suits of which one half were filed against adjacent claim-holders21 Although their figures cannot be compared, Lord cited the “district court” records to show that until 1867 a dozen companies with important Comstock claims were involved in 245 suits. These companies were aggressive plaintiffs in that they initiated 168 suits or 69 percent of the total. Five companies - Ophir (28), Yellow Jacket (24), Savage (22), Gould & Curry (20) and Overman (18) – initiated 112 lawsuits or 67 percent of the total plaintiff cases. These same companies were defendants in 36 suits or 47 percent of that category. The ratio of plaintiff/defendant suit was three to one. Three

19 Several different sources can be consulted concerning the ledge theory. Smith presents a readable summary in Chapter 9, The Comstock Lode. A more technical discussion appeared in George Becker’s monograph, “A Summary of the Geology of the Comstock Lode and the Washoe District” in Geology of the Comstock Lode and the Washoe District (Washington: Department of the Interior, United States Geological Survey, 1882), 314-319.20 Smith, The Comstock Lode, 15-19.21 Smith, The Comstock Lode, 66, although no source was cited.

10

THE COMSTOCK [G]

companies – Chollar (7 vs. 10), Potosi (7 vs. 8) and Hale & Norcross (2 vs. 7) - found themselves to be defendants more often than plaintiffs. What was not revealed in these figures was how many times the same companies were involved in suits against each other. Without citing precise figures Lord averred that the heavy plaintiff activity concerned suits of “ejectment [sic]…to dispossess ‘jumpers’ or to quiet title.” The list would have been longer, he speculated, except other companies had “nothing worth wrangling for” even though their rights were no “less questionable.” The most litigious companies had claims of “recognized value” and yet they also had among the strongest titles to be recorded in those hectic first years, and yet their “trustees made unusual exertions to secure the most perfect titles possible.”22 District codes, laudable though they be as a reaffirmation of the American individualistic spirit, simply made the chaos worse. The “Interminable Litigation”, the chapter in which Lord discussed these matters, arose from a long delayed construction of a “well framed National or State code.” For him, and perhaps him alone, a devout disciple of laissez-faire economics, the democratic spirit embodied in the miners’ district councils was excessive and often counterproductive. Lord even suggested that all the early claims that came under the purview of the district councils should be renounced and they should be reassigned on the basis of a more rational set of rules and regulations. Some centralizing order, as Spanish-American mining evidenced, would serve the region and the industry well.23

A more sanguine although still critical view came from Smith, a lawyer by training, who thought that the situation was less bleak than Lord’s critique implied. In some circumstances such as the smaller Gold Hill claims where “their stopes and other mine workings were constantly joined, the owners worked together harmoniously, often using each other’s shafts…the only mines along the Lode not involved in a welter of litigation….”24 In the second half of the first decade and the in the second and third decades cooperation was patently evident as mining companies whose ore bodies never materialized or were exhausted but whose underground infrastructure - shafts, ventilation and drainage systems and tunnels – could assist adjoining operations made deals to do so. In the early years, however, competition and animosity were far more fashionable than cooperation and harmony. And often lost in the discussion is that many of the companies pursuing lawsuits had the resources to do so, no matter how expensive, inefficient and unnecessary they may have been. The mitigation in “to sue or be sued” outlook came not because there was a wave of altruism swept across the Comstock. In his 1865 Legislative Mining Survey the Surveyor-General, who characterized the legal scene as “a Kilkenny cat fight,” estimated that a fifth of the Comstock’s ore production through 1865 was eaten up in legal fees and courts costs. He further observed that the litigation phase simply “exhausted” itself.25 Stockholders had seen assessments replace their dividends, and the

22 Lord, Comstock Mining and Miners, 177-178.23 Lord, Comstock Mining and Miners, 178-180.24 Smith, The Comstock Lode, 98.25 “Annual Report of the Surveyor-General of the State of Nevada for the Year 1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 28. His estimate more or less agreed with figures proposed by Lord and Smith. Of the $40 to $45 million in output a fifth would have amounted to $8 to $9 million. Lord cited the Surveyor-General and a figure of $9 million, and Smith, without citing his source, said between $9 and $10 million were spent. Lord, Comstock Mining and Miners, 172, and Smith, The Comstock Lode, 70.

11

THE COMSTOCK [G]

downturn in production in 1864 accompanied by a run on Comstock stocks at the San Francisco Exchange had emptied the companies’ coffers. Lawsuits were no longer had much appeal. Not only were many companies, some of the largest, close to bankruptcy but they also lacked targets. Perhaps at an inordinate and unnecessary cost the boundaries got fixed and the disputes got settled. The claims that show up in Comstock surveys and maps to be published over the next two decades will vary little from how the Comstock looked in the mid-1860s.

Smith observed that among the hundreds of suits filed (many of which were never litigated) only four achieved high profile status. The four were Ophir vs. Burning Moscow, Gould & Curry vs. North Potosi, Chollar vs. Potosi and Yellow Jacket vs. Princess and Union.26 Two of these, Chollar vs. Potosi and Ophir vs. Burning Moscow, surely reached the level of absurdity. Chollar and Potosi had side-by-side claims, each 1,400 feet in length and 400 feet in width. Potosi first found ore in 1861 that dipped into Chollar and then Chollar found ore that dipped into Potosi. Chollar won the first suit and Potosi the second, although both decisions were confusing and tainted. After spending four years in litigation, which, according to Smith, “shook the Comstock to its foundations” and cost an estimated $1.3 million the two companies agreed to merge in 1865.27 In Ophir vs. Burning Moscow there may have been an opportunity early to avoid a dispute. In the fall of 1859 Melville Atwood, a quartz miner from Grass Valley California, notified the Ophir owners that the footwall along Mt Davidson would turn to the east and so too would the Lode. While the outcroppings appeared to dip to the west where the company had concentrated its operations these surface features should be seen as only temporary. He advised Ophir to buy up a small claim held by Burning Moscow to the west along the footwall to forestall the possibility that as the footwall turned east Burning Moscow could contest Ophir’s claim to that part of the Lode. But Ophir ignored his advice. In 1865 after four years of litigation and an expenditure of $800,000 to $1,000,000 a settlement was reached, although to the very last moment the parties wrangled over the details. Ophir agreed to pay $70,000 for 800 feet that then had a market value of $50,000.28 If $8 to 10 million dollars were spent on lawsuits in the early 1860s, then a fourth or fifth of the total was consumed in these two cases. Whatever the

26 Smith, The Comstock Lode, 70. One can follow both the legal and political ramifications of these lawsuits in Russell Elliott, Servant Power, A Political Biography of Senator William M. Stewart (Reno, NV: University of Nevada Press, Nevada Studies in History and Political Science, # 18, 1983), Chapter 2. Elliott wrote that Stewart “was a central figure in the Comstock legal wars, which climaxed with the case of the Chollar Mining Company against Potosi Mining Company….It was the basis, also, of the quarrel between Judge John W. North, which began as a difference of legal opinion and ended as a political contest that brought Stewart into the United States Senate and ended North’s career in Nevada.” (21). Elliott relied heavily on Eliot Lord’s rendering of the dispute between Chollar and Potosi Mining Companies. 27 Smith, The Comstock Lode, 88. See also “Annual Report of the Surveyor-General…1865” in State Journal and Appendix, 3rd Legislative Session (1867), 2828 Smith, The Comstock Lode, 65-67; Lord, Comstock Mining and Miners, 177-178. The $1 million figure is from the “Annual Report of the Surveyor-General...1866” in State Journal and Appendix, 3rd Legislative Session (1867), 28. In the Ophir-Burning Moscow case Lord complained that “No further commentary is needed to disclose the folly of the laws which allowed a locator to follow the dips, spurs, and angles of the ledges anywhere.” [177] “Peculiar” is how Smith described American mining law that allowed one claimant to follow his dip even as it “penetrated” under an adjoining claim. Laws in other countries allowed for vertical side boundaries that prevented a claimant from entering adjacent property unless he purchased it. [66].

12

THE COMSTOCK [G]

actual total legal costs in the wake of the discoveries they do not appear in retrospect to add much value to the business of mining and processing the ore.

The extravagance of the companies’ judicial skirmishes, even if they had some positive consequences in settling boundary disputes, was part of a general pattern of financial misdirection and mismanagement. Historically mining fortunes could be destroyed almost as quickly as they were made. They were particularly vulnerable in the earliest years. On the Comstock, for example, Gould & Curry hardly exhibited a sober and frugal attitude toward finances. Gould & Curry was the merged claims originally located by Alva Gould and Abraham Curry. A group of San Franciscans organized the company on June 1860 with a length of 1,200, and all became rich. In 1862 through its D Street tunnel somewhere about 40 feet below the surface Gould & Curry uncovered the richest deposit yet. Its stock price rose from $500 per share to $1,050 per share and finally to $2,500 per share. It probably produced about $14 million worth of ore up to 1865, and of that amount it paid out nearly $4 million in dividends. In 1864 it allotted $1.5 million to construct a new mill. The timing could not have been worse because the ore grades dropped to less than $15 per ton, and within a year or so the ore bodies disappeared completely. The mill with 80 stamps to crush the ores and 40 pans for amalgamating the ore and mercury had capacity that exceeded what the mine could produce. Even Smith recognized (with less virulence than Lord was capable of) that this “was a showy period; wealth was expected to make a display.”29 Such lavishness was not unique to the Comstock or to Gould & Curry. For Gould & Curry the cost of 27 lawsuits during this litigious period may not have posed a short-term financial burden since the mine had ores yielding as much as $50 to $100 a ton. When the litigation craze came to an end a few years later, it was not because the company ran out of money but because it ran out of profitable ore. If it had practiced greater thrift, could it have extended its life and at the same time could it have satisfied its stockholders? Perhaps, but even it had managed both it could not have changed the ultimate outcome. A more intriguing question is what would the company have done with its surplus if it had been more frugal and less lavish? Numerous options come to mind from investing in other mining properties to donating to many needy causes. There was no economic incentive to change course or conserve capital since underlying all “gold and silver rushes” was the presumption, reinforced by popular and expert opinion, that the bonanzas might never end. Of course it was always possible the newly enriched stockholders and owners found many ways to make worthy investments, just not in Nevada. What may appear to be rational or irrational in retrospect may simply miss the point. Vast sums of money earned from mining were spent in ways that may defy common sense or fiscal probity but not necessarily economic choice.

29 Smith, The Comstock Lode, 84-86.

13

THE COMSTOCK [H]

Chapter 8The Business Of Mining:

Challenges of Deep-Lode Mining, Working Bonanzas at Belcher & Crown Point

As the Comstock shifted from placer mining to lode mining, miners had no manuals or maps to consult on how to proceed. Some had experiences as quartz miners in California or elsewhere, and some had training in fields of science and engineering that were related to mining. They could apply the knowledge that they brought with them, but they had to move quickly and decisively beyond that fairly limited information base if they were to succeed. To be successful in exploiting the Comstock’s riches they had to become quick learners and risk takers. The Comstock hid its valuable minerals in places and under circumstances that could not be divined from the surface markings. So many stories can be told about the Comstock, and even though the financial shenanigans have often supplied so much of the material for its modern histories, the retrieval of the ore may well be the Lode’s real story. These became the deepest mines in America with tunnels, drifts, upraises and winzes that covered hundreds of miles. The deeper mines, the higher the temperatures, the greater the risk of flooding from scalding water and the poorer the ventilation. Perhaps the most remarkable underground accomplishment was the Sutro Tunnel, a four-mile-long tunnel from the Lode to the Carson River through Six Mile Cañon to drain the mines as well as to extract any ores found during its construction. No less impressive were the erection of huge mills with giant machines for refining the ores, the construction of roads and rails across steep, rugged terrain and the installation of a system to supply potable water from the Sierras. But the first order of business was to find and extract the ores.

By the middle of the 1860s surveys and maps of Comstock began to appear in print. The configuration of claims and boundaries along and around the Comstock Lode certainly looked different from 1859 and 1860. The consolidation of mining claims had accompanied the arrival of mining companies. The first (documented) official inquiry of the State’s mining industry appeared as part of Surveyor-General S. H. Marlette’s report to the 3rd Legislative Session in 1867.1 He had compiled as comprehensive a list as possible of mining and milling operations throughout the state along with other information on roads, water resources and related geographic and topological concerns. Much of the report focused on the Comstock and the mining and milling operations that had been set up in Story County and surrounding counties. It is worth recalling at this stage that the Comstock Lode was a quartz formation with outcroppings along the base of Mt Davidson from the northern edge of Virginia City to the southern edge of Gold Hill, a distance of several miles. At both ends the Lode forked and eventually terminated. Underground the quartz formations angled from the footwall at the base of Mt Davidson eastward toward an edge known as the hanging wall. The distance that the Lode angled away from the footwall toward the hanging wall was as much as 1,000 feet. The Lode may have had a surface area of more than a million square feet, but the surface area of the productive mines was only a fraction of that total figure. And yet mining claims were staked across the entire Lode and beyond for many miles on the assumption that the region was filled with quartz formations. A few of these outlying properties produced

1 Beginning in 1867, the Legislature would meet in January every two years.

1

THE COMSTOCK [H]

profitable ores, but most of them occupied barren ground. The Lode was located in Story County except perhaps for a small section that spilled over into Lyon County at Silver City south of Gold Hill. The terminus on the southern end was a matter of dispute. Two Tables appear in Marlette’s report: a Table, entitled “Mines on the Comstock Lode”, identified all the mining properties from the northern end (in Virginia City) and to the southern end (in Gold Hill) all within Story County; an accompanying Table, entitled “Tabular List of Mills Crushing Ore from Mines on the Comstock Lode During the Year 1866”, identified the mills not only in Story County but in adjacent counties since Comstock mines sent ores to mills in Lyon and Ormsby Counties to the south and Washoe County to the west. The mill data will be treated later in this chapter.

In 1866 the Surveyor-General assembled a list of 43 mines on the Comstock Lode. His list included the length in feet along the Lode that each company or miner claimed. The average length was 513 feet, but the median was only 210 feet. A distribution by frequency shows that 17 claims or 40 percent had 100 feet or less, 12 claims or 28 percent had between 101 and 500 feet, 7 claims or 16 percent had 501 to 1,000 feet and another 7 had 1,001 feet or more. The longest claims belonged to Baltimore American (2,600 feet) and North American (2,000), both on the upper branch of the southern tip. The next longest claim of 1,959 feet was Sierra Nevada on the northern end, although the Surveyor-General’s footnote indicated that it was originally 3,000 feet. At the core of the Comstock (in Virginia City proper) the following mines had claims of significant lengths: Chollar Potosi with 1,434 feet, Ophir 1,400 and Gould & Curry 1,200. The remaining claims in both Virginia City and Gold Hill fell between 10 feet (Plato) and 1,000 feet (Utah). Some of the smallest claims (under 100 feet) were located in the northern part of Gold Hill between Virginia City’s border and Gold Hill’s Yellow Jacket on the southern end. Disputed claims were also noted. Gould & Curry claimed Best & Belcher’s 222 feet while at the same time Best & Belcher and Sides claimed 279 feet of Gould & Curry (222 feet and 57 feet respectively). The Surveyor-General also thought the claims of Baltimore American and Overman (1,200) were doubtful. (He may have meant to include North American as well.) The total of all 43 claims was more than 22,000 feet. A crucial statistic - width - was not given.2

While the Surveyor-General could identify 43 mining properties, he could only account for 22 producing mines among the 43. That they were not productive in 1865 or1866 did not mean that they had not been productive or would not become productive. When one recalls that hundreds of claims existed on and around the Comstock, one soon realizes that at a time Comstock registered about $12 million in bullion two-dozen mines made that possible. Should this have troubled the mining or investing community? Five years after the initial discoveries the grand forecasts from pundits to speculators had little grounding in reality. It was improbable that the Comstock was at risk of being closed down soon, but it was becoming less and less probable that under Story County lay a vast uniform body of gold and silver ore. The two most productive mines in terms of bullion per ton were of medium size and contiguous properties in Virginia City’s center: Hale &

2 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), Tables are inserts between p. 21 and p. 25 and between p. 26 and p. 29. See p. 29 for a reference to North American.

2

THE COMSTOCK [H]

Norcross at $46 per ton and Savage at $45 per ton.3 The majority of productive mines were producing ores that had yields that were not even half as large as those figures. Although not yet fully apparent the consolidation that had occurred since 1860 would simply intensify in the coming years.

How miners went about their business was a subject of interest to various state officials but especially to the State Mineralogist. Richard Stretch was appointed to the position in 1864-1865. From 1865 through 1870 Asa White served as Mineralogist (by appointment), and he and his successor, Henry Whitehill, who was elected rather than appointed, provided the Legislature (as discussed earlier) with long reports, county by county, on mining conditions as well as general demographic and economic conditions. Beginning with the 4th Legislative Session in 1869, (covering two previous years, 1867 and 1868) the State Mineralogist rather than the State Surveyor-General reported to the Legislature on mining operations. This continued until 1879 when the 9th Legislative Session abolished the office of the State Mineralogist as a cost-costing measure. In his first report, White, formerly a member of the team of geologists and surveyors under Clarence King of the States Geological Service, described Story County as a “broken and barren” territory that just happened to contain the Comstock Lode, a “universal notoriety”. He described the topography and the geology much of which had been worked in the previous years by various investigators. The vein was contained in a fissure that ran three miles from 5,800 feet in Gold Hill to 6,200 feet in Virginia City. It was located between sienite (syenite, also known as silica-poor granite), a plutonic igneous rock on the west side of the Lode toward Mt Davidson and propylite, a crystalline igneous rock on the east side away from Mt Davidson. The propylite (which miners also called porphyry) lay against the Lode for its entire length, and from the surface it dipped 45 degrees to the west (toward Mt Davidson), gradually became vertical and then at about 400 feet dipped 45 degrees to the east. In some mines, Overman for example, the eastward dip was 70 degrees. The propylite was not regular in its formation – alternating between nearly vertical to nearly horizontal – and could change its direction suddenly. On the surface the fissure that contained the vein was measured as 500 feet in width, but underground the walls appeared to be “constantly approaching and receding [toward and from each other] without regularity.” The structure of the fissure on the southern end was different from the northern branch. At the time that report was written more was known about the underground structure on the southern Lode because more discoveries had been made there. Also the miners had not explored much beyond the 500- to 800-foot level so that the structural changes at 1,000 feet and below still awaited them. White observed, as had others, that the richest underground deposits lay against the east wall but that between 400 and 800 feet the size and number of these bodies decreased. Worrisome to White and the mining companies was the fact that so much of the vein was barren of profitable ores after 100 to 200 feet across the entire Lode. So extensive were these barren areas, wrote White, “that constant explorations are necessary to sustain the supply of ore…at heavy cost.”4

3 “Annual Report of the Surveyor-General…1866,” in Senate Journal and Appendix, 3rd Legislative Session (1867), Table following p. 21.4 White’s appointment as State Mineralogist took effect 1 March 1869, even though he presented his first biennial report to the Legislature that met between 4 January and 4 March 1869. “Biennial Report of the State Mineralogist of the State of Nevada for the Years 1867 and 1868” in Senate Journal and Appendix, 4th

3

THE COMSTOCK [H]

Although output had increased between 1865 and 1869, when White rendered his report to the Legislature’s biennial session, it had been a difficult period for many companies. The ore bodies with major outcroppings, of which there were about a half dozen, had been mainly exhausted. What was both puzzling and disconcerting to the miners were the long stretches of barrenness as they probed the ground below shallow ore bodies. Bonanzas found since 1859 had proved to be rich but of short duration. White reported that companies were pursuing two different strategies, both with some success. Shallower levels, thought to have been “worked out”, were being rehabilitated and were yielding some low grade but modestly profitable ores. The second strategy was to deepen the search. Not entirely certain or clear how to proceed below 500 feet companies were dropping shafts from various surface locations in hopes of reconnecting with mineral-bearing sections of the Lode that for all intents and purposes was being squeezed out 500 feet and below. Shafts were being driven to 800 feet, 1,000 feet and even 1,200 feet in an effort to relocate the vein. Eventually this approach began to pay off. The largely barren ground between 500 and 1,000 feet resulted from a shift in the Lode to the east toward the hanging wall. As the shafts grew deeper and the tunnels longer, miners faced numerous and constant challenges in building the underground infrastructure. Rock formations changed, ranging from very hard (known as “country” rock and similar to what constituted the footwall) to soft, sugary porphyry, and interspersed with clay. It was not uncommon for a superintendent’s weekly report on the progress inside the mine to describe on one day how miners were working in hard rock and on the next day how they were working in porphyry or clay. With experience miners became more adept at “reading” the rock structure with respect to location of ore, although their expectations were not always borne out. On the positive side, as the miners invaded the ground between 500 and 1,000 feet, they encountered less water than they had above 500 feet, but on the downside they had to contend with temperatures of 100 to 110 degrees.5

Puzzling though the Lode was for miners in the middle 1860s sufficient quantities of ore were being found or lifted to make the search worth the investment and the risk. It would be incorrect to assume that extractable ores ceased to exist below 500 feet (or thereabouts); rather extractable ores on the scale of the earliest bonanzas more or less terminated until the miners had made a necessary eastward shift in their explorations to locate the next bonanzas.

Reports by mining-company superintendents to their stockholders and quoted liberally by White illustrate what had to be done in the search for ore, a search that had no assurance of success. At Chollar Potosi Isaac Requa informed his directors and stockholders (June, 1868) that for the previous year work had been concentrated at 352 feet “from the surface.”6 The area being worked was about 270 feet in length northeast to

Legislative Session (1869), 22-23. 5 “Biennial Report of the State Mineralogist...1867 and 1868” in Senate Journal and Appendix 4th

Legislative Session (1869), 23-24.6 Where work was being carried out underground can be confusing. Sometimes, as in this example, the reference was to the distance from the surface. In other examples the reference could be to a specific level, such as the 350-foot level, based on a measurement from a surface point (known as A) on top of Gould & Curry’s mine. Since the Lode dropped by about 400 feet from Virginia City to Gold Hill, miners in the latter camp had several hundred fewer feet to work through in order to reach a comparable Gould & Curry

4

THE COMSTOCK [H]

southwest and about 70 feet wide east to west. Equally important was the fact that from point where the rail had been installed at 352 feet the ore body extended up (not down) over 100 feet. As Comstock miners were quickly learning from experience, a body of ore did not always have uniform grades. The body described by Requa was richest in the center and less so on the edges. It was mined for 10 months and then abandoned in February 1867. From here to the southern boundary the company had 600 feet of unexplored ground. A drift to the southern boundary was cut, and cross-drifts about 140 long were also cut at various intervals. Unfortunately very little millable ore was found in this large quartz structure. The vertical shaft was extended until it was more than 800 feet below the surface where it crossed a vein about 3-foot thick. The vein dropped for about 40 feet and then disappeared. At the 850-foot level 700 test drillings were made with no positive results. The vertical shaft was dropped another 100 feet and from there an incline shaft was cut to the 1,000-foot level and then to the 1,100-foot level. Between the 850- and 1,100-foot levels the company had almost 250 feet of ground to prospect. His summary for the year (to June 1868) was that almost 5,500 feet of drifts and winzes had been cut and more than 500 feet had been added to the vertical and inclines shafts. “Without seeming to predict what may lie in the unexplored section to the east,” Requa was optimistic that the signs (without actually specifying them) pointed to major deposits at the depths now being explored.7 Sadly Chollar Potosi would find nothing at the 1,000-foot or 1,100 feet level or lower. In the course of a year after its only major ore body had been exhausted a few hundred feet from the surface, Chollar Potosi would add thousands of feet of underground works with barely anything to show for it.

Chollar Potosi’s neighbor, three properties to the north, Gould & Curry, did not fare much better. Its Bonner Shaft had reached 910 feet “from its mouth” or 1,100 feet “below the outcroppings” (the difference being explained by taking into account the grade from where the outcroppings were to where the shaft had been built). Most of the explorations during 1867 had occurred around the fourth station between the 400- and 500-foot levels. Drifts measuring hundreds of feet were constructed along the length and the width of the claim at this station quartz material through mixtures “of quartz and porphyry, without ore.” At deeper stations, the fifth and the sixth (at approximately 500 to 600 feet below the surface), Louis Janin jr., the superintendent, wrote: “No sign of ore was met with” and no trace of ore was found. Despite these less than promising prospects the company planned to explore the lower reaches much as they had explored the area

level: the 500-foot level at Gould & Curry was about 100 feet from the surface in Gold Hill. At 352 feet below the surface, as Requa reported, the level as measured from Gould & Curry would only be a few feet less. Unfortunately it is not always clear from the reports whether the reference is to distance from the surface or to the level in feet as measur4ed at Gould & Curry. I have tried to maintain as much precision as I can when these references are used. When I refer to a level number hyphenated with foot, such as 500-foot level, I am referring to the measurement from the Gould & Curry Point A. When I use 500 feet, I am referring to the distance from the surface (often I add “from the surface”). The problem is that the sources that I have consulted, such as company records or Smith and Eliot or even the Territorial Enterprise, have to be interpreted at times as to whether the reference is from Point A or from the surface. The maps and surveys in Becker, Atlas, usually include both numbers, the Point A number appearing in brackets.7 “Biennial Report of the State Mineralogist...1867 and 1868” in Senate Journal and Appendix 4th

Legislative Session (1869), 25-26.

5

THE COMSTOCK [H]

around the fourth station. What would eventually become obvious was that Gould & Curry was basically barren below 500 feet.8

FIGURE 1VIEW INSIDE COMSTOCK MINE

White had good news to report from the southern end of the Comstock Lode. It had rich, abundant ores between the 500- and 900-foot levels (200 to 500 feet under the surface) and even richer deposits yet to be discovered between 1,000 and 2,000-foot levels. For the year ending 1868 Crown Point’s Superintendent T. G. Taylor reported that the ore at 500-foot level “pinched out in porphyry: 76 feet above and 33 feet below that level. But then at the 600-foot level about 150 feet from the shaft the workers cut through clay to find a new ore body. It was as narrow as three inches and as wide as 14 feet and resided between the 500- and 700-foot levels. This was known as the “west body”, and a few months later the “east body” was discovered between the 600-foot and 800-foot levels. In addition at the 800-foot level two seams about four feet thick of valuable ore were found between the east and west bodies. Taylor indicated that the extent of the discovery at the 800-foot level had not been fully ascertained. Actually this ore body would dip away into the adjoining property, Kentuck, and what Taylor did not yet know was that 200 feet deeper Crown Point would open a true bonanza. Whereas the reports of the companies above referred to the construction of long, expensive tunnels from their main shafts through largely barren ground between 500 and 1,000 feet, Crown Point by contrast found ore in almost every direction from the main shaft. Despite the knowledge gained about the structure of the Lode in a decade of mining finding the next bonanza was almost as much the work of the wizard as the expert.9

White summed up the structure of the Comstock, as then understood having reached depths of 1,000 feet. First the country rock of the west wall dipped with 8 “Biennial Report of the State Mineralogist...1867 and 1868” in Senate Journal and Appendix 4th

Legislative Session (1869), 26-27.9 “Biennial Report of the State Mineralogist...1867 and 1868” in Senate Journal and Appendix 4th

Legislative Session (1869), 24-25. Other Gold Hill mines were also reporting favorable discoveries below the 1,000-foot level. Imperial had ore that yielded about $40 per ton, and Yellow Jacket was lifting ore from a vein about 40 feet thick on the Lode eastern wall. A less favorable sign was that Imperial had also discovered a huge underground pool of water. (p. 31)

6

THE COMSTOCK [H]

regularity at an angle of 45 degrees. Some low-grade ore lay against that wall. Second the propylite rock of the east wall dipped first 45 degrees to the east, and then at 400 feet became vertical and finally it turned eastward at 45 degree with the fissure at that point being about 125 feet wide between the west and east walls. It was now generally understood, according to White that the great ore bodies, if they existed, would be found along the east wall, sometimes with and sometimes without clay linings. Third the surface, while it had some rich outcroppings, was actually “split and covered” from rock slides and other seismic activities over time so that the outcroppings were episodic and would disappear into nearly barren quartz ground below. Finally he noted that the composition of the vein changed from the surface to the depths now being worked. Gold was more abundant on the surface then silver and then for 200 to 300 feet it virtually disappeared. At the depths discussed in the reports of the companies both gold and silver were becoming abundant again.10

After considering and summarizing various company reports White added an interesting comment concerning a new discovery. He reported that “about a mile and a half or a little more east of Virginia City” (more precisely east of Gold Hill) “a ledge crops out in places and is parallel with the Comstock.” The most important mine was Occidental (which appears on later surveys and maps), and the ores both gold and silver yields profits of $6 to $8 per ton. To find an ore ledge that far away from the Comstock Lode was what many Comstockians had dreamed of if not begged for. The venture came to naught. Occidental (which included a mill) will appear in the public record from time to time, but the potential of a second ledge soon passed from public view.11

The reserved but modestly upbeat evaluation of White in 1869 assumed more positive tones at the hand of the new mineralogist, Henry R. Whitehill, a Republican first elected to the office in 1871. And for good reason. Whitehill could legitimately record that the Comstock had given birth since 1869 to several true bonanzas, unlike anything experienced before. And this simply brightened the prospects for the future. Following a format developed by his predecessor Whitehill described general economic and demographic conditions county by county before turning his attention to the state of mining. Most counties had some mining, but Story County was certainly the heart of Nevada’s mining sector. Even the counties surrounding Story benefited from the Comstock mines. His description of deep Comstock geology was understandably more detailed than White’s because more was known by the time he was writing. When he was preparing his report, presumably in late 1872, some mines had already reached 1,700 feet. He likened the fissure to a channel filled with ore bodies shaped like eggshells and while they were not continuous they could still be massive wherever they were found. He explained that during the volcanic period in which the Lode was formed hundreds of vents within the fissure spewed forth “solfataras”, hot vapors and sulfurous gases that eventually filled the area with metal-bearing quartz. Other events combined to introduce

10 “Biennial Report of the State Mineralogist...1867 and 1868” in Senate Journal and Appendix 4th

Legislative Session (1869), 27-28.11 “Biennial Report of the State Mineralogist...1867 and 1868” in Senate Journal and Appendix 4th

Legislative Session (1869), 32. These comments were contained in a section dealing with “Diagrams of the Mines….” White underscored the importance of the surveys being prepared by Clarence King with the assistance of White’s predecessor, Richard Stretch.

7

THE COMSTOCK [H]

metallic materials and then to solidify and crush the quartz. The solfatara process eventually came to a close. That miners had encountered hot water at the lower depth suggested that “at no very great depth, a considerable temperature is still maintained…but…only a faint relic of a once intense action.” The western (foot) wall dipped to the east, as others had reported, but at varying angles of 35 to 53 degrees, according to Whitehill. The east wall (hanging), although ill defined in structure, dipped west for several hundred feet and then both walls dipped east at 45 degrees. The space between the two walls collapses to a few feet and expands to several hundred feet. In these spaces, of course, resided the ore bodies. The fissure that contained the vein consisted of billions of cubic feet, and although much of it was barren of ore still tens of millions of cubic feet of ores.12

Whitehall made note of the fact that the earliest shafts were driven through the outcroppings near the footwall on the assumption that the vein below inclined toward the west. That was true for several hundred feet after which the vein dipped east, as noted earlier. At about 400 or 500 feet these shafts ran into the west wall that was hard sienite rock and actually below the vein at that level. (Sienite [syenite] is a hard, crystalline rock, allied with granite and composed mainly of hornblende and feldspar with or without quartz.) The presence of the sienite was convincing evidence to the miners that the structure was different from the soft material that had surrounded the ore veins closer to the surface. Within a few years Ophir Mining Company ran out of profitable ore under the original outcroppings on the Lode’s western slope. At 300 feet the vein began to grow narrower and shorter and soon disappeared into worthless porphyry.13 But even before the demise of Ophir’s bonanza the Gould & Curry Company, a half-dozen properties to the south of Ophir, had made a discovery that would shape the future of Comstock mining. Gold & Curry under its new San Francisco-based owners, who were unimpressed with poor results and limited prospects at its western outcroppings, decided to move 1,000 feet away from the west wall. At about 100 feet below the surface the new Gould & Curry ran into a rich ore body. What they had dug was more of an adit or tunnel rather than a shaft. It was driven into the side of the eastern slope of the Comstock Lode, but like rest of the companies it too eventually had to drop a vertical shaft. Many of these early shafts were sunk along D Street in Virginia City itself. Gould & Curry’s discovery of an ore body along the eastern slope had long-term implications for accessing and exploring the Lode as well as how the city grew. The future lay not in further explorations of the western slope but in expanded explorations of the eastern slope.14

The Comstock underground grew into a honeycomb of horizontal and vertical structure. How many miles of shafts, tunnels, drifts, winzes, etc. were eventually constructed will probably never be accurately known, but surely the total was in the hundreds. Even as the miners became better acquainted with the Lode basic outline, they could not predict very well the location of the profitable ores. Thus, much of the underground system was built for exploration rather than exploitation of the ore bodies. 12 “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of the Senate, 6th

Legislative Session (1873), 122, 124-125.13 Smith, The Comstock Lode, 81.14 “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of the Senate, 6th

Legislative Session (1873), 124-125; Smith, The Comstock Lode, 84.

8

THE COMSTOCK [H]

And that of course raised the cost of deep, underground mining. Once ore bodies were located even at the shallower depths of several hundred feet their size and composition posed immediate problems. The ore as well as the surrounding materials such as porphyry and clay could be soft and incapable of carrying the weight of the ground above these giant cavities. In Spanish America natural pillars fashioned from the ore bodies themselves were common. On the Comstock the workings were so large that natural supports failed. So too did early wooden props. Timbers spliced together to hold up the ceilings or hold back the walls were bent or crushed under the weight. The invention of the square-set framing system by the German engineer and California miner, Philipp Deidesheimer in 1860 more or less saved the day for Comstock mining. These were squares of timbers, approximately 6 feet by 6 feet that could be placed on top of each other or side by side for any reasonable distance. This system was introduced in the Ophir Mine and soon spread to other mines. The arrangement of the frames helped to spread the weight across the entire structure.15 Even the square-set system could fail, and companies had to be vigilant in how the frames were constructed both as the depth of the shafts and the size of the cavities increased. Supporting the ever-deepening shafts posed problems that the square-set frames could not solve. Since shafts passed through soft ground, that ground could cause the shafts to expand and contract to such a degree that hoisting operations had to be stopped until repairs could be made. Some shafts were so inappropriately located or badly constructed that they had to be abandoned and replaced.

FIGURE 2BURLEIGH DRILL

[DEBATE ABOUT WHEN FIRST INTRODUCED; WIDE-SPREAD USE BY THE MID-1870S.MODIFICATIONS OVER TIME. OPERATED WITH COMPRESSED-AIR UNIT]

By the 1870s, however, Comstock mining benefited from other late-nineteenth-century technological revolution. Such improvements as Cornish Pumps, Burleigh Drills, wire ropes, metal hoisting cages and of course dynamite all entered the miners’ arsenal for conquering the depths of the Comstock. The engines that drove the cages in the shafts or pumps in the mines reached horsepower of several thousand, and each required scores of cords of pine and fir each day. These engine also operated the compressors that drove the power drill that could triple the amount of rock and ore to be excavated in a single

15 Lord, Comstock Mining and Miners, 89-90; Smith, The Comstock Lode, 23-24.

9

THE COMSTOCK [H]

days.16 All of this came at some cost, not only to purchase the equipment but also to install, operate and maintain it. Without mechanization deep mining along the Comstock would have developed more slowly if at all. An attribute of the technological and industrial revolution in late-nineteenth-century America was that bigger and faster machines were simply a matter of time and application. In his 1875 legislative report included a reprint from the Virginia Enterprise with the heading of “Going for the Bottomless Pit”. The Savage Mining Company had ordered steel-wire ropes from John A. Reehling’s Sons in Trenton, New Jersey, and engines to raise and lower the rope from Booth and Company of the Union Iron Works in San Francisco in order to reach the 4000-foot level, twice the depth that current machinery was servicing. Other mining companies – Crown Point, Hale & Norcross, Consolidated Virginia and Ophir – were also preparing to launch similar assaults with bigger and faster machines. Notwithstanding the fact that barren ground characterized much of what was being explored at the 2,000-foot level, even for the bonanza mines, the Virginia Enterprise could not resist a rhetorical flourish: these companies “will at once plunge down into the great unknown ‘depths profound,’ in which lie hidden the silver roots of the Comstock.”17

Over time through trial and error miners had developed certain underground procedures for opening, managing and securing underground operations. Nothing could be done to neutralize absolutely the risks. Whitehall was impressed with some of the efficiencies that had evolved. Extractions were easier if ores lay above the tunnel. An upraise could be dig to the wall of ore above and then as workers cut their way through the wall they could drop the ore and the residue onto the floor or into cars below. The cars were then placed on a platform, usually surrounded by a cage and lifted to the surface. From there the cars were directed to ore bins or to waste dumps. The cars could carry up to a ton of ore or waste. Tunnels connected to the shafts every few hundred feet and usually tunnels were designated in the foreman’s journals or the company’s account by their depths such as the “1,000-foot level” or the 1,500-foot level”. The tunnels themselves could snake for hundreds of feet underground, and tunnels on different levels were connected by upraises and winzes. Some tunnels were abandoned because they lacked profitable ore or encountered unstable ground, while others in use for years were routinely retimbered, enlarged and refurbished to accommodate more workers and machines. In addition, of course, other tunnels had to be dug to provide air and remove water. Water, often very hot water, was a constant threat. It often lurked behind a clay wall that separated ore bodies or marked the terminus of a vein and could be breeched in the course of following the vein. Greater depths meant higher temperatures (110-120o F), and tons of ice had to be transported to the lowest levels every day and administered to the workers. This is but a general description of the Comstock’s underground city. More will be revealed as we examine individual companies. The business of mining, deep mining as it were in the case of the Comstock, involved construction and maintenance on a grand scale in order to extract the wealth that was being sought.

16 Lord, Comstock Mining and Miners, 335-337, especially footnote 3; Smith, The Comstock Lode, 46.17 “Biennial Report of the State Mineralogist...1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875), 124.

10

THE COMSTOCK [H]

Above ground another mechanized world was emerging. The heart of it was in the municipality of Virginia City, the seat of government and commerce, and for a while one of Nevada’s largest cities. In addition to offices, stores and homes, though, Virginia City was becoming an industrial city. Ore had to be processed and treated before it became gold and silver bullion. Two basic processes existed: smelting in which the impurities were cooked away and amalgamation in which mercury was combined with the ore to drawn out the metals. Bartolomé de Medina had invented amalgamation in Mexico in the middle of the sixteenth century. The composition of New World ores including those found in Nevada made amalgamation the preferred refining method. By the nineteenth century the mill or refinery had evolved from a simple operation that had the appearance of an outdoor patio to a mechanized process inside what was a factory. As the boom unfolded along the Comstock companies spent millions in building ever-larger mills to process what was thought to be a never-ending supply of ore. Some contained the latest technology imported from European mining centers. Mills were scattered throughout the county and in the adjoining counties. But within the boundaries of the city itself some of the largest and most mechanized would be built. The ore had to ground and treated before being combined with the mercury and other chemicals. After being “amalgamated” for a period of time the mercury had to be evaporated (cooked off), the metals fashioned into ingots and prepared for shipment to the mint. Photographs from the last quarter of the nineteenth century reveal a city in the mountain desert with a fashionable opera house, grand mansions and huge mills. Like an Escher print the structure has a flow from the harshness and severity of the underground natural world to the triumph of progress and order above ground.

While mining was the engine that drove the local economy, commerce, finance and transportation were fuel lines that feed the engine. The Comstock was virtually inaccessible until roads and then a railroad were constructed. Almost everything had to be imported: timber for the mines, water for the mills, food for the citizens, finery to dress the opera-goers and capital to find and process the ores. Mining centers throughout Latin American had a similar hustle and bustle arising from a less than permanent foundation. Story County, as more than one public official had reported, had nothing to recommend it for settlement, not even a supply of water except for the Truckee River on its northern edge. One could have said the same thing about Potosí in Bolivia and Zacatecas in Mexico. Location made travel and transportation to and from the Comstock unpredictable until the Geiger Road was finished and perhaps more importantly the Virginia & Truckee Railroad. With nothing being produced locally everything to maintain the life and business of the city and county had to be imported. Even the water was piped in from higher ranges around Lake Tahoe. The completion of V&T Railroad, known as the “crookedest railway in the United States”, that first connected Virginia City with Carson City and later with Reno was hailed as both a technological triumph and an economic necessity. Although it cost about $100,000 a mile to build, financed largely by Story and Lyon County bonds and mining company contributions, V&TRR soon justified its cost at least with respect to local commerce. The tracks apparently on some days handled between 30 and 40 trips per day, but that seems high for an everyday occurrence given the technology. Certainly the route was well used. Trains might carry as much as 1,000 tons of ore from the Comstock to the mills and mints and as much as 5,000 cords of wood

11

THE COMSTOCK [H]

to the city. The trains also featured luxury accommodations for travelers and visitors, such as President Ulysses S Grant in 1878.18 Some nearby counties lacked huge ore deposits and the instant wealth that they engendered, but if they had land that could be farmed or other natural resources such as forests that could be harvested they too could participate in the Comstock boom.

The decade of the 1860s chalked up some major discoveries, but none of these had the makings of a true bonanza. Close to $90 million worth of ore had been pulled out of the Comstock with the mines on the center of the Comstock – Chollar Potosi, Savage and Gould & Curry – having produced about half of the total. Some sections of the Lode had high-yielding ores, say $30 per ton and above, but much of what had been assayed was of moderate or poor quality. Although mining officials and stock speculators continued to portray the Comstock in the most positive terms – that rich ore bodies were within reach – the decade was one of many unfulfilled promises. Extraction costs were on the rise, and reduction costs even with more efficient mills remained high. The great blank underground spaces were hardly encouraging. (And companies’ extravagances plus speculators’ manipulations only further clouded the financial viability of Comstock mining.) The Comstock could become a footnote rather than a headline in Western mining history.

A major discovery on the Lode’s southern end kept the Comstock in the headlines. It was in Gold Hill where the early placer miners had been so active. As prospectors had tramped around Gold Cañon, north of Silver City, they had recognized the possibility that a “yellow hill” about “60 feet in height and nearly 500 feet long” in the upper Gold Cañon might be worth investigating. The “yellow hill” was not lost on James Finney, a long-time prospector who despite his bluster was as skilled a placer miner as anyone. In January 1859, Finney and his friends began to prospect on the hill, and they found gold worth about 15 cents a pan, “a fair prospect”. They made placer claims of 50 feet long and 400 feet across, and they named the area Gold Hill. Days later another group including Henry Comstock laid claim to adjoining land. In the spring after the snow had receded the placer miners had discovered a quartz vein about 10 feet below the surface. This can be treated as the “official” discovery of the Comstock Lode, although writers over the years have offered variations on the theme of who discovered “what and where”. This quartz discovery on the Comstock’s lower end in contrast to the quartz discovery on the upper end in June, discussed earlier, was that the Gold Hill discovery remained a placer claim. In any event these discoveries by placer miners that yielded about $20 per day were soon overshadowed by events on the Comstock’s upper end.19 As we enter the Comstock’s second decade the action will return to the southern end with the bonanzas at Belcher and Crown Point, two neighboring mines.

18 “Biennial Report of the State Mineralogist...1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875), 80.19 Smith, The Comstock Lode, 2-5, 13-14. As is well known, Finney’s nickname “Old Virginny” for his home state of Virginia, became the basis for the place names of Virginia Hills and Virginia City, and Comstock, who apparently spent a lot of time riding a bedraggled mule around the countryside, will lend his name to the lode for reasons that were barely connected to mining at all. Regardless of how names got attached, Comstock mining to be understood got its start on the southern end of the lode in Gold Hill.

12

THE COMSTOCK [H]

The southern end had not been devoid of activity in the 1860s. The Imperial mine had opened on a Gold Hill quartz claim in 1859, and for a few years it produced about $2.5 to $3.0 million dollars. In the early 1860s small to moderate ore bodies, more or less above 500 feet, had been exploited at Belcher, Crown Point, Kentuck, Yellow Jacket and one or two other properties. Belcher’s operations began in 1863 and Crown Point’s in 1864, and as operating mines they would continue with a few interruptions until 1884 (and beyond). But it was the discovery of a large and rich ore body, shared by the two claims, from the 1,000- to the 1,500-foot levels in 1870 that saved the Comstock from a premature death. Up to 1870 Belcher had worked a small vein of ore several hundred feet below the surface and worth about $2 million, while Crown Point had worked two different bodies (which it shared with Yellow Jacket on the north) worth about $4 million. Over the life of these two mines from the mid-1860s to the mid-1880s we can estimate the total tonnage from Belcher was in excess of 800,000 tons worth about $35 million and from Crown Point over 900,000 worth about $29.20 The yields per ton were calculated at $44 per ton for Belcher and $32 per ton for Crown Point. If we look at the most productive years – 1871-1875 – Belcher’s per-ton yield was $55 on 547,000 tons worth $30 million and Crown Point’s per-ton yield was $39 on 638,000 tons worth $25 million. Prior to 1871 Belcher was regarded as virtually worthless having produced very little profitable ore. Crown Point in contract had shown more promise yielding up several million dollars in bullion. After 1875, while both continued to register bullion through 1884, Belcher’s yield per ton fell to $22 on slightly more than a total of 200,000 tons and Crown Point’s yield dropped more sharply to $14 on similar tonnage.

At the aforementioned per-ton yields Belcher and Crown Point made money for their stockholders. From 1870 and 1878 Belcher paid out $14.9 million or 47 percent in dividends and Crown Point $5.3 million or 20 percent. As the dividends suggest Belcher was a far more productive mine than Crown Point. For the four best years Belcher’s ore had a string of extraordinarily high yields: 1871 with $65 per ton; 1872 with $58; 1873 with $70; and 1874 with $55. In 1875 the boom was done as per ton years fell $27 where it would languished for another decade. Crown Point had more tons but less valuable ores, although dividend payments were still substantial: 1871 with $32 per ton; 1872 with $41; 1873 with $59; and 1874 with $40. In 1875 the yield dropped to $20 per ton, but then had a brief recovery to $55 per ton on one-third of the volume of the previous half-decade. But the downward spiral resumed in 1877, and by 1884 yields settled in at about $12 per ton21.

20 My total estimates will differ somewhat from others quoted in various published works because I have used different sources and have chosen a longer time period. My sources for 1871 through 1884 are from the Story County Assessment Records. From 1876 through 1884 on microfilm in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno. For 1871 through 1875 I have relied on the Mineralogist’s Reports found in the Appendices to Journals of Senate and Assembly for Legislative Sessions 6 (1873), 7 (1875) & 8 (1877). For the years prior to 1871 I have used data found in Grant Smith’s Notebooks, NC229, Binder 1, Special Collections, Library, University of Nevada at Reno. Smith estimates from 1859-1882 are Belcher 738,000 tons worth $34 million ($46 per ton) and Crown Point 843,000 tons worth $30 million ($35 per ton). Smith, The Comstock Lode, 310-311. I have discussed these sources in previous chapters.21 These yields were computed from the Mineralogist’s Reports cited above.

13

THE COMSTOCK [H]

FIGURE 3CHALLENGE, CONFIDENCE, EMPIRE-IMPERIAL MINING OPERATIONS

[GOLD HILL, BARREN AFTER 1,000' (SURVEYOR'S POINT)]

As discussed in the previous chapter the per-ton-yield figures were only half of the equation. The other half was per-ton costs, which in many cases equaled or exceeded yields. Cost data are harder to verify, and yet for some companies such as Belcher and Crown Point several different sources can be compared to try to arrive at a reasonably sound estimate. Since both companies paid handsome dividends – a total of nearly $24 million on output worth about $58 million – they realized surpluses (receipts greater than expenses) at least during their bonanza years. What can be said as a general observation – and not particularly original – is that costs relative to receipts were high at the beginning of the bonanza in the early 1870s, fell sharply during the middle years when both mines came into their own, and then rose again during the late 1870s and early 1880s (and in fact during some years surpassed receipts). From the third quarter 1875 through the fourth quarter 1884 (without any interruption) Belcher costs were only $1.83 per ton less than its receipts and Crown Point costs were $1.41 per ton more than receipts. Since their bonanzas came to an end in late 1875 or early 1776, these figures do not represent the highly profitable years during the first half of the 1870s. Five surviving quarterly Abstract Statements, submitted by Story County to the State Controller, indicate how successful these mines wee from 1871 to 1875. At Belcher after a losing first quarter 1871, per-ton yields rose and per-ton costs fell in each of the remaining four quarters. The best of these five quarters was the first quarter 1874 when yields reached $65 per ton and costs came in at $22 per on, a difference of $43 per ton. In the same five quarters Crown Point’s performance was less impressive, in particular during the first quarter 1874 when it actually posted a $2 loss per ton, but still undeniably strong. Its best quarter was the first quarter 1872 when it achieved $54 per ton in receipts versus $24 per ton in

14

THE COMSTOCK [H]

expenses for a difference of $30 per ton. Crown Point’s costs remained in the mid twenties, but its yields declined into the mid thirties so that in terms of the ratio between receipts and costs Crown Point was less valuable than Belcher. A comparison of financial statement for slightly different period – the calendar year 1873 and the fiscal year June 1873-May 1874 – reveal mining and milling costs that did not differ significantly. Belcher removed 155,000 tons that cost $8.51 per ton to mine and $12.10 to mill compared to Crown Point that removed 140,000 at $9.24 per ton to mine $11.85 to mill. The difference between the two operations lay in what they mined and milled. Belcher produced more gold – 53 percent of the total bullion – than Crown Point – 42 percent. The average yield of an ounce of gold and silver bullion was $2.57 at Belcher and $2.17 at Crown Point. Comstock gold was generally less fine than gold from other region like California and its silver was purer. Any mine that could produce more gold than silver gained an advantage in terms of yields, costs and profits.22

The ore bodies that Belcher and Crown Point shared and developed on the Lode’s southern end were in Smith’s mind “ideal”. They existed between 1,000 and 1,500 feet underground (between 1,450-foot and 1,950-foot levels). The length of the vein (across both properties) was nearly 800 feet, and at its widest the vein was 120 feet. Smith described the lay of the ore body between 1,200 and 1,300 feet “like a fish with two flat tails, one branch continuing down the footwall, the other descending at a slighter dip.” By and large the ore was easily accessible, and lacking other base metals it was highly uniform in value. It took four years to extract the ore in this vein. At the outset of the bonanzas, as was true so frequently on the Comstock, hopes flew high. Crown Point’s Superintendent, S. L. Jones, wrote in his (May) 1874 report after three years in which nearly $20 million worth of bullion had been hoisted “in my judgment, there is more ore in sight in the mine today than there was at the time [May 1873] of the last annual report.” Along side of the justifiable optimism – these were indeed very rich mines – was a sober note from Rossiter Raymond, a respected mining engineer who, as quoted by Smith, wrote in 1873: “Whoever believes that these mines have now at last entered upon solid and continuous body, extending indefinitely in depth, and precluding for the future the necessity of explorations, will find himself mistaken.” as the companies sunk deeper shafts, their costs rose, their assessments increased and their profits vanished. Those underground cavities where the stopes were the thickest grew so large as the ores were being extracted that millions of feet of timber had to be installed to prevent interior collapse. After labor the highest 1873-1874 expense in both mines was the purchase of timber – almost a half million dollars for the two mines combined. By 1875 bullion yields had fallen by more than 50 percent, and more threatening was the evaporation of the margins (that is, gross profits) between receipts and costs. No ore was found below 1,600 feet even though their shafts had reached the equivalent of 3,000 feet.23

22 “Biennial Report of the State Mineralogist…1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875). Crown Point’s accounts appear on pp. 106-112 and Belcher’s on pp.114-118.23 Smith, The Comstock Lode, 137-138. These depths measured from Gould & Curry were approximately from the 1,450-foot level to the 1,950-foot level. Smith reproduced a map with the fish tail from Becker, “Longitudinal Vertical Projection of the Comstock Lode…,” Atlas, Sheet VII, in which the depth were given in both feet from the surface and feet as measured from Gould & Curry. Raymond’s quotes by Smith was from his 1873 “U. S. Mines and Mining Report”, no page given. Smith also reproduced a composite (p.

15

THE COMSTOCK [H]

The bonanza at Belcher and Crown Point came after one of the “darkest” years in the history of the Comstock.24 In 1870 all the mines were in trouble. At the 500-foot level ores had given out along the Comstock, and although several mines had reached the 1,000-foot level the prospects were not encouraging. From 1865 to 1870 Belcher had produced about 0.5 percent of the Comstock ore whereas Crown Point had produced between 8 and 9 percent and ranked sixth behind Savage, Yellow Jacket, Chollar Potosi, Kentuck and Hale & Norcross. Gould & Curry, the previous high flyer, witnessed the disappearance of the vein at the 500-foot level as the east and west walls permanently pinched together. Similarly at the 1,000-foot level Yellow Jacket, Hale & Norcross and Savage experienced the same pinching effect with the result that had less profitable ores and more underground flooding. And on top of these developments came the fire of 1869 on the southern end of the Comstock Lode that closed down part or all of the operations from Crown Point through Kentuck into Yellow Jacket. From 1865 to 1869 these three mines had produced more than a third of the ore on the Comstock. By 1869 all three of these mines plus a flooded Belcher to the south of Crown Point had come under the control of the flamboyant entrepreneur and politician, William Sharon and his associates. The loss of their best mines brought their Comstock Empire (which included mines, mills, a bank and a railroad) to the verge of collapse. In late 1870 Crown Point’s superintendent, J. P. Jones, an Englishman who was both politician and miner with a penchant for risk-taking (no one “better fitted to lead a forlorn hope”, wrote Lord) entered promising ground about 200 feet from the Belcher line, and because the seam lay against the angled footwall Jones assumed that it would extend south and eventually cross the boundary into Belcher property. Since Sharon et al. had controlling but not majority interest in these mines, Jones and Alvinza Hayward, one of Sharon’s business associates, began to buy up Crown Point stock. They eventually won control of Crown Point, much to the surprise and chagrin of Sharon. In response to their betrayal and to forestall any further losses Sharon began to accumulate Belcher stock that he did not already own. The two parties finally agreed to end the warfare and to reach a settlement. Sharon sold all his Crown Point stock to Jones and Hayward, and they in turn sold all of their Belcher stock to Sharon. The transaction, it was said, involved millions of dollars. It turned out to be a high-priced paper transfer that benefited both sides.25

In the decade before the bonanza at Belcher and Crown Point, the latter mine had enjoyed greater success than the former. Crown Point had produced ore that had a value 10 times greater than its total assessments and had paid some dividends. Belcher, on the other hand, had assessment that were 2.5 times greater than its production and paid no dividends. When the Crown Point superintendent, T. G. Taylor, issued his report in May 1868, he acknowledged that the fiscal year (June 1867-May 1868) was one of uncertainty. To begin with, a “body of ore” at the 500-foot level (about 100 feet underground) gave out unexpectedly after an initial success. In the normal procedure of working up and down from the main tunnel carved out at 500 feet, the workers had

276) of several longitudinal vertical projections (Sheets X-XII) from Becker, Atlas.24 Smith, The Comstock Lode, 126.25 Smith, The Comstock Lode, 122-123, 126-131. Some of the data were found in Smith’s Notebooks, NC229, Binder 1, Special Collections, Library, University of Nevada at Reno. Quotes from Lord’s Comstock Mining and Miners will be found in pp. 280-282.

16

THE COMSTOCK [H]

followed the vein up 76 feet and down 33 feet only to terminate in worthless porphyry. About 6,730 tons of ore worth more than $220,000 had been removed. This part of the vein was thought to be richer, and that expectation had been noted enthusiastically in the previous report. Not all was lost, however. At the 600-foot level over 100 feet from the shaft in an eastward direction workers found dry quartz and a new ore deposit. It was as narrow as three inches and as wide as 14 feet, and it had been pursued to the 700-foot level and slightly beyond. Already 7,000 tons of ores had been extracted, worth between $225,000 and $250,000. Following that discovery another ore body was found at 700 feet, about 200 feet from the shaft, once again in an eastward direction. The seam was worked up to the 600-foot level with varying widths of two feet to 19 feet before it ceased. It was at the time of the report being followed down to 800 feet where more work remained to be done before its full value could be ascertained. Between the 600-foot and 800-foot levels workers ran into additional seams that measured about four feet wide. The disappointments at 500 feet were soon compensated for at the deeper levels. This report captured how quixotic the business of mining was. Ground that looked promising could become a dead-end, and ground that appeared to have limited prospects could lead to good deposits. Some of the ore between the 600-foot and 800-foot levels had extraordinary in-mine assays of $296 per ton, but the average yield was only about $33 per ton, higher than the average for the Comstock but nowhere near any record. Crown Point ore worth $866,000 had been reduced at several mills during the fiscal year noted above. The calendar-year figures for 1867 and 1868 respectively will differ from the fiscal-year figures. They show that Crown Point produced nearly $1 million worth of ore in 1867 and over $1 million the next year. More telling perhaps was the fact that its stockholders were assessed $150,000 but earned dividends of $625,000. The excavations at the 800-foot and then at the 900-foot levels continued to yield good ores into 1869 when, as discussed earlier, the fire of April 1869 closed down Yellow Jacket, Kentuck and Crown Point. In 1869 Crown Point produced $106,000 worth of ore but also assessed its stockholders $150,000. Needless to say its dividends ceased.26 At this point no one could have anticipated that Crown Point’s future was to glow even more brightly.

The big strike came on November 1870 at the 1,100 feet below ground (about 1,450-foot level). The Mineralogist portrayed it as “the largest body of pay ore ever found in the Comstock lode….” In comparison to earlier discoveries it was indeed huge. It lay about 375 to 400 feet north of the southern boundary with Belcher, extended from the 900 feet to 1,300 feet, and reached widths of 125 feet. The value per ton was about $45, about double the per-ton average for all companies across the whole period 1865-1885. The Mineralogist was mildly disturbed that the superintendents of both Crown Point and Belcher had not yet filed any reports, and therefore further details were scarce.27 Several months after the Mineralogist had presented his report (and his criticism) to the Legislature Crown Point’s superintendent, J. P Jones, prepared a report for company stockholders. He acknowledged that he had not submitted any reports since

26 “Biennial Report of the State Mineralogist...1867 and 1868” in Senate Journal and Appendix 4th

Legislative Session (1869), 24-25. See also production data in Smith’s Notebooks, NC229, Binder 1, Special Collections, Library, University of Nevada at Reno.27 “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th

Legislative Session (1873),3 132.

17

THE COMSTOCK [H]

1 May 1870 in large part because “Crown Point was yielding nothing”. He reminded the stockholders that the prospects were bleak:

There was no ore in sight of sufficient high grade to pay the cost of extraction and reduction. Nor was there any where in the mine any indication of a coming ore-body. The Company’s mill was leased at a very moderate monthly rental of $1,000. The future prospects of the Company never looked as unpromising.

The fire had ruined most of the underground works to the north of the main shaft, but it did not stop operations to repair and extend the shaft and to explore ground to the east and south of the shaft. This had resulted in the aforementioned discovery at the 1,100-foot level. A drift following quartz seams had been cut for a long distance of 800 feet due east. The seams, however, were barren and ended up in porphyry. It was decided then to drive a new tunnel to the south at a point in the drift that was 360 feet from the shaft and 101 feet from the northern boundary. At about 240 feet a clay wall, running diagonally northeast by southwest, was pierced. At this juncture as the drift was turned eastward, it passed through some “soft whitish quartz, containing occasional spots of ore” and then for the next 10 feet through porphyry that was “somewhat decomposed and resembling soapstone in appearance”.28 This was in fact the west wall of an ore body that “consisted of boulders encased in cement”, had a width of 1 foot and a yield of $40 per ton, wrote Jones. Following the vein in a southeastward direction for about 38 feet, it grew in width to 14 feet, 20 feet and finally to 84 feet. The drift was driven to the southern boundary where it entered the property of Belcher. Crown Point’s had a future after all.29

As was often the case the ore body resided across several levels in a wedge shape. Jones explained in considerable detail the work at each level and the quality of the ore. He then summarized these details:

the vein at 900 feet [from surface] or the “upper edge or apex” was 80 feet in length with an average width of 9 feet and a value of $28 per ton;at 1,000 feet it was 300 feet in length and on average 45 feet wide with a per-ton yield of $32;at 1,100 feet its length was 255 feet and its average width 58 feet and a yield of $38 per ton;at 1,200 feet it ran for 310 feet and averaged a width of 70 feet and yield $45 per ton;

28 Some of these phrases in an altered form appear in Lord, Comstock Mining and Miners, 282.29 Typescript, “Crown Point Bonanza (Report of the Superintendent J. P. Jones, May 1st, 1873, on the operation of the three years preceding)”, NC85/2, 1. A copy of the original document was typed at a later, unspecified date and deposited in the Crown Point company archives. It was more detailed than what appeared in Smith, Lord and other commentators. This was the report that preceded the annual report which the Mineralogist quoted from in his 1875 Legislative Report: “Biennial Report of the State Mineralogist...1873 and 1874” Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875), 103-112.

18

THE COMSTOCK [H]

finally at 1,300, the best level thus far, the length was 360 feet, the average width 90 feet and the per-ton yield $75.

As it dropped from level to level it grew in length and breadth, and that meant of course exceedingly favorable extraction costs. Jones estimated that at 1,300 feet more than $4 million worth of bullion had been extracted and another $10 million may be awaiting extraction.30 It was hoped and perhaps assumed that this great wedge would continue downward indefinitely. It did not. It ended between 1,500 and 1,600 feet. There were further explorations and investments but no evidence that future discoveries could be expected. The ground itself lacked what miners had come to regard as potential signs of yet-to-be-discovered deposits.31

Because of Crown Point’s discovery in 1870 the focus of attention for explorations became the 1,500-foot level all across the Comstock. Only a handful of explorations proved profitable and most ventures lost money, but for better or for worse the search helped to revive the sagging local mining economy. Crown Point was obviously a beneficiary, and for four year it made money. By Comstock standards that was a reasonably lengthy bonanza. But despite great profitability it was not exempt from the limitations in the vicinity of the 2,000-foot level that characterized this cycle of bonanzas in the 1870s. In 1875 costs jumped to nearly twice its revenues, and while Crown Point remained active until 1885 (and beyond), it operated in the red for most of the second decade. What Crown Point found at 1,100 feet (1,450-foot level) was an “immense chimney”, the phrase that Jones used in his 1873 report. Jones explained in the report how the chimney was exploited in the first two years. Only one-seventh of the ore had been removed from 900 to 1000 feet with the remainder being held in reserve in case revenue was needed to deal with cave-ins or other disruptions deeper in the mine. Four-fifth of the ore had been removed between 1,000 and 1,100 feet, and three-fourth between 1,100 and 1,200 feet. Only one-fourth had been extracted from area between 1,200 and 1,300 (to May 1873). Jones said some ore existed above 900 feet, although the wedge was at its narrowest at the top. With ground below 1,300 remaining to be mined Jones speculated what might be found. Since this wedge was actually made up of several chimneys separated mainly by walls of porphyry or clay, Jones speculated the chimneys would eventually unite into a single ore body of great depth and width and of course of great richness. It did eventually unite, not, as Jones had hoped, to launch a new, grand bonanza but to signal the termination of the vein.32

In the final pages of his 1873 report Jones added more details about the impact of discovery and exploitation of the chimneys. He described the post-fire operation as prospecting, and when the discovery was made in 1870, the company had to make a

30 See footnote above, pp. 5-6.31 I believe that the depths given in the foregoing summary from the Superintendent’s Report are measured from the surface and not from the Gould & Curry Point A. I have compared them to data in Becker, “Longitudinal Vertical Projection of the Comstock Lode…,” Atlas, Sheets 7 & 11, and they fit more convincingly with calculations from the surface than from Gould & Curry Point A. I am not absolutely certain about this interpretation, and unfortunately the reports by the Superintendent and the Mineralogist were not helpful.32 See footnote 29, above, pp. 6-7.

19

THE COMSTOCK [H]

substantial investment to mine the body. Crown Point’s shaft was small, and the hoisting and ventilating systems were inadequate. The shaft was enlarged down to 1,100 feet, and three hoisting cages were installed in the shaft. Swelling of the ground around the shaft caused the timbering to push inward. Removing two more feet of soil around the shaft eliminated that problem. Most of the shaft was retimbered. Not only were the engines for the hoisting cages new but also all the underground equipment – drills, compressors, pumps, fans – was new. Only then did a prospecting mine become an operating mine.33

A year later, 1874, a new superintendent S. L. [instead of J. P.] Jones made a much longer report, part of which was reproduced (verbatim) in the Mineralogist’s 1875 Legislative Report. It included not only descriptive material but also accounts on revenues, costs and profits. Based on Jones’s details the mineralogist concluded that Crown Point had been “worked with skill and economy, and no management of a mine in this district has ever given better satisfaction to the stockholders.” And reading Jones’s report can clearly leave that impression. It is filled with references to new buildings, bigger machines and perceived efficiencies. In general he referred to the year (May 1873 to May 1874) as one of considerable “dead works”, which in mining parlance meant maintenance and repair. Several thousand feet of new timbering had been installed in the main shaft, the loading and unloading compartments at each level and in the tunnels themselves. Several thousand feet more of new drifts, raises, winzes and crosscuts had been dug. A large and much improved carpenter and machine shop had been constructed at the top of the shaft. The water supply, mainly for fire prevention, had been improved. Jones was especially proud of the new hoisting facilities, which would soon be ready to operate. After describing such things as the number of anchor bolts (two to two and one-quarter inches) and the size and strength of the hoisting reel, he compared the old and new hoisting capabilities. Under the current system the car and the rope combined weighed 11,000 pounds. To hoist 500 tons of ore per day, a goal of the company, 250 trips with two tons of ore per trip would be required. Under the new system with a bigger car and stronger rope with a combined weight of 18,000 pounds 500 tons could be hoisted in 42 trips at 12 tons per trip. Fewer trips, it was anticipated, meant savings of tens of thousands of dollars per year. The cost of the new machinery plus freight and installation was estimated to be $50,000. Jones concluded that within several years the new machinery would pay for itself based on predicted savings. But in fact during the year fewer than 400 tons on average were lifted each day, and the number 500 appeared to be an unrealizable goal. The assumed savings to pay off the capital improvements and to enhance the bottom line did not materialize to the degree predicted by Jones.34

Even though some goals were not realized by the end of the fiscal year, production and revenue figures between May 1873 and May 1873 bore out Jones’s upbeat assessment. Crown Point clearly made a handsome profit. His figures showed that on 140,000 tons of ore the company realized a yield of $7.1 to 7.4 million or about $52 per ton. [Numbers in report do not always agree so I have used approximations.] Because the company carried over a cash balance of $1.9 million on 1 May 1873 and had other

33 See footnote 29, above, pp. 7-8.34 “Biennial Report of the State Mineralogist...1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875), 103-105.

20

THE COMSTOCK [H]

receipts from 1873 to 1874, total revenues equaled $9.3 million. Based strictly on the value of the bullion extraction costs of $1.5 million including extensions, repairs, operations plus new machinery (which probably should have been amortized) and reduction costs of $1.6 million including expenses and repairs at its own mill, Rhode Island, and contracts with 10 other mills the total was about $3.1 million or $21 per ton. The “gross operating” profits were about $4.0 to 4.3 million or about $30 per ton. The company reported another $400,000 in administrative, legal, assay and freight charges so that profits were reduced to between $3.5 and 4.0 million. The company paid dividends of $5.3, an amount greater than the surplus for the year. The cash on hand made up the difference. Thus at the end of 1873-1874 fiscal year Crown Point still had on hand a half million dollars.35

On the basis of mining operations in 1873-1874 it was not hard to be optimistic and generous about the future. The hopes, however, would be dashed. The wedge or chimney that seemed unending quit at the 2,000-foot level or about 1,600 to 1,700 feet underground. To keep the company going for the next few years assessments had to be re-instituted, but an ore body that might have justified the expense was never found. In August 1875 a letter from Jones to the President of Crown Point, J. D. Fry, revealed how quickly the prospects had deteriorated. At 1,700 feet after pushing the drift 160 feet east it was still in hard rock with temperatures reaching 120 degrees. Workers were being furloughed and expenses cut because the ore grades were so low - from $4 to 10 per ton – that the value of the bullion did not cover the costs. Even though the wedge had given out in early 1876 Jones and his engineers remained preoccupied with trying to figure out where it might reappear. They had driven as deep as 2,000 feet. Three drifts – north, south and east – were being dug in hopes of intercepting a continuation of the wedge from above or of finding a new vein. Actually quartz was found at 2,000 feet, but it was even lower in grade, $2 to 4 per ton, than what was found at 1,700 feet. The new problem was water, extremely hot water. Behind the porphyry were not deposits of ore, as was often the case, but pools of water. The main pumps did not extend beyond 1,700 feet, and special pumps had to be installed at 2,000 feet to remove the water to 1,700 feet before the main pumps could be activated. And the temperature of the water adversely affected the interior ambiance throughout the mine. A year later in 1877 the water problem had been solved by making a connection with Belcher, but while the tunnels were dry, the rock was hard and more importantly the ore was absent! Not even enough ore was being produced to keep the mill (Rhode Island) running, and it had been leased for $1,500 a month to Mackay and Fair’s Pacific Mill and Mining Company. And the Story County commissioners were contemplating a lien on the company’s property in lieu of unpaid taxes, although the taxes were eventually paid. This was not the end of mining at Crown Point. It continued to register ores until 1885 but in amounts that were a fraction of its earlier success. It certainly ceased making money and paying dividends.36

35 “Biennial Report of the State Mineralogist...1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875), 106-112.36 Crown Point Gold and Silver Mining Company Letterpress Book, Feb 1875-Jul 1877, NC85/3, Special Collections, Library, University of Nevada at Reno. Information cited from following: Letter from S. L. Jones, Supt., to J. D. Fry, Pres., 20 Aug 1875, recto 68 (page in Letterpress); Letter from S. L. Jones, Supt., to C. E. Eliot, Sec., 8 April 1876, recto 137, verso 139; Letters from W. P. Holmes to F. B. Taylor & Co, 19 July 1877, recto 294 and S. L. Jones, Supt., to Col. P. L. Weller or Miller, Pres., 19 July 1877, recto 274-

21

THE COMSTOCK [H]

The Belcher Mine on Crown Point’s southern boundary shared the ore bodies described above. Indeed in 1873 the Crown Point directors agreed to accept a payment of $275,000 from Belcher because the latter had crossed the boundary and extracted ore from Crown Point’s side. The agreement called for a payment of $137,500 in gold and a note for the remainder payable in 60 days at a rather usurious rate of 1 percent per month. The Crown Point accounts showed the receipt of $2,750 in interest from Belcher, the amount equal to two months at 1 percent per month. Apparently the boundary was clearly enough marked to avoid future disputes. And in the course of the next few years Belcher would in fact out-produce Crown Point. Already noted was how control of Crown Point passed from Sharon to Jones and Hayward and control of Belcher from Hayward to Sharon. In the end Sharon, as the principal owner of Belcher, would realize a somewhat larger fortune than Haywood, the principal owner of Crown Point. It was almost axiomatic in mining societies that fortunes were made to be lost. They were lost because owners did not know when to abandon unproductive works and because they could also spend endless hours speculating in stocks. Serious investors who seldom speculated made and lost fortunes; and serious speculators who could be serious investors also made and lost fortunes. Buying up cheap mining stocks even if done with speculation in mind could actually have positive results if the purchasers made some effort to recover the mines. In short the role of speculation in mining (like speculation in “dot.coms”) did not necessarily spell disaster for the business of mining. In the case of Crown Point and, as we shall see, in Belcher and other mines what happened at the site away from the stock markets was the more important consideration.37

Because they shared an ore body the work in Belcher to find and exploit the ore will not be so different from what we have described in Crown Point. In the 1860s Belcher’s output could not even pay for its assessments. Belcher barely figured in the Mineralogist’s Reports before 1871. At the 1,000 feet (1,400-foot level according to Gould & Curry) after the strike in Crown Point a vein about 400 feet long and 100 feet wide was found in Belcher. Its full depth was not yet known, but it was thought to be several hundred feet. In early 1871 Belcher’s main works were at 100 to 200 feet underground (400-foot level) in an ore body probably discovered in the early 1860s.

275 [folios not numbered correctly, pages also torn out]. The distances discussed in these letters appears to be feet from the surface rather than feet from Gould & Curry Point A. Such an interpretation would coincide with figures shown in Becker, “Longitudinal Vertical Projection of the Comstock Lode…,” Atlas, Sheets VII & IX. A comment about Letterpresses. Scores of Letterpress Books for mining companies survive in varying conditions. Instructions for copying a single-sheet letter or as many as 10 to 20 single sheets were given on the fly page of the letterpress book. La Belle Copying Book and Ink was one company that sold these copying devices. Basically after the letter was written and allowed to dry for a few minutes, it was placed on a heavy “pasteboard” written-side up. A leaf of the copying paper was placed over the ink-written letter (La Belle also provided the ink) and then rubbed “rather hard with the ends of your fingers on the copying paper.” Apparently the ink for the original “seeped” through the copying paper to create a copy of the original. The letterpress books sold by Le Belle had from 300 to 1,000 pages. By using a Copying Press provided by the vendor more than one letter could be copied at a time. Most of the letterpress books in Special Collections were 300 to 500 pages, which cost $2.75 to $4.25 each. A half pint of ink was included.37 General discussion of Belcher in Smith, The Comstock Lode, 126-140; negotiations between Belcher and Crown Point in Crown Point Gold and Silver Mining Company, Minutes, Special Meeting, San Francisco, 17 December 1873, NC85/1, Record, 1859-May 1874, Special Collections, Library, University of Nevada at Reno.

22

THE COMSTOCK [H]

Activity was also underway 700 to 800 feet underground (between 1,100- and 1,200-foot levels). Before the discoveries at Crown Point on the northern border the strategy in Belcher was to explore in a southern direction. After Crown Point’s discoveries, however, the northern side of the Belcher claim looked more promising. At the end of January 1871 with the discovery of a 2-foot seam at these deeper levels ore samples jumped from $7 to $30 per ton to about $100 per ton. By September 1871 the work along the northern border was paying off. At times yields were as high as $75 per ton. This was reflected in company accounts that showed that bullion received from the mint and expenses to operate the mine had risen from a few thousand dollars per month earlier in the year to tens of thousands. The problem at the lower depths was water, although the former superintendent, Thomas Bowen, was confident that it could be successfully controlled. But the matter was still under debate and had not yet been resolved to everyone’s satisfaction. Bowen’s successor, W. P. Smith, believed that without a resolution the mine could not operate at an optimal level. A shaft had been dropped 800 feet but was still several hundred feet above the ore body for purposes of hoisting water. Other proposals were to construct a new shaft over the ore body or to construct an incline shaft to connect the ore body with the existing shaft. Smith did not believe a suitable location for a new shaft had been found. Sharon, who remained the company’s dominant force, concluded that an incline shaft could be built more cheaply and quickly than cutting a new shaft. An incline shaft was planned from approximately the 700-foot level of the current shaft at an angle of 360 for 700 feet in order to reach the level of the ore body about 1,100 feet underground where a drift of at least 150 feet and perhaps as much as 500 feet would be constructed to intercept the ore. Smith estimated that the incline shaft could be completed in eight months (May 1872). In addition Smith proposed retimbering 400 feet of the existing shaft and purchasing and installing new machinery for hoisting the ore along the incline and through the shaft. By the time of the Mineralogist’s Report in 1873, the superintendent’s recommendations had been implemented and Belcher was becoming the biggest and richest operation on the Comstock. The Mineralogist was impressed with the skill of the effort and the “neatness” of the operation. He even urged Belcher’s neighbors to “imitate” its model.38

Plans for accessing new ore bodies did not always proceed smoothly. By June 1872 the incline had been driven 418 feet from a point 850 feet underground. New machines had to be installed, and that combined with the hardness of the rock slowed progress in sinking the incline. The original timetable could not be met. When the work reached 1,000 feet underground drifts were started in order to tap into the wall of ore (about 1,100 feet underground), and when the wall was penetrated the body of ore was said to be 65 to 70 feet in width, and far richer than expected. In addition to rich ore, however, the miners found unbearable working conditions. Because of the intensity of heat and the poorness of ventilation workers became exhausted after several hours and had to be replaced by a new shift. Hiring, training and managing a larger labor pool plus

38 Letters from T. W. Bowen, Supt., to W. C. Kibble, Sec, 20 January 1871, recto 4; 24 January 1871, recto 4; 30 January 1871, recto 13; 19 Mar 1871, recto 66; Letter from T. W. Bowen to J. D. Fry, Pres., 25 Feb 1871, recto 41 & 42; Letters from W. H. Smith to J. D. Fry, Pres., 7 Sep 1871, rectos 199 & 200 with accounts attached; 11 Sep 1871, rectos 201 & 200 in Belcher Silver Mining Company, Gold Hill, Letters, NC92, Special Collections, Library, University of Nevada at Reno. “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th Legislative Session (1873), 132.

23

THE COMSTOCK [H]

frequent shift changes affected adversely the efficiency of the operation. And of course in order to work the wall of ore that was several hundred feet in depth the incline had to be extended and more drifts had to be opened with the attendant problems of heat and ventilation. (Shafts were more effective at circulating air than inclines or drifts.) In addition draining Belcher turned out to be complicated and cumbersome because the water had to be piped through a drift that passed through Crown Point to Yellow Jacket’s shaft where it was hoisted to the surface. These were not permanent obstacles; rather they slowed progress, cost money and demanded attention. What distinguished the ore body residing in Belcher from that residing in Crown Point was the presence of gold. The time lost and the expense required, though greater than expected, soon paled in significance as ore yields reached historic highs. In 1872, when most of the letters and reports containing the foregoing information were written, extraction costs ranged from $17 to $24 per ton in three of the four quarters while total costs (including transportation and reduction) per ton ranged from $27 to $37 per ton. At the same time given it gold content the ore was so rich even with those cost it yielded bullion worth between $50 and $60 per ton. And as the obstacles were overcome with new drainage pumps and ventilation shafts the cost of extracting the ore declined. In one quarter during its most productive year 1874 extractions costs were reported to be under $10 per ton as the yield reached $65 per ton. These figures suggest that the operation of the mine became more efficient in spite of the need to construct and maintain a complex underground system. As the depths grew, however, there was some foreboding. The angles of the veins were shifting unexpectedly, not in accord with the surveys, and although not yet recognized for what it was it would become the beginning of the end. The ore body had a limit, and that limit had been reached in 1874.39

In his 1875 biennial report (covering the two previous years) the State Mineralogist could barely contain his enthusiasm. He believed that Belcher was the most productive mine in the history of world, and that it surpassed even Potosí, Spanish America’s legendary Andean mine. What impressed him was that Belcher produced almost as much as Potosí (in dollar values), but Potosí’s production came from over 2,000 mines and 32 veins, not from a single mine and ore body. (The comparison was somewhat overdrawn because Potosí’s production was more concentrated than these numbers suggest.) By 1873 Belcher had built four stations 100 feet apart between 1,000 and 1,400 feet. They produced a total of 156,000 tons of ore. The station at 1,300 feet was the most productive with 38 percent of the total followed by 26 percent from each station at 1,000 and 1,200 feet and 10 percent from 1,400 feet. When the Mineralogist prepared his report the incline shaft had reached the 1,300 feet and ore from the 1,400 feet was being removed through a drift connecting with Crown Point and perhaps Yellow Jacket. More new equipment was in evidence including a Burleigh air compressor and two Burleigh drills. In the mine itself 3,692 lineal feet of drifts and winzes had been excavated; 380 feet had been added to the incline; and 4,072 feet of track had been laid

39 These points were drawn from handwritten copies of letters sent to company officers and from daily progress reports. They were not letterpress copies, although letterpress books exist for the Belcher. Letters from W. H. Smith, Supt., to J. D. Fry, Pres., 22 June 1872, p. 35 and 30 June 1872, p. 35, along with notes by Smith from daily reports in NC92/1/1, Special Collections, Library, University of Nevada at Reno. Quarterly costs from Abstracts Statements in Nevada State Archives. By 1877 extraction costs had risen to more than $30 per ton, and the yields in the mid-$20 range could not cover those costs.

24

THE COMSTOCK [H]

and other repairs too numerous to be noted had been finished. Producing ore worth about $11 million cost about $4 million. The company paid dividends in the amount of nearly $7 million and still had on hand at the end of the fiscal year $1 million in cash. Having paid about $1 per share Sharon and his partners realized astronomical returns.40

Both Crown Point and Belcher remained active mining sites until 1885. After 1875 the mines made little or no money, and soon assessments exceeded the value of mineral output. The owners achieved some of the greatest depths on the Comstock, at least 3,000 vertical feet, without anything to show for it. The wedges that seemed unending when first discovered did not continue or reappear at these lower depths. Ore of such low grades found that it made more economic or financial sense to leave it in the ground than to hoist it. Belcher assay records from 1885 reveal that the value of extracted ore occasionally exceeded $20 per ton but generally held around $15 per ton.41

Speculation in Belcher stock occurred from time to time, but even the speculators eventually knew when enough was enough. The danger signals in what was transpiring at both mines in the second half of the 1870s was obscured in part by the even more astonishing success of The Firm’s Consolidated Virginia and California mines at the other end of the Comstock.

40 “Biennial Report of the State Mineralogist...1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875), 112-118.41 Belcher Silver Mining Company, Record of Assays of Ores Milled, January 1885-Nov 1886, NC92/2, Special Collections, Library, University of Nevada at Reno.

25

THE COMSTOCK [I]

Chapter 9The Business Of Mining:

Types of Mills, Economics of Milling, Mills Owners & Operations

Scores of mills were built and rebuilt in Story County and adjacent counties to process the 7 to 10 million tons of extracted ores from the Lode between 1865 and 1885. In the early 1860s so-called custom or independent millers set up shop on the Comstock. Mine owners being preoccupied with establishing their underground operations often lacked both the capital to build their own refineries and the skill to operate them. Millers found themselves in the envious position of being able to dictate the terms of the contracts even though milling capacity soon exceeded demand. Over time, as mining companies became better established, they had financial motives to construct their own mills and to bypass custom mills. In time milling became an extension of mining operations, and in the annual statements of the mining companies the cost of refining ores was treated, like costs for extraction, transportation and administration, another cost of doing business. The problem for mining companies with their own mills was that they had a shortage of milling capacity when their mines entered a highly productive period and conversely they had an excess of milling capacity when expansion in output turned to contraction, Both could be costly in that inadequate capacity could lead to investment in plant and equipment that may not be justified over the long term and idle capacity could lead to higher fixed costs and lower returns on capital. Both theoretically could dilute profits and threaten dividends. Since mining companies could not predict with certainty how much refining capacity that they would need a year or two later they constantly ran the risk of having too much or too little milling capacity. One strategy to moderate the risk was for mining to create stand-alone milling companies that were not strictly dependent on the output of their own mines. Ideally an independent milling company set up by a mining company could offer in-house milling services for all the mines that the company owned and custom milling for those companies that lacked mills with the hope of smoothing out fluctuations in production that even the best mining operations could not avoid. But there is a somewhat more nefarious reason was behind these undertakings. The mining companies had discovered that by divorcing milling from mining operations they stood to profit from both businesses. (Railroads, of course, followed a similar tack in creating railroad construction companies separate from the railroads themselves.) Milling companies were usually organized as partnerships among the founders or principals or as corporations with the founders as the major stockholders and a few other associates or friends as minor stockholders. If milling-company stocks traded on the San Francisco Exchange they attracted little attention. Even though they could be profitable, they depended for their financial success on the state or health of the mining industry and more particularly on the mines in which their principals had a role. As stand-alone companies they probably had little appeal at the stock traders. Moreover, it is not clear that the founders of the milling companies really wanted to share milling profits with an investor public or needed an investor class to finance their operations. Despite the rationale that independent mills could secure their financial footing by shopping around for business from all mining companies, the best performing milling companies were associated with highly productive mining operations. When the mines were on the upswing, the mills made money, and conversely when the mines in contraction, the mills

1

THE COMSTOCK [I]

were sold or abandoned. In the end milling remained tightly linked to the health or state of mining. What the creation of large quasi-independent milling companies succeeded in doing was pushing down milling costs without destroying their potential profitability. Truly independent mills in the mold of the original custom mills did not disappear but were moved to the periphery of the milling business.

FIGURE 1MAP ASSEMBLED BY NEVADA NATURAL RESOURCES DEPARTMENT

SHOWING MILL SITES IN COMSTOCK REGION[PART OF TOXIC CLEANUP PROJECT]

2

THE COMSTOCK [I]

It is useful to present a modest discussion of milling technology, as it had evolved by the second half of the nineteenth century, before tackling the financial issues involved in milling operations. Spanish colonial miners soon discovered that much of the silver ore that they extracted from underground could not be smelted economically. Smelting worked best when silver ore contained a base metal like lead. The lead acted as a flux. Under high temperatures the lead and silver particles fused, and then again since lead had a lower melting point intense heat would be applied to separate the silver and the lead. These were often referred to as high-grade silver ores because the natural presence of the lead flux made “cooking” the ore economical and efficient and resulted in silver of high quality (fineness and purity). The great discoveries at Zacatecas and Potosí contained silver ores in combination with other minerals that did not readily lend themselves to smelting because of the cost of purchasing flux, firewood or charcoal and other ingredients. These less smeltable ores came to predominate, and without a different technology for recovering the silver the grand camps of Zacatecas and Potosí would have had a much-diminished mining history. As unsmeltable ores piled up around the entrances to the mines and near the smelting facilities the search for alternate refining techniques became intense. The prize went to Bartolomé de Medina, a Spaniard who was working in Mexico. He developed an ore-reduction technology based upon amalgamating the ore with mercury or quicksilver rather than smelting it. Although used since ancient times amalgamation had few practitioners. In the method that Medina fashioned the ore after being pulverized and washed was incorporated with mercury in an open, walled space that resembled a patio. In Spanish America Medina’s technology became known as the patio process. Over a period of many weeks or several months of stirring the soup silver (and gold) amalgamated with the mercury. The amalgamated ingredients were removed from the patio and transferred to a small furnace where the heat would evaporate the mercury and leave the silver. Over time other minerals were added to the mixture to speed up amalgamation along with adaptations to the furnaces to try to capture the evaporating mercury, but the basic technology remained unchanged into the nineteen century. Spanish colonial miners and millers proved to resistant to major innovations that some mining professional recommended in part because of the cost to alter their plant and equipment and in part because of the familiarity and predictability with the existing techniques. As would be true of refiners on the Comstock and in other Western mining camps, some refiners in Spanish America proved to be more skilled than others in pulverizing the ores, incorporating the mercury and isolating the silver. It was also true that the quality of the mercury mattered (imported Spanish mercury was superior to local Andean mercury) as well as the type of ore (Mexican ores tended to be richer than Peruvian ores). When western mining established itself, miners and millers embraced amalgamation but chafed at the inefficiencies that the Spanish-American system entailed.1

Since mining was new to Western United State, the opportunity existed for miners and millers to innovate. Milling operations were frequently discussed in local newspapers and scientific journals, but documents concerning operations seldom show up in company

1 Numerous sources could be cited relative to Spanish American mining and milling. A good overview is Peter Bakewell,, “Mining in Colonial Spanish America,” in Leslie Bethell, ed., The Cambridge History of Latin America, The Colonial Period, 2 vols. (Cambridge: Cambridge University Press, 1984), 2: 113-119.

3

THE COMSTOCK [I]

archives. Part of the explanation for the absence of documentary evidence is that, as more and more milling operations were spun off into private companies, mining companies were under no statutory requirement to report on milling operations except to report what they paid for milling their ores. In the early years there was considerable interest in the founding and building of the mills because it was less than clear how or where the Comstock’s ores would be processed. Once the initial flurry of activity relating to the construction of the plant and the design of the equipment ended toward the middle of the 1860s many decisions about the most efficient methods for reducing the ores had become standardized. The Comstock would witness the erection of newer mills or the renovation of older mills with ever-increasing capacity into the middle of the 1870s with much less debate and experimentation concerning milling techniques because the procedures and protocols were fairly well understood. From the earliest days, as noted above, Comstock miners knew that their ores could not be efficiently smelted. They turned instead to reduction through the patio process, but they were dismayed at the time required to complete the operation. The search was for a way to speed up amalgamation of the silver and mercury. Eliot Lord correctly observed that colonial Mexican miners had developed techniques for shortening the time required to complete the amalgamation that involved grinding the ore as finely as possible, adding mercury, salt and water until it became a “pasty” mixture called pulp, transferring it to a copper kettle where is was boiled, stirred and tested for four hours or more and finally after amalgamation had been determined to have occurred removing it to large basins or vats of water that washed away the slime or residue and left the amalgam. While these and other techniques were known to late colonial miners, they were not widely accepted because of the cost of the equipment or the scarcity of the ingredients. By the nineteenth century, however, many Mexican mills had introduced these modifications.2 What held back colonial Mexican millers was not relevant to late nineteenth century Comstock milling. Almost every aspect of the amalgamation process was open to modification and improvement. From the material and mechanization of the batteries and the stamps to the size and number of the amalgamating pans, from the addition of agitators to the collection of slimes every step was scrutinized to see how the processing of ore could save time and money. Both Lord and DeQuille consider the contributions of early millers like Almarin Paul, Israel Knox and Henry Brevoort and various superintendents who proved to be ingenious at applying and reworking the new ideas.3 What converged from the efforts of these tinkerers and experimenters was something called (almost generically) the Washoe Process. In short it transformed the patio process of many weeks into a mechanized process of a few days. When Mackay and Fair under the corporation known as Pacific Mill and Mining built (and rebuilt) their new mills – Consolidated and California – in Virginia City between 1874 and 1876, they employed the Washoe Process only on a grander scale than any other miller had. It is worth noting that Eliot Lord’s Comstock Mining and Miners included illustrations of mills, their interiors and their mechanics that are well worth studying. A set of 10 drawings of the interior of the Gould & Curry mill is especially

2 See Lord’s discussion of these improvements based upon his reading of Francisco Gamboa, Comentarios a las Ordenanzas de Minas…. Eliot used the Heathfield translation. These references will found in vol. 2, pp. 200-203. There are several monographs on the history of ore reduction in colonial and modern Mexico. One of the most thorough (in Spanish) on the developments summarized by Eliot is Modesto Bargalló, La minería y la metalurgía en la América española durante la época colonial (Mexico, 1955).3 Lord, Comstock Mining and Miners, 82-89; DeQuille, History of Comstock Lode, 74-79.

4

THE COMSTOCK [I]

noteworthy (between pp. 126 and 127). These illustrate the scope of the mill and the extent of mechanization that had infused the milling business only a few years after the discoveries. One can imagine that if drawings of the Mackay and Fair’s mills had been rendered a decade later the result would even have been grander.

The Surveyor-General’s 1866 report offered an extensive inventory of Comstock milling facilities and operations4. It included names of owners, locations of mills, construction costs, tax assessments and numerous details about capacity, equipment supplies, etc. In the four counties – Story, Lyon, Ormsby and Washoe – surrounding the Comstock there were total of 77 mills. Story had the most with 33 mills or 43 percent; Lyon was second with 27 or 35 percent; Washoe had 9 or 12 percent; and Ormsby had 8 or 10 percent. The total cost to build these 77 mills, based on data given to the Surveyor-General, was $5 million for an average cost of about $65,000 per mill. Story County accounted for $2 million or 40 percent and Lyon for $1.4 million or 28 percent. Story was the only county that reported tax assessments on mill properties, and they amounted to $954,000, a figure that was not the tax collected but the proportion of the value of the property (about 48 percent) against which property taxes were levied. Gould & Curry’s mill, located in Seven Mile Cañon about two miles from its mine under Virginia City, probably was the most expensive mill to have been built up to that time with a price tag of $380,000. The least expensive was Monitor near Dayton in Lyon County at $6,000. These 77 mills had 1,400 stamps for crushing ore for an average of 18 stamps per mill. Again Gould & Curry’s mill headed the list with 80 stamps, and Monitor plus several other small mills had only five stamps. The cost of construction per stamp was comparable in the largest and smallest mills: $4,750 at Gould & Curry versus $5,000 at Monitor. The 77 mills could process about 65,000 tons of ore monthly or 750,000 tons yearly. That was between two and three times more than the output of ore to be milled in 1866. The zeal to build milling facilities derived from the same economic fantasy that fed the drive to claim and exploit every acre of the Comstock.

4 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), Tables are inserts between p. 21 and p. 25 with notes about the mills on pp. 25-26. The following discussion is based on data and calculations from these Tables. In addition to his survey of plant and equipment Surveyor-General Marlette asked a few mining companies to provide him with financial data on milling operations. When mining companies used outside millers or organized their own independent milling companies to reduce their ores, their own mining accounts revealed very little about the cost of reduction. Except for small quantities of ore sold each year by miners to millers the amalgamated or refined ore remained the possession of the mining companies. Mining-company accounts normally showed how much the reduction cost per ton and not much else. Few milling accounts have survived if they ever existed, even when mining companies, whose records do survive, built and managed the mills themselves. Thus, inquiries such as those conducted by the Surveyor-General in 1866 offer a glimpse into a less well-understood economic sphere.

5

Illustration 1: Eureka Mill, Lyon County

THE COMSTOCK [I]

One of the most grandly publicized of the early mills was constructed for Gould & Curry. In 1861 Gould & Curry undertook the construction of a small mill in the vicinity of Seven Mile Cañon, but then over the next two years as output from the mine grew it enlarged and refurbished the mill at a cost (allegedly) of nearly $900,000. The reduction process that had been installed proved to be so inefficient that the new superintendent, Charles Bonner, discarded it in 1864. Then another reconstruction was ordered at a cost of more than a half million dollars.5 By 1865, when Louis Janin jr. had replaced Bonner as superintendent, Gould & Curry had spent more than $1.5 million on the construction and reconstruction of this mill. In the 1866 survey the mill was estimated to have cost $385,000, a figure that does not match up with any of the figures just cited. In any event after the second remolding to install a “more traditional patio” process and now under Janin’s leadership the efficiency of the mill improved. In 1865 the Gould & Curry mill reduced nearly 32,000 tons at $12.93 per ton. This was a spectacular turnaround that began in November 1864. Before that it was alleged to have cost up to $50 per ton to refine Gould & Curry’s ore in its own mill, and because of the high cost most of its ore was sent to custom mills, which charged on average $26 per ton. Gould & Curry could no longer afford the extravagance in outlays for mill construction and ore reduction because the per-ton yields of its ores had dropped from extraordinarily high levels of $70 to $100 to $30.6

In the same report with his survey the Surveyor-General published detailed financial data provided to him by Janin. He wrote that the “admirable system of accounts of expenditures adapted in the Gould & Curry and Savage office, is worthy of all commendation, and it is to be hoped, will be adopted by other companies.”7

Unfortunately, while the efforts of Superintendent Janin and his staff represented an improvement over some earlier financial reporting, the excerpts that appeared in the Survey-General’s report have figures that do not always add up. Still Janin’s statement can be a useful point to start the analysis of milling operations. Gould & Curry finances showed that the mine produced 62,425 tons of ore with an average yield of $28.64 per ton.8 Although he did not provide a total-dollar value, a simple calculation - tonnage x yield – would result in a bullion value of $1.8 million. Even with expanded milling capacity, perhaps the largest of any Comstock mill, Gould & Curry assigned some ores to custom mills. Sixty-five percent or 40,432 tons were “worked” at the company’s new mill and 28 percent or 17,680 tons at custom mills. A portion of the total, 4,313 tons or 7 percent was unaccounted for. Janin made no reference to the disposition of the missing ore, whether it was set aside for later processing, was sold to other millers or was simply too inferior to be milled and was scrapped. If per-ton yield were calculated more strictly on the basis of 58,000 tons rather than 63,000 tons, it would rise to $33. Unfortunately

5 Lord, Comstock Mining and Miners, 125. Lord cited Annual Reports from 1861 through 1864 plus newspaper reports. Smith, The Comstock Lode, 85.6 Lord, Comstock Mining and Miners, 128-129.7 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), 30.8 It was described as 3rd class ore without any further details. Ores could be classified in terms of their chemistry and purity but seldom were they classified as just noted in the superintendent’s reports. It would appear based on yields per ton that a 3rd-class ore had an average of slightly above average yield compared to all Comstock ores.

6

THE COMSTOCK [I]

the excerpted version of the Janin report contained no figures that would detail the cost to Gould & Curry of having ores reduced at customs mills. Of the 40,432 tons crushed at Gould & Curry’s mill 36,001 tons or 88 percent were actually amalgamated. The

remaining 12 percent or about 6,000 tons were lost in what were called “slimes and moisture in the ore”. The slimes were not necessary lost permanently; they could become tailings that required further refining to unlock the minerals in them. It was an accepted practice to assay the ore in its “wet” and crushed form and then to assay it again in its “dry” and amalgamated form. For Gould & Curry the wet assays came in at nearly $44 per ton and the dry assays at $33 per ton. The $33-per-ton figure matched up with the figure above,

although the bases from which the calculations were made were different. The “so-called “loss” of about 75 percent from the wet to the dry was about average for the Comstock. But the breakdown between gold at 30 percent ($364,000) and silver 70 percent ($825,000) was somewhat below what other mines were reporting. This ratio will fluctuate from mine to mine and from area to area.9

The matter of “slimes” was a continuing concern to Comstock millers. As the ore was pulverized either by breakers or crushers, it was mixed with water into what Mark Twain called a “creamy paste”. As this paste moved from the stamps into the amalgamation pans the water was drained off as slimes into wooden troughs and eventually into nearby pools or ravines. The slimes contained mud, rock, other metals and nuggets of gold and silver. Procedures for screening out the nuggets with course blankets, fine screens and other such gadgets did not totally succeed, and at the end of the trough slimes hardened into tailings. Tailings could be reworked to extract their minerals, although the reworking could be expensive and unpredictable. Working the slimes was not ennobling work, according to Twain. “Of all the recreations in the world, screening tailings on a hot day, with a long-handled shovel, is the most undesirable.” Twain asserted that about a third of the ore containing gold and silver floated away in the slimes, and that was in fact the same figure that miners and miller used when estimating how much would be lost between the wet and dry assay. Since the dry assay was taken from the cake of metal that emerged from the amalgamation, whatever metal was recovered from slimes was considered to be a bonus. Some mining companies in addition to their reduction mills built tailings mills, and some independent millers specialized in processing tailings. Janin did not recount how the tailings were handled, and the accounts, which he presented, made no reference to them. It was certain, though, that the tailings from the operations at Gould & Curry’s were not ignored. Piles of tailings all over the Comstock region served legitimate business enterprises such as tailings mills and, as Twain reminded his readers, inspired hucksters (even today): “I have seen men hunt over a pile of nearly worthless quartz for an hour, and at last find a little piece as large as a filbert, which was rich in gold and silver – and this was reserved for a fire-

9 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), 33.

7

Illustration 2: Santiago Mill, Ormsby County

THE COMSTOCK [I]

assay! Of course the fire-assay would demonstrate that a ton of rock would yield hundreds of dollars—and on such assay many an utterly worthless mine was sold.” In addition inferior ores could be scrapped and end up with the slimes. Although as much as a third of the ore may have ended up in tailings dumps, the quantity of tailings actually recovered and registered (for tax purposes) remained a fraction of the gold and silver amalgamated form the ore and presented to the mint.10

Based on Janin’s figures the cost for the Gould & Curry mill to reduce more than 40,000 tons of ore was $12.27 per ton.11

Janin stated that milling costs both at the company mill and at the custom mills averaged $13.30 per ton. It appears that the company milling was slightly less costly than custom milling. Beginning in the second half of the 1860s many of the local mills came under the ownership or the control of William Sharon. His plan was to

break the stranglehold of the independent millers and yet to make money milling ores from mines that he owned or controlled as well as from other mines. Although precise data on milling rates at custom mills in the early 1860s is seldom revealed in the surviving sources, the data after Sharon invoked his plan indicate that rates had fallen to about $15 per ton. Once Sharon’s plan proved successful other entrepreneurs began to emulate it, and that put rates under additional downward pressure. It would appear that both Gould & Curry’s mill as well as the custom millers came in at the low range of milling rates. At Gould & Curry’s mill of the nearly $500,000 in milling costs, 61 percent was for supplies and materials, 32 percent for labor and 7 percent for hauling. In a more detailed schedule Janin broke down refining costs into seven categories and then further divided each category into seven subsections, as shown in Figure 1 by dollars and cents per ton (functions in left-most column arranged by percentage):

FIGURE 2MILLING COSTS PER TON BY CATEGORY, GOULD & CURRY, 1867

Category Labor Wood Castings Copper Salt Mercury Sundries TotalPower $0.5888 $3.9784 $0.1249 $4.61 (38%)Amalgamation $0.7681 $0.0465 $0.5936 $0.4350 $0.2706 $0.8659 $0.1096 $3.09 (25%)Repairs $0.8410 $0.6941 $1.51 (12%)Batteries $0.6598 $0.2085 $0.1096 $0.98 (8%)Hauling $0.9000 $0.90 (7%)Foreman, etc. $0.7133 $0.71 (6%)Breakers $$0.4132 $0.333 $0.45 (4%)Totals $3.9042 $4.0249 $0.8021 $0.4350 $0.2706 $0.8659 $1.9648 $12.27

32% 33% 7% 4% 2% 7% 16% 101%Note: Batteries were stamps for crushing ores; foreman plus watchman and laborers – not clear how laborers in this column different from other laborers; breakers assigned to break up ore chunks in

10 Mark Twain [Samuel Clemens], Roughing It (New York: Penguin Books, 1981 [Reprint of 1872 edition]), 36. Almost no information on how the tailings mills were constructed or operated has shown up in he original sources that I have studied.11 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), 34. The Table in the text is a rearrangement of Janin’s data as given in his report. The percentages are mine.

8

Illustration 3: Gould & Curry Mill, Story County

THE COMSTOCK [I]

amalgamation pans; copper actually sulphate of copper; bottom row of percentages does not add up to 100% because of rounding up. Total Column rounded up. There is a tiny mistake in the summing of items for the function amalgamation - $3.0893 instead of $3.0896.]Sources: See footnote 11.

The arrangement of milling expenses is not in and of itself surprising. Power, typically a major operating cost, consumed $4.61 per ton or 38 percent of the total. The major component of power was the purchase of wood ($3.99 of the $4.61.) and the remainder, slightly more than 60 cents per ton, was spent on labor and supplies. Since wood powered nearly all the machinery used in Comstock mining, it was in constant demand. In the mills firewood was needed primarily to drive the breakers and stamps that crushed the ore. Some firewood was needed during the amalgamation itself, but it was accounted for separately. If the cost of firewood for amalgamating were combined with the cost of firewood for crushing (and a few other minor tasks) firewood purchases comprised a third of milling-component costs. Timber was harvested as far away as Lake Tahoe and then hauled (or “floated) to the Comstock. In the Surveyor-General’s mill survey Gould & Curry stated that it averaged 20 cords of wood per day (several times the average for all mills), and while Gould & Curry did not report the cost per cord, other mills reported that they paid between $13 and $16 a cord. Despite some discrepancies between the Surveyor-General’s survey and Janin’s accounts, it is possible to estimate that timber purchases cost Gould & Curry between $100,000 and $150,000 per year. The mill under normal operations may have used between 7,000 and 8,000 cords of wood to power the crushers, mixers, steamers and other machines in reducing the ore. Electrification did not arrive until late in the nineteenth century, long after the Comstock’s zenith, and the figures from Gould & Curry’s timber accounts reveal why logging became one of the ancillary industries to grow up around the Comstock and why some mining and milling entrepreneurs started or bought their own operations: to add to the bottom line as well as to assure a ready supply.

The next most costly item behind power was amalgamation at $3.09 or 25 percent of the total. Outlays expressed in percentages for the components were as follows: mercury (28 percent), labor (25 percent), castings (19 percent), sulphate of copper (14 percent), salt (9 percent), sundries (4 percent) and wood (2 percent). Not surprising mercury was the most costly item. Amalgamation was less efficient without salt and copper so that if these three ingredients were summed they would constitute more than half (51 percent) of the total costs. Labor represented about a quarter of the total and purchases of replacements for castings on machines about a fifth. Miscellaneous supplies came in at 4 percent and firewood at 2 percent. This did not include the preparation of the ore – “breakers” and “batteries” for crushing and pulverizing the ore – and if preparation and amalgamation were combined they would add up to $3.63 per ton, which was still less than the overall power costs. The cost of the central ingredient, mercury, was only 87 cents per ton or 7 percent of the total component cost at Gould & Curry. Since mercury could be recovered from batch to batch and was seldom totally lost (unlike firewood) a far smaller portion of the component costs was tied up in mercury than wood. Indeed labor, just behind firewood, was a much bigger component cost than mercury. Of course how much mercury could be recovered varied from mill to mill, and where efficiencies were rare or modest mercury could become a much larger expense.

9

THE COMSTOCK [I]

After accounting for power, amalgamation and preparation the remaining costs concerned repairs (12 percent), transportation (7 percent) and salaried personnel like foremen and watchmen (6 percent). With respect to repairs the major component was labor, which was billed at 84 cents per ton or 55 percent of total repairs. Hauling was simply listed at 90 cents per ton for “sundries”, and the personnel item was an expense that could not be included under any other category. Although one might wish for greater specificity in each category or component, one comes away from the report with a fairly clear understanding of how costs were spread across a milling operation. As important as mercury was, and in the opinion of some as costly as mercury was, it did not rank at the top of the list. Rather the cost of firewood to power the machines consumed $4.03 per ton and the cost of labor, a smaller component in milling than in mining, nonetheless ranked behind cost of power at $3.90 per ton or 32 percent. In a nation that was quickly industrializing and in an industry that was the beneficiary of that industrializing the role of power to drive more and increasingly complex machinery and the role of labor will loom large in how the Comstock industry confronted the cost structure. If the milling costs reported by Janin to Surveyor-General in the second half of the 1860s, they were, it would appear, as much as half the milling rates of the custom mills in the first half of he 1860s according to undocumented estimates.

On the basis of Janin’s figures for ore extracted and then processed in Gould & Curry’s mill the results appear to be positive. Of the 40,432 tons crushed at the mill 36,001 tons (11 percent loss) were actually submitted to amalgamation to yield $1.2 million in bullion, $825,000 in silver and $364,000 in gold. To extract the total crushed tonnage cost an estimated $7.86 per ton or $318,000.12 As noted above, to refine that tonnage cost $12.27 per ton or $496,005. Janin did break it down into three categories: $301,751 or 61 percent for on materials, $157,865 or 32 percent on labor and $36,389 or 7 percent for transportation. The ratio of mining to refining costs of $1 to $1.50 per ton was not out of line with what other companies reported in the second half for the 1860s and later. Even without considering the ore processed at custom mills the company had a gross profit of nearly $400,000. Obviously some costs that modern accounting rules would require have not been included, but the figure just cited could be treated as gross operating profits. The company was reported to have paid a dividend of $250,000, substantial but not spectacular in mining lore.13

At the time of the survey most of the large mining companies owned and operated their own mills, and like Gould & Curry they also used independent millers. The third leg in the milling complex in addition to custom mills and company mills was a separate milling business under the ownership of the principals of the mining companies, the so-called Sharon model. At the vanguard of the newly-emerging mining and milling corporate structure was a more shadowy Comstock personality, the San Franciscan

12 Janin’s extraction costs were based on 62,425 tons, not just the 40,032 tons submitted to Gould & Curry’s mill, so it cannot be determined if $7.86 was an appropriate estimate for extraction costs of the smaller volume. It is not possible to compute extraction costs except for total tonnage.13 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), 31-34. Dividend figures from Grant Smith Notebooks, NC229, Binder 1, Special Collections, Library, University of Nevada at Reno. In addition to Gould & Curry Savage reported that to mill 9,700 tons in the two mills (Atchison and Minnesota) that it owned in Washoe County cost $12.04 per ton, close

10

THE COMSTOCK [I]

financier, William Ralston. He had invested in and made money from several large mining ventures: Gould & Curry, Ophir and Mexican to name a few. As the shafts of these mines closed in on the 500-foot level they began to flood out. In addition Ralston’s own agents in Virginia City had mismanaged his properties to the extent that Ralston was the victim of theft. To protect his Comstock investments, which underwrote his other non-mining investment in San Francisco and across the West, he sent William Sharon to Virginia City in 1864. Sharon was frequently described in Napoleonic terms – a small, compact man who became by his own dint a towering figure. In the same year Ralston set up the Bank of California with Sharon as the chief cashier in Virginia City’s branch.14

With Sharon’s arrival to implement Ralston’s strategy the business of mining underwent a fundamental change. After an impressively thorough investigation of the Comstock mining and milling operations Sharon concluded that the Comstock despite a huge volume of water at the bottom of many of the active mining shafts was not washed up. He approved loans to mining companies even though in 1864-1865, as ore production and stock valuations fell in tandem, the Comstock was experiencing its first financial panic. Sharon’s approach was not to rely on one or a few assays but to order many assays in different mines. On the basis of these tests he became convinced that rich ores lay under the water.15 Sharon was also convinced that with respect to mining and milling extravagance rather than prudence had governed the Comstock operations. Even Lord credited Sharon with a new outlook: “where organization was to triumph over anarchy and cool calculations of self-interest were to be the only basis of recognized action.”16

And the search for order was no more apparent than in the milling sphere. In addition to lending to mine owners, Sharon also made loans to millers. But the Comstock was in a state of contraction. Borrowers easily fell behind on their bank payments (interest in some cases was 2 to 5 percent per month), and when they did, through foreclosure proceedings, the Bank of California ended up with the properties. Foreclosure was preferred to a forced sale because a forced sale could yield less than a loan’s face value and a foreclosure presented the opportunity to try to preserve the investment in plant and equipment by operating the mill. It cannot be ascertained with certainty that Ralston and Sharon had thought through all the likely scenarios that evolve from foreclosing on mills during a contraction. Did they really want to end up owning more capacity than they could use? Foreclosures that led to idle operations were money-losers. Milling properties deteriorated quickly, according to Lord, because the dyes, pans and shoes, all made from iron, became corroded with rust when not in use.17 That would represent substantial capacity at a time when the Comstock was struggling to recover. By 1867 the Bank may have owned as many as 17 mills. Whatever the number Ralston and Sharon decided to create a milling company called Union Mill and Mining Company, incorporated in California with a capitalization of $1.5 million in the form of 15,000 shares. Although the

to the Gould & Curry figure..14 While description and analysis of the roles played by Ralston and Sharon were standard fare in most Comstock histories, some of the most illuminating details appear in works by the Progressive historian, George Lyman. See in particular Ralston’s Ring, 34-35, 38-39. For a typical characterization of Sharon see Lord, Comstock Mining and Miners, 244.15 Lyman, Ralston’s Ring, 38-39. Many assays were made as close to the water level as possible.16 Lord, Comstock Mining and Miners, 245. This is a fine example of Lord’s devotion to laissez-faire principles.17 Lord, Comstock Mining and Miners, 246.

11

THE COMSTOCK [I]

charter investors include seven individuals, three of the seven – Ralston, Sharon and D. O. Mills (longtime colleague of Ralston) became the principals. Seventeen mills were far too many to operate economically, and once the company was in place consolidation became the order of the day. Acquiring mills along the Carson River where water-power was assured was a deliberate strategy to reduce the cost of power.18

How Ralston and Sharon carried out their strategy has not, to my knowledge, been examined in detail. There was no doubt that Union Mill and Mining became the dominant milling operation for Comstock and remained so well into the 1870s. Even before the 1867 incorporation according to the Surveyor-General’s mill survey from 1866 Sharon was listed as owner or agent for eight mills. Ralston’s name did not appear; nor did any of the names of the other investors in the soon-to-be-announced Union Mill and Mining. But the Ralston crowd owned mines that also owned mines. So surely the eight mills only represented a part of the total under the control of the Ralston, Sharon and their associates. Even with an incomplete list the mills directly connected to Sharon provide some illuminating details. It is worth noting that Sharon’s name appeared in the survey in several different ways: Wm. Or W. Sharon Agt. (6), Sharon & Co. (1) and Williams & Sharon (1).19

FIGURE 3MILLS LISTING WILLIAM SHARON AS OWNER OR AGENT, 1866

Mill Names Location-County Date Cost Power-HP

Stamps Crush per Month

Empire State 7 Mile Canyon-Story ND $35,000 Steam-? 15 700 tonsPacific Lower Gold Hill-Story 1863 $75,000 Steam-

8030 1,300 tons

Franklin Carson River-Dayton-Lyon

1861 $50,000 Water-? 10 500 tons

Gold Cañon Reduction

Silver City-Lyon 1861 $40,000 Steam-30

15 750 tons

Illinois Carson River-Dayton-Lyon

1864 $30,000 Steam-30

20 500 tons

Swansea Johntown-Lyon 1862 $60,000 Steam-40

12 600 tons

Brunswick Empire-Ormsby 1863 $50,000 Water-? 8 600 tonsCarson Carson-Ormsby 1862 $25,000 Water-? 10 ?Totals $365,000 120 4,950 tons

Sources: Footnote 13.

The mills were spread through three counties: two in Story near Virginia City; four in Lyon with two along the Carson River; and two in Ormby with both along the Carson River. Water-power drove three mills, and a fourth mill, Illinois, while located along the Carson River apparently used steam as did the other four. Statistical comparisons with Sharon-identified mills and the total survey would not be useful because some of the other mills were surely under the control of the Ralston/Sharon combine. The properties unmistakably linked to Sharon cost (the original owners) about 18 Lyman, Ralston’s Ring, 85-86.19 The Williams of Williams & Sharon could not be identified. The thought occurs that this could be a typographical error in that Sharon’s name was William and the entry perhaps should read William Sharon.

12

THE COMSTOCK [I]

$365,000 to build or $46,000 per mill. The most expensive was Pacific at $75,000 and the least expensive was Carson at $25,000. Pacific, built in 1863, had 30 stamps, two or three times the number at the other mills, and a capacity of 1,200 tons per ton, twice the capacity of other mills. That worked out to about $2,500 per stamp. Being located in Gold Hill away from any river Pacific was power by 80 horsepower steam engine. In terms of cost per stamp Illinois was the cheapest. Built in 1864 at a cost of $30,000, it had 20 stamps or $1,500 per stamp. Although on the Carson River it used steam power rather than water-power (30 horsepower engine) to operate the stamps with a monthly crushing capacity of 500 tons. The most expensive mill was Brunswick. It had the fewest stamps (8) at a cost of $6,250 per stamp with total construction costs of $50,000. It could crush 600 tons per month and was powered by water from the Carson River. Other factors such as the number and size of the amalgamation pans, the number of settlers and agitators for combining the ores with the mercury and other chemicals and the weight of each stamp had to be considered with respect to a mill’s cost and capacity. Still some of the figures cited above square with other information about the cost and capacity of Comstock mills.

Even though the 1866 survey had linked these eight mills directly to Sharon and his allies other mills owned by mining companies had also fallen under the control of the so-called Bank Crowd in the middle 1860s. They included Ophir, Gould & Curry and Yellow Jacket, all of whom had large mills. If the data assembled by the Surveyor-General on these three company mills were added to the foregoing mill data, then the growing concentration of the milling business in the hands of Ralston and Sharon was be far more pronounced. These three company mills with a total of 144 stamps and a crushing capacity per month of 7,000 tons cost at least $600,000 to construct or about $4,200 per stamp.20 One can presume that at the time of the Surveyor-General’s 1866 report as many as 11 mills with between 250 and 300 stamps, a crushing capacity per month of 12,000 tons and a price tag of at least $1 million could have fallen under the control of Ralston & Sharon. The total crushing capacity of all the mills in the four counties was about 60,000 tons per month, and the Bank Crowd may have controlled about a fifth of that capacity. Even though some very large mills were outside the control of Ralston and Sharon, they had a dominance that cannot be detected through the survey and other documents from 1866.21 As difficult as it is to pin down the exact number of mills owned or controlled by Ralston and Sharon in the years preceding the organization of the Union Mill and Mining Company in 1867, the trend toward what Grant Smith termed “private” milling had begun. Private milling existed along side of private mining, and while they had separate corporate identities, they were in fact set up by the mine owners who gleaned profits from both enterprises.22 The objective in creating Union Mill and Mining was to consolidate and concentrate milling operations. That meant that some

20 There was much conflicting information about the cost to build and rebuild the Ophir and Gould & Curry mills, and the figures cited by the Surveyor-General were very much on the low side. Without actual company records any resolution of these conflicts remains improbable.21 O’Neale, Rule & Co controlled three or four mills with a total crushing capacity of between 2,000 and 2,500 tons per month. In addition Crown Point Mining Company, which would eventually come under the control of Ralston and Sharon, had at least two mills with a crushing capacity of less than 2,000 tons per month.22 Smith, The Comstock Lode, 50-51.

13

THE COMSTOCK [I]

of the 17 mills could be sold or abandoned because they were inefficient, and the remaining mills, which could set their own rates irrespective of the custom milling rates, would not only be fed ores from their own mines but could also solicit business from other mining companies. The crucial point was to own enough milling capacity to dominate the sector and to restrain competition. Custom mills, of course, had always been under private ownership, usually a single proprietor or several partners, and their independence from the mine owners was a source of friction. It was their independence (which had allowed them to dictate prices in the early years) that the milling tycoons wanted to compromise. Although custom mills survived, private milling as envisioned by Ralston and Sharon became the standard on the Comstock.23

The business of refining had changed noticeably by 1873 when the State Mineralogist presented his biennial report to the 6th Session of the State Legislature. The data that he collected was from 1871 and 1872, and in the half-dozen years since the Surveyor-General’s survey the Sharon model had taken hold on the Comstock. The state had 162 mills with 1,904 stamps and the capacity of 5,183 tons per day. The four counties of Story, Lyon, Ormsby and Washoe had a total of 64 mills (40 percent) with 981 stamps (52 percent) and a daily capacity of 3,043 tons (59 percent). A direct comparison with the 1866 survey requires some care because the Mineralogist’s 1873 report included tailing mills and the 1866 survey did not. It is not known when independent tailings mills were first constructed. There is almost no discussion of tailings mills in standard published sources. Based on the 1873 Mineralogist’s report at least a half-dozen tailings mills had been built in Story and Lyon Counties by 1873. One of those mills, Occidental, was described as both a quartz mills and a tailings mill. If we exclude tailings mills from the 1873 report (excluding Occidental), we can then compare that report with the 1866 survey. The total number of quartz mills for the four counties in 1873 would fall from 64 to 57, a figure that was 26 percent below the total number of mills (77) in 1866. Along with the decline in the number of mills came a 33-percent decline in the number of stamps. A decrease in mills and stamps was counterbalanced to a degree by an increase of 13 percent in capacity (from 2,072 tons to 2,338 tons – tailings capacity not included). After the craze in mill building during the 1860s some mills had been abandoned, some may have been converted to tailings operations and some were remodeled and upgraded. New mill building did not cease in the 1870s. Several large, powerful and efficient mills were constructed in and around Virginia City, mainly in connection with mining bonanzas at Crown Point, Belcher, Consolidated Virginia and California. Since 1866 the number of mills in Story and Lyon – the two counties most densely populated with mills - had declined from 60 to 46 or 12 percent and the number of stamps from 1031 to 687 or 33 percent. On the other hand daily capacity had grown from 1,484 to 1,704 tons or 15 percent. Even with a decline in the number of mills and stamps Lyon and Story Counties still had a third or more of the milling facilities in Nevada.24

23 The mill data from “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd

Legislative Session (1867), insert after p. 21.24 “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th

Legislative Session (1873), 147. The 1866 data from the footnote above.

14

THE COMSTOCK [I]

Close scrutiny of the 1873 milling data reveals how the Comstock-related milling business had changed since 1866. Milling needed water, and the location of so many mills along rivers, especially the Carson River, was not an accident. Even though the ore had to be hauled 10 to 20 miles from the mines to the mills, that was initially cheaper than trying to bring water to the Comstock. The Washoe County mills being the most distance were the most vulnerable. In 1866 some of the largest mills yet built were in Washoe (City) and Franktown. The former town had two mills (Manhattan and New York & Washoe), owned New York & Nevada and New York & Washoe. Each mill had 24 stamps with a daily capacity of 45 tons at an estimated cost of $100,000 to build in 1863. In nearby Franktown Ophir Mining had built its mill in 1862 with 72 stamps and a capacity of 33 tons per day at a cost of $150,000, although in 1869 the Mineralogists declared that it cost over $500,000.25 Its grandeur did not escape Lord’s attention: 12 miles (16 miles according to the Surveyor-General) from the mine and covering an acre of ground the costly complex boosted not only a mill but also “shops, stables, carriage-houses, quarters for workmen, offices, and superintendent’s residence”, all of which “constituted a miniature city”.26 Even with the second highest number of stamps in the four counties (only Gould & Curry’s mill, discussed earlier, had more) the capacity – to refine ore - was only average for Washoe County mills and for mills in the four counties.27 Meanwhile in 1864 the Ophir Mining built a second mill along the Carson River in Lyon County about half the size of the Washoe County facility. Not far from the first Ophir Mill in Franktown J. H. Dall had built Washoe Valley Reduction with 60 stamps and a capacity of 60 tons daily for $140,000. By 1873, wrote the Mineralogist, all but one reduction mills in Washoe County were idle and most of those built in the decade before had been abandoned or dismantled. The Truckee Mill (not on the Surveyor-General list) was still reducing ores, and several tailings mills remained in business. The cause of their demise: the Virginia and Truckee Railroad that allowed miners to transport their ores more cheaply to the mills to the south of the Lode on the Carson River. Without specifying the names or types of mills or commenting on their operational status, the Mineralogist noted that Washoe County in 1873 had 5 mills (down from 9 or 45 percent in 1866), 84 stamps (down from 261 or 68 percent) and 124-ton per-day capacity (down from 308 or 60 percent). For all intents and purposes refining ceased to be a major business. Washoe County now had to depend on Reno and Wadsworth, both important rail centers, and farming and grazing outside the cities for its economic prosperity.28

Ormsby County, which included mainly Carson City, the State Capital, but was later incorporated into Douglas County, was like Washoe County some distance from the Comstock. Since the Carson River flowed thorough it, it had access to water-power In addition, unlike Washoe County, it had direct access to the Comstock mines through the Virginia and Truckee Railroad, which opened in late 1869. The number of operating

25 “Biennial Report of the State Mineralogist…1867 and 1868” Appendix to Journal of Senate, 4th

Legislative Session (1869), 21. Grant Smith cited the same figure without any source in The Comstock Lode, 80.26 Lord, Comstock Mining and Miners, 122-123. Lord did not give a price tag to build a miniature city.27 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), insert after p. 26.28 “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th

Legislative Session (1873), 138-139.

15

THE COMSTOCK [I]

mills actually dropped from eight to six (a decline of 25 percent) between the Surveyor-General’s report in 1866 and the Mineralogist’s report in 1873. At the same time the number of stamps increased from 170 in 1866 to 210 (up 24 percent). The explanation for this was renovations at Santiago (from 24 to 34 stamps, 42 percent increase) and Brunswick (from 8 to 56 stamps, 600 percent increase). During the early years of mill-construction frenzy two Comstock mining companies built expensive mills in Ormsby County: Mexican built a steam- and water-powered mill for $300,000 in 1863 in the town of Empire (under the ownership of Alsop & Company in 1866) and Yellow Jacket built a water-powered mill in 1864 for $150,000 in the same town. The 1866 survey reported that the eight mills, built between 1860 and 1864, cost a total of $825,000 or slightly more than $100,000 apiece on average. With the aforementioned 170 stamps the cost per stamp was just under $5,000. By 1866 two of the mills, Brunswick and Carson, had come under the control of Ralston and Sharon. It had fewer mills than Washoe in 1866, but the level of capitalization was somewhat higher. Whereas Washoe faded Ormsby remained a part of the milling complex associated with the Comstock until the end. In 1873 the Mineralogist reported that Brunswick, Mexican and Yellow Jacket Mills were then processing ore from Crown Point, whose bonanza began in 1871. With more stamps Ormsby’s monthly capacity jumped from 7,360 to 15,300 tons, an increase of 107 percent. This was accounted for in large part because Brunswick’s capacity skyrocketed from 20 to 120 daily or 500 percent. In a curious twist Ralston and Sharon had bought the Crown Point Mine in the late 1860s, and then lost control of it just as the bonanza began in 1871. Who owned the mills, and in particular who owned Brunswick, which was currently processing ore from a mine that they no longer owned? The Mineralogist’s Report was of little help because it did not list any of the owners of the mills in Ormsby. Eliot Lord wrote, however, that Ralston and Sharon after having lost Crown Point were further disappointed because they did not secure any contracts for Union Mill and Mining to refine Crown Point’s ores. Crown Point had a mill in Gold Hill (Rhode Island) near the mine, and that mill surely processed some of the ore. What was not refined there was processed at mills owned by Nevada Mill and Mining, which Crown Point’s owners, Haywood and Jones, had established in the mold of Union Mill and Mining. If the Mineralogist’s information was correct that these Ormsby County mills were fully occupied with ores from Crown Point, then Brunswick, Mexican and Yellow Jacket may well have belonged to Nevada Mill and Mining. Union Mill and Mining had sold other mills, and it may have disposed of Brunswick. Whoever owned the Ormsby’s mills in the early 1870s, they were valuable properties as a consequence of the recovery of the Lode’s southern end. None of the mills was idle, and none appeared to be processing tailings.29

From 1866 to 1873 Lyon County fared better than Washoe but less well than Ormsby. Lyon had the highest population of mills in Nevada, but, if only quartz mills were counted, then it was second behind Story. Lyon County sat between Story and Ormsby, and the availability of water from the American Flats and Carson Rivers made it a natural site for mill construction. The Virginia & Truckee Railroad from Virginia City to Carson City passed through the heart of Lyon County’s milling district and further 29 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), insert after p. 21; “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th Legislative Session (1873), 115-117, 132; Lord, Comstock Mining and Miners, 283-284.

16

THE COMSTOCK [I]

enhanced its position. In 1866 there were 27 amalgamation mills in Lyon County with 395 to 424 stamps in plants that cost between $1.4 and $1.5 million to build, or approximately $3,500 per stamp.30 According to Lyon County’s Assessor, George McFadden, who collected the Lyon County data that the Mineralogist incorporated in his 1873 report, the 24 quartz and tailings mills were located in the following areas: eight in Silver City (closest to the Comstock), six along the Carson River (farthest from the Comstock), five in Gold Cañon (between Silver City and Dayton), three in Dayton (a few miles southeast of Silver City) and two in Spring Valley (west of Dayton). Of the 24 mills 19 were classified as quartz (amalgamation) mills and five as tailings mills. More than half of Lyon County’s milling capacity was from tailings. If all the mills listed in the 1866 Surveyor-General’s survey were quartz mills (this seems likely) then the county had lost eight quartz mills between 1866 and 1873. Over time as the volume of tailings grew mills specializing in tailings also increased in number. In 1873 all of Lyon’s tailings mills were in operation whereas among the quartz mills five were idle. The Mineralogist’s Report did not explain why the mills were idle or how long they had been idle. Two of the idle mills were in Gold Cañon, and one each along the Carson River, in Dayton and in Spring Valley. The largest of the idle mills was Rock Point Mill (also known as Imperial because it was built by Imperial Mining) with 56 stamps and a monthly capacity of 112 tons. When it was built in 1861 at a cost of $250,000, it was the county’s largest and most expensive mill. At the time only the Gould & Curry Mill in Story County and the Mexican Mill in Ormsby County cost more to build. In the 1873 Mineralogist’s report the number of stamps remained the same at 56, but the capacity of the mill had risen from 90 tons per day to 112 tons per day. Its stamps were of average size with 16 weighing 600 pounds and 40 weighing 550 pounds. The Imperial Mining Company had enjoyed some success in the early 1860s, but along with many other Gold Hill mines Imperial produced little profitable ore after 1868, and that may explain why this large facility was idle in 1873. Despite the trend toward private milling companies Imperial may have remained a mine-linked mill. The other idle mills were of moderate size. Given that nearly a third of the quartz mills were not operating and all the tailings mills were, tailings operations had obviously grown in importance in Lyon County’s milling business. It was certainly more prominent in Lyon County than in any of the other three counties.

Two points of clarification should be made. That a mill was running with a certain capacity did not mean that it was running at full capacity every day. The Mineralogist’s report simply indicated what the potential capacity was and not what was being milled every day. Furthermore, tailings yielded metals of far less value per ton than amalgamation so that the quartz mills with less daily capacity might actually produce gold and silver of greater worth.31 Mills could make profits from tailings, however, and since Lyon County had so many quartz mills from the early 1860s, it probably had an ample supply of tailings for millers to buy and reprocess. The two largest tailings mills were the Carson Valley Mill along the Carson River and the Birdsail & Co. mill in Dayton, which could process up to 300 tons daily. The remaining three mills were smaller with a capacity of 25 to 50 tons. The largest of the operating quartz mills was 30 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), insert after p. 21.31 If Lyon County Assessment Rolls have survived, and I assume that many have although I have not consulted them, the relationship between quartz and tailings mills could be studied in greater detail.

17

THE COMSTOCK [I]

Eureka on the Carson River with 60 stamps and a capacity of 120 tons (compared for example to the idle Imperial with 50 stamps and a 112-ton capacity. Built in 1861 for $100,000, its owners in 1866 were Hurd, Wheeler & Dunker. It cannot be verified that they built the mill in 1861 or still owned it in 1873. It had been enlarged since 1866 when it was of average size with 20 stamps and a daily capacity of 22 tons. Even though it was 6.5 miles from the Comstock mines, it had access to the Carson River to power a large turbine and was close to the Virginia & Truckee railroad. According to the 1873 report Eureka was an operating mill, but the report made no reference as to who owned it or whose ore was being processed. Some of the other quartz mills noted by the County Assessor served mainly Lyon County mines: Dayton Mine-Atlanta Mill; Buckeye Mine-Horn and Hope Mills; and Cook & Geyer Mine-Franklin Mine. Only the Franklin Mill appeared on the 1866 survey with Sharon as its owner. Several other mines were described as flooded or abandoned. The remaining amalgamation mills, like Eureka, listed by the Surveyor-General were not identified with any mines. Five of those mills – Devil’s Gate, Bacon, Trench, Kelsey and Sacramento – will end up in the stable of mills owned or controlled by The Firm through the Pacific Mill and Mining Company to process ores from Consolidated Virginia and California Mines.32

For Story County the 1873 Mineralogist’s report added an important component. It had information on size and location of the mills, but it also included information on which mines the mills served. Story had a total of 29 mills only three of which processed tailings. Occidental was classified as a dual quartz and tailings mill. Eight mills (28 percent), none of which were tailings mills, were idle, about the same proportion as in Lyon County. Among the amalgamation mills the average number of stamps per mill was 13 and the average capacity was 37 tons per day or 1,100 tons a month. Story’s average-sized mill tended to be smaller in terms of number of stamps and overall capacity when compared to the average in Lyon and Ormsby but especially in Ormsby. Eight (28 percent) mills were located in Lower Gold Hill, six (21 percent) in Gold Cañon (further south where the boundary between Story and Lyon Counties was located), five (17 percent) each in 6-Mile and 7-Mile Cañons (east of Virginia City) and the remaining five (17 percent) in Virginia City (3), Silver Star (1) and Cedar Hill (1). Pacific (Gold Cañon) had the most stamps with 30 and a capacity of 70 tons per day or 2,100 tons per month while Petaluma (Lower Gold Hill) had 6 fewer stamps but the highest capacity of 75 tons per day or 2,100 tons per month. The three mills in Virginia City proper – Hoosier State, Nevada and Sierra Nevada – had more than the average number of stamps but only slightly more than the average capacity. Although the capacity of the tailings mills was not given, they seemed to play a smaller role in Story County’s milling business. Two tailings mills – Park & Bowie, Nos. 1 & 2 – were in 6 Mile Cañon, and the other, Occidental, was located in Silver Star. Half of the County’s mills listed in 1873 inventory appeared in the earlier 1866 survey. Among the largest (25 stamps and 50-ton per-day capacity) was Rhode Island, built at a cost of $100,000 in 1862 by Crown Point Mining Company. When Sharon and Ralston took control of Crown Point, they probably took control of Rhode Island. It is unclear if it became a property of the Union Mill and Mining Company because when the rivals of Sharon and Ralston won control of Crown

32 “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th

Legislative Session (1873), 100.

18

THE COMSTOCK [I]

Point in the early 1870s they apparently also came into possession of Rhode Island. Between 1866 and 1873 the capacity of Rhode Island was not increased so that its 50-ton-daily capacity remained the standard. Most of the mills on both inventories had undergone some enlargement and improvement. Both Pacific and Petaluma increased the number of stamps and their capacity after 1866. Several mills reduced the number of stamps but increased capacity. Although the total number of mills had declined from 33 in 1866 to 27 in 1873 or 18 percent, excluding tailings mills, and the number of stamps had fallen from 607 to 399 or 34 percent, capacity had risen 18 percent. Like Lyon County Story had idle amalgamation mills – seven of the 27 or 26 percent. They accounted for a quarter of the daily capacity. The reason for their idleness was not recorded. Four of the seven dated from the early 1860s, and age may have made them less competitive. Despite the bonanzas on the Comstock’s southern end Story County could still be saddled with milling overcapacity. Several of the idle mills, however, will be reactivated during the great bonanza that was just beginning on the northern end.33

In the early 1870s the output of four mines – Crown Point, Chollar Potosi, Savage and Belcher – dominated the milling business in Story County. Twelve of the 27 quartz mills with more than half of the stamps and daily capacity were engaged in processing ores from these mines. Among the operating mills this was to 72 percent of the stamps and 68 percent of the capacity. Four Story County mills – Ione (a small “croppings” mill), Petaluma, Sapphire and Rhode Island - with 69 stamps (17 percent) and 180-tons per-day capacity (18 percent) were processing ores from Crown Point, which the Mineralogist described as “the most valuable silver mine in the world”. These four mills, however, constituted a minor contingent of Crown Point’s milling facilities. The bulk of the ore was shipped to three mills – Brunswick, Mexican and Yellow Jacket – on the Carson River in Ormsby County.34 Their combined capacity was 345 tons per day, almost twice the volume of the Story County mills. The largest of the Story County contingent was Petaluma with a capacity of 75 tons that was equal to the capacity of Yellow Jacket, which ranked third on the list of Ormsby mills. It is possible, of course, that mills in Lyon County also processed Crown Point ore, although none was so identified. As noted earlier, the new owners of Crown Point set up their own private milling company, Nevada Mill and Mining, but what cannot be documented yet is which of these mills were folded into the Nevada operation. Three other Story County mills – Winfield, Landy and Nevada – with a total of 60 stamps and 150-tons capacity per day (4,500 tons per month) milled ores for Chollar Potosi Mining Company, and three other mills – Atlas, Hoosier State and Evans – with 38 stamps and 93 per-ton per-day capacity (2,800 tons per month) worked ores for Savage Mining Company. It was not stated whether these mills belonged to a milling combine under the control of the mine owners or were independent, custom mills. In the case of Savage the Mineralogists did state that except for a small quantity Savage’s ores were processed at customs mills. Savage owned two mills – Atchison and Minnesota – in Washoe County, both built in the early 1860s, and one of them (name of mill not given in report) processed about 1,000 tons. Low yields 33 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), insert after p. 21; “Biennial Report of the State Mineralogist...1871 and 1872” Appendix to Journal of Senate, 6th Legislative Session (1873), 138.34 “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th

Legislative Session (1873), 132.

19

THE COMSTOCK [I]

from Savage ores made the cost of transportation to Washoe prohibitive. A fourth mine, Belcher, at the onset of its bonanza, sent some of its ores to Pacific, the second largest Story mill, and a Sharon-Ralston property. Presumably other mills owned by Sharon and Ralston in Story and other counties could have been enlisted to mill the rising quantity of ore from Belcher. By the 1870’s large and powerful milling combines had emerged along side of large and power mining combines.35

When the Mineralogist’s Report (1875) filed his 1875 report with the 7th Biennial Legislature, it contained no mill surveys and very little general information about milling. It was regrettable that he did not provide a more detailed review of milling operations in Story and the surrounding counties at a point when the Comstock was about to enter its most flourishing period. In Lyon County he noted that most of the processing was tailings, a pattern that we observed in the 1873 report. Without naming the two tailings mills he reported that they had the combined capacity of 1,350 tons per day, more than twice what had been reported two years earlier. In Story County, he advised, there was insufficient milling to handle the upsurge in ore production mainly from Consolidated Virginia and California mines. He included some milling details concerning operations at Crown Point, Belcher and a few others mines, but he devoted most of milling report to the evolving milling behemoth in connection with Consolidated Virginia and California, a topic to be looked at closely in the next chapter. The bulk of his report, however, focused on mining rather than milling, which in everyone’s mind was on the verge of fulfilling the promise often made for the Comstock.36

The published accounts of Crown Point’s mining and milling operations for the fiscal year 1873-1874 offer details on the cost of preparing and processing the ores.37 For the fiscal year 1873-1874 11 mills were required to process slightly more than 140,000 tons of ore.38 Figure 3 lists pertinent information about the mills. Eight of the 11 mills were included on the Survey-General’s 1866 Report and nine of the 11 were included in the Mineralogist’s 1873 report. The two mills that did not appear on earlier inventories were Morgan and Sherman: the former was near Carson City in Ormsby County and Sherman was on the southern edge of Story County. More than a quarter of the ore was processed at Brunswick in Ormsby County. Behind Brunswick were two other Ormsby County mills, Mexican (19 percent) and Morgan (18 percent). These three accounted for 64 percent of the refined ore. In fourth place (11 percent) was Crown Point’s own mill, Rhode Island, built a decade before. The remaining seven mills handled a quarter of the ore. The yields ranged from a high of $67 per ton at Hoosier State Mill on 376 tons, the smallest quantity of ore processed by any of the mills, to a low of $35 per ton at Sherman Mill on 449 tons, the next smallest quantity. The average yield was $51 per ton, a figure 35 “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th

Legislative Session (1873), 131-132, 134-136, 138.36 “Biennial Report of the State Mineralogist...1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875), 91-101, passim.37 The Superintendent’s Report covered the period May 1873-April 1874. Excerpts and summaries are found as a port of the “Biennial Report of the State Mineralogist...1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875), 106-112.38 Ore that was described as “ore worked” or as “working ores” usually meant ore that had been put through the refining process from crushing to amalgamating. Worked ore could be less than the volume of ore extracted from the mine and shipped to the mill.

20

THE COMSTOCK [I]

that characterized the yields of the four largest refiners (noted above). At this point the accounts require some interpolation. The milling costs at Rhode Island were included along with the general mining accounts, and the inclusion of milling accounts within the mine’s financial accounting suggests that the mill was still a property of the mining company. The refining costs of the other mills, some or perhaps all of which may have been properties of Nevada Mill and Mining, were listed under a single entry called crushing.39 The mining company spent $1.5 million to process 124,000 tons (the difference between the total of 140,000 and Rhode Island’s share of 16,000). The per-ton cost was $11.99 per ton. Rates at individual mills were not recorded. If $12 per ton was more or less the standard, it amounted to about a quarter of the average per-ton yield in bullion of $51. Add the $12 per-ton refining cost to the $9 per ton mining cost for a total of $21 to $22, leaving a surplus of nearly $30 per ton.

Refining costs at Rhode Island Mill appear to be somewhat lower per-ton than the calculated average. For the 16,000 tons processed at Rhode Island the cost including more than $1,000 for mill improvement was $174,000. Some other costs such as haulage and assays may not have been fully accounted for under entries for Rhode Island. In any event the per-ton rate there was $11 ($10.84), slightly lower than the rate for the other 10 mills. The breakdown (less precise than for an earlier discussion of Gould & Curry) is as follows: mercury, chemicals etc. - $66,602 or 39 percent; labor - $45,659 or 26 percent; wood - $28,987 or 17 percent; machines & castings - $23,003 or 13 percent; and water - $8,400 or 5 percent. Clearly mercury and the other ingredients necessary for amalgamation had jumped to the top of the cost structure. Two factors can be cited. First the demand for mercury had risen in step with increasing tonnage of ore to be processed, and that led to higher mercury prices. Further, the richer the ore the more “new” mercury had to be incorporated with each batch – in short more mercury was lost. In the case of Rhode Island mercury et al. cost about $4.19 per ton. If that were used as a benchmark for all the mills, then more than $550,000 was spent on mercury purchases. The next highest cost was labor at about $2.88 per ton. Firewood to power the steam turbine and machinery cost $1.81 and $1.44 per ton respectively and water cost slightly more than 50 cent per ton. Even as milling rates had declined since the early 1860s the allotment of those costs had also changed. No doubt part of this arose from the introduction of greater efficiencies in the preparing and processing of the ores, but the most notable change arose from the heavy, constant demand for mercury without which the Comstock’s success would have been greatly limited.40

Not much on milling appeared in subsequent reports by the Mineralogist, and with the abolition of the office in 1879 public reports on mining and milling on the Comstock and in Nevada almost ceased entirely. Some new mills were built and some

39 I have deduced that if the volume of ores refined at Rhode Island is subtracted from the total of ores processed, the difference is the amount listed as crushed but excluding Rhode Island. In order to estimate the cost of refining at the other mills the figure for “crushing” only refers to the refining of the ore outside of the Rhode Island Mill. The per-ton cost reached by dividing the total crushed figure by the tonnage delivered to the mills except Rhode Island is within a few cents of the per-ton refining cost stated for all the mills in the accounts. It is not clear why the per-ton cost was presented in this way without more detail.40 “Biennial Report of the State Mineralogist...1873 and 1874” Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875), 107. The percentage calculations are mine.

21

THE COMSTOCK [I]

old ones refurbished during the boom years of the middle 1870s, but as the boom faded, many mills, new, old and remodeled, were abandoned. The mills that continued to have some business were the tailings mills because as the output of ore from underground fell, the tailings were seen as potentially profitable especially as the techniques for recovering minerals from them were being improved. The state of the mines rather than the mills remained the principal interest of the official investigators.

FIGURE 4MILLS REFINING OF CROWN POINT ORES, 1873-1874

Mill County Tons Bullion Value ($) Per-Ton Yield ($) % TonsBrunswick Ormsby 37,620 $1,910,659 $50.79 26.85Mexican Ormsby 26,333 1,366,538 51.89 18.79Morgan Ormsby ? 25,480 1,280,062 50.23 18.18

Rhode Island Story 16,044 850,362 53.00 11.45Petaluma Story 12,333 624,544 50.64 8.80Pioneer Lyon 10,486 522,080 49.78 7.48

Atlas Story 7,490 386,122 51.54 5.35Sapphire Story 1,804 84,637 46.90 1.29

Devil's Gate Lyon 1,713 75,829 44.25 1.22Sherman Story/Lyon ? 449 15,858 35.22 0.32

Hoosier State Story 376 25,048 66.70 0.27Totals 140,128 $7,141,739 $50.97 100.00

Sources: Footnote 37.

22

THE COMSTOCK [I]

Chapter 9The Business Of Mining:

Types of Mills, Economics of Milling, Mills Owners & Operations

Scores of mills were built and rebuilt in Story County and adjacent counties to process the 7 to 10 million tons of extracted ores from the Lode between 1865 and 1885. In the early 1860s so-called custom or independent millers set up shop on the Comstock. Mine owners being preoccupied with establishing their underground operations often lacked both the capital to build their own refineries and the skill to operate them. Millers found themselves in the envious position of being able to dictate the terms of the contracts even though milling capacity soon exceeded demand. Over time, as mining companies became better established, they had financial motives to construct their own mills and to bypass custom mills. In time milling became an extension of mining operations, and in the annual statements of the mining companies the cost of refining ores was treated, like costs for extraction, transportation and administration, another cost of doing business. The problem for mining companies with their own mills was that they had a shortage of milling capacity when their mines entered a highly productive period and conversely they had an excess of milling capacity when expansion in output turned to contraction, Both could be costly in that inadequate capacity could lead to investment in plant and equipment that may not be justified over the long term and idle capacity could lead to higher fixed costs and lower returns on capital. Both theoretically could dilute profits and threaten dividends. Since mining companies could not predict with certainty how much refining capacity that they would need a year or two later they constantly ran the risk of having too much or too little milling capacity. One strategy to moderate the risk was for mining to create stand-alone milling companies that were not strictly dependent on the output of their own mines. Ideally an independent milling company set up by a mining company could offer in-house milling services for all the mines that the company owned and custom milling for those companies that lacked mills with the hope of smoothing out fluctuations in production that even the best mining operations could not avoid. But there is a somewhat more nefarious reason was behind these undertakings. The mining companies had discovered that by divorcing milling from mining operations they stood to profit from both businesses. (Railroads, of course, followed a similar tack in creating railroad construction companies separate from the railroads themselves.) Milling companies were usually organized as partnerships among the founders or principals or as corporations with the founders as the major stockholders and a few other associates or friends as minor stockholders. If milling-company stocks traded on the San Francisco Exchange they attracted little attention. Even though they could be profitable, they depended for their financial success on the state or health of the mining industry and more particularly on the mines in which their principals had a role. As stand-alone companies they probably had little appeal at the stock traders. Moreover, it is not clear that the founders of the milling companies really wanted to share milling profits with an investor public or needed an investor class to finance their operations. Despite the rationale that independent mills could secure their financial footing by shopping around for business from all mining companies, the best performing milling companies were associated with highly productive mining operations. When the mines were on the upswing, the mills made money, and conversely when the mines in contraction, the mills

1

THE COMSTOCK [I]

were sold or abandoned. In the end milling remained tightly linked to the health or state of mining. What the creation of large quasi-independent milling companies succeeded in doing was pushing down milling costs without destroying their potential profitability. Truly independent mills in the mold of the original custom mills did not disappear but were moved to the periphery of the milling business.

FIGURE 1MAP ASSEMBLED BY NEVADA NATURAL RESOURCES DEPARTMENT

SHOWING MILL SITES IN COMSTOCK REGION[PART OF TOXIC CLEANUP PROJECT]

2

THE COMSTOCK [I]

It is useful to present a modest discussion of milling technology, as it had evolved by the second half of the nineteenth century, before tackling the financial issues involved in milling operations. Spanish colonial miners soon discovered that much of the silver ore that they extracted from underground could not be smelted economically. Smelting worked best when silver ore contained a base metal like lead. The lead acted as a flux. Under high temperatures the lead and silver particles fused, and then again since lead had a lower melting point intense heat would be applied to separate the silver and the lead. These were often referred to as high-grade silver ores because the natural presence of the lead flux made “cooking” the ore economical and efficient and resulted in silver of high quality (fineness and purity). The great discoveries at Zacatecas and Potosí contained silver ores in combination with other minerals that did not readily lend themselves to smelting because of the cost of purchasing flux, firewood or charcoal and other ingredients. These less smeltable ores came to predominate, and without a different technology for recovering the silver the grand camps of Zacatecas and Potosí would have had a much-diminished mining history. As unsmeltable ores piled up around the entrances to the mines and near the smelting facilities the search for alternate refining techniques became intense. The prize went to Bartolomé de Medina, a Spaniard who was working in Mexico. He developed an ore-reduction technology based upon amalgamating the ore with mercury or quicksilver rather than smelting it. Although used since ancient times amalgamation had few practitioners. In the method that Medina fashioned the ore after being pulverized and washed was incorporated with mercury in an open, walled space that resembled a patio. In Spanish America Medina’s technology became known as the patio process. Over a period of many weeks or several months of stirring the soup silver (and gold) amalgamated with the mercury. The amalgamated ingredients were removed from the patio and transferred to a small furnace where the heat would evaporate the mercury and leave the silver. Over time other minerals were added to the mixture to speed up amalgamation along with adaptations to the furnaces to try to capture the evaporating mercury, but the basic technology remained unchanged into the nineteen century. Spanish colonial miners and millers proved to resistant to major innovations that some mining professional recommended in part because of the cost to alter their plant and equipment and in part because of the familiarity and predictability with the existing techniques. As would be true of refiners on the Comstock and in other Western mining camps, some refiners in Spanish America proved to be more skilled than others in pulverizing the ores, incorporating the mercury and isolating the silver. It was also true that the quality of the mercury mattered (imported Spanish mercury was superior to local Andean mercury) as well as the type of ore (Mexican ores tended to be richer than Peruvian ores). When western mining established itself, miners and millers embraced amalgamation but chafed at the inefficiencies that the Spanish-American system entailed.1

Since mining was new to Western United State, the opportunity existed for miners and millers to innovate. Milling operations were frequently discussed in local newspapers and scientific journals, but documents concerning operations seldom show up in company

1 Numerous sources could be cited relative to Spanish American mining and milling. A good overview is Peter Bakewell,, “Mining in Colonial Spanish America,” in Leslie Bethell, ed., The Cambridge History of Latin America, The Colonial Period, 2 vols. (Cambridge: Cambridge University Press, 1984), 2: 113-119.

3

THE COMSTOCK [I]

archives. Part of the explanation for the absence of documentary evidence is that, as more and more milling operations were spun off into private companies, mining companies were under no statutory requirement to report on milling operations except to report what they paid for milling their ores. In the early years there was considerable interest in the founding and building of the mills because it was less than clear how or where the Comstock’s ores would be processed. Once the initial flurry of activity relating to the construction of the plant and the design of the equipment ended toward the middle of the 1860s many decisions about the most efficient methods for reducing the ores had become standardized. The Comstock would witness the erection of newer mills or the renovation of older mills with ever-increasing capacity into the middle of the 1870s with much less debate and experimentation concerning milling techniques because the procedures and protocols were fairly well understood. From the earliest days, as noted above, Comstock miners knew that their ores could not be efficiently smelted. They turned instead to reduction through the patio process, but they were dismayed at the time required to complete the operation. The search was for a way to speed up amalgamation of the silver and mercury. Eliot Lord correctly observed that colonial Mexican miners had developed techniques for shortening the time required to complete the amalgamation that involved grinding the ore as finely as possible, adding mercury, salt and water until it became a “pasty” mixture called pulp, transferring it to a copper kettle where is was boiled, stirred and tested for four hours or more and finally after amalgamation had been determined to have occurred removing it to large basins or vats of water that washed away the slime or residue and left the amalgam. While these and other techniques were known to late colonial miners, they were not widely accepted because of the cost of the equipment or the scarcity of the ingredients. By the nineteenth century, however, many Mexican mills had introduced these modifications.2 What held back colonial Mexican millers was not relevant to late nineteenth century Comstock milling. Almost every aspect of the amalgamation process was open to modification and improvement. From the material and mechanization of the batteries and the stamps to the size and number of the amalgamating pans, from the addition of agitators to the collection of slimes every step was scrutinized to see how the processing of ore could save time and money. Both Lord and DeQuille consider the contributions of early millers like Almarin Paul, Israel Knox and Henry Brevoort and various superintendents who proved to be ingenious at applying and reworking the new ideas.3 What converged from the efforts of these tinkerers and experimenters was something called (almost generically) the Washoe Process. In short it transformed the patio process of many weeks into a mechanized process of a few days. When Mackay and Fair under the corporation known as Pacific Mill and Mining built (and rebuilt) their new mills – Consolidated and California – in Virginia City between 1874 and 1876, they employed the Washoe Process only on a grander scale than any other miller had. It is worth noting that Eliot Lord’s Comstock Mining and Miners included illustrations of mills, their interiors and their mechanics that are well worth studying. A set of 10 drawings of the interior of the Gould & Curry mill is especially

2 See Lord’s discussion of these improvements based upon his reading of Francisco Gamboa, Comentarios a las Ordenanzas de Minas…. Eliot used the Heathfield translation. These references will found in vol. 2, pp. 200-203. There are several monographs on the history of ore reduction in colonial and modern Mexico. One of the most thorough (in Spanish) on the developments summarized by Eliot is Modesto Bargalló, La minería y la metalurgía en la América española durante la época colonial (Mexico, 1955).3 Lord, Comstock Mining and Miners, 82-89; DeQuille, History of Comstock Lode, 74-79.

4

THE COMSTOCK [I]

noteworthy (between pp. 126 and 127). These illustrate the scope of the mill and the extent of mechanization that had infused the milling business only a few years after the discoveries. One can imagine that if drawings of the Mackay and Fair’s mills had been rendered a decade later the result would even have been grander.

The Surveyor-General’s 1866 report offered an extensive inventory of Comstock milling facilities and operations4. It included names of owners, locations of mills, construction costs, tax assessments and numerous details about capacity, equipment supplies, etc. In the four counties – Story, Lyon, Ormsby and Washoe – surrounding the Comstock there were total of 77 mills. Story had the most with 33 mills or 43 percent; Lyon was second with 27 or 35 percent; Washoe had 9 or 12 percent; and Ormsby had 8 or 10 percent. The total cost to build these 77 mills, based on data given to the Surveyor-General, was $5 million for an average cost of about $65,000 per mill. Story County accounted for $2 million or 40 percent and Lyon for $1.4 million or 28 percent. Story was the only county that reported tax assessments on mill properties, and they amounted to $954,000, a figure that was not the tax collected but the proportion of the value of the property (about 48 percent) against which property taxes were levied. Gould & Curry’s mill, located in Seven Mile Cañon about two miles from its mine under Virginia City, probably was the most expensive mill to have been built up to that time with a price tag of $380,000. The least expensive was Monitor near Dayton in Lyon County at $6,000. These 77 mills had 1,400 stamps for crushing ore for an average of 18 stamps per mill. Again Gould & Curry’s mill headed the list with 80 stamps, and Monitor plus several other small mills had only five stamps. The cost of construction per stamp was comparable in the largest and smallest mills: $4,750 at Gould & Curry versus $5,000 at Monitor. The 77 mills could process about 65,000 tons of ore monthly or 750,000 tons yearly. That was between two and three times more than the output of ore to be milled in 1866. The zeal to build milling facilities derived from the same economic fantasy that fed the drive to claim and exploit every acre of the Comstock.

4 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), Tables are inserts between p. 21 and p. 25 with notes about the mills on pp. 25-26. The following discussion is based on data and calculations from these Tables. In addition to his survey of plant and equipment Surveyor-General Marlette asked a few mining companies to provide him with financial data on milling operations. When mining companies used outside millers or organized their own independent milling companies to reduce their ores, their own mining accounts revealed very little about the cost of reduction. Except for small quantities of ore sold each year by miners to millers the amalgamated or refined ore remained the possession of the mining companies. Mining-company accounts normally showed how much the reduction cost per ton and not much else. Few milling accounts have survived if they ever existed, even when mining companies, whose records do survive, built and managed the mills themselves. Thus, inquiries such as those conducted by the Surveyor-General in 1866 offer a glimpse into a less well-understood economic sphere.

5

Illustration 1: Eureka Mill, Lyon County

THE COMSTOCK [I]

One of the most grandly publicized of the early mills was constructed for Gould & Curry. In 1861 Gould & Curry undertook the construction of a small mill in the vicinity of Seven Mile Cañon, but then over the next two years as output from the mine grew it enlarged and refurbished the mill at a cost (allegedly) of nearly $900,000. The reduction process that had been installed proved to be so inefficient that the new superintendent, Charles Bonner, discarded it in 1864. Then another reconstruction was ordered at a cost of more than a half million dollars.5 By 1865, when Louis Janin jr. had replaced Bonner as superintendent, Gould & Curry had spent more than $1.5 million on the construction and reconstruction of this mill. In the 1866 survey the mill was estimated to have cost $385,000, a figure that does not match up with any of the figures just cited. In any event after the second remolding to install a “more traditional patio” process and now under Janin’s leadership the efficiency of the mill improved. In 1865 the Gould & Curry mill reduced nearly 32,000 tons at $12.93 per ton. This was a spectacular turnaround that began in November 1864. Before that it was alleged to have cost up to $50 per ton to refine Gould & Curry’s ore in its own mill, and because of the high cost most of its ore was sent to custom mills, which charged on average $26 per ton. Gould & Curry could no longer afford the extravagance in outlays for mill construction and ore reduction because the per-ton yields of its ores had dropped from extraordinarily high levels of $70 to $100 to $30.6

In the same report with his survey the Surveyor-General published detailed financial data provided to him by Janin. He wrote that the “admirable system of accounts of expenditures adapted in the Gould & Curry and Savage office, is worthy of all commendation, and it is to be hoped, will be adopted by other companies.”7

Unfortunately, while the efforts of Superintendent Janin and his staff represented an improvement over some earlier financial reporting, the excerpts that appeared in the Survey-General’s report have figures that do not always add up. Still Janin’s statement can be a useful point to start the analysis of milling operations. Gould & Curry finances showed that the mine produced 62,425 tons of ore with an average yield of $28.64 per ton.8 Although he did not provide a total-dollar value, a simple calculation - tonnage x yield – would result in a bullion value of $1.8 million. Even with expanded milling capacity, perhaps the largest of any Comstock mill, Gould & Curry assigned some ores to custom mills. Sixty-five percent or 40,432 tons were “worked” at the company’s new mill and 28 percent or 17,680 tons at custom mills. A portion of the total, 4,313 tons or 7 percent was unaccounted for. Janin made no reference to the disposition of the missing ore, whether it was set aside for later processing, was sold to other millers or was simply too inferior to be milled and was scrapped. If per-ton yield were calculated more strictly on the basis of 58,000 tons rather than 63,000 tons, it would rise to $33. Unfortunately

5 Lord, Comstock Mining and Miners, 125. Lord cited Annual Reports from 1861 through 1864 plus newspaper reports. Smith, The Comstock Lode, 85.6 Lord, Comstock Mining and Miners, 128-129.7 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), 30.8 It was described as 3rd class ore without any further details. Ores could be classified in terms of their chemistry and purity but seldom were they classified as just noted in the superintendent’s reports. It would appear based on yields per ton that a 3rd-class ore had an average of slightly above average yield compared to all Comstock ores.

6

THE COMSTOCK [I]

the excerpted version of the Janin report contained no figures that would detail the cost to Gould & Curry of having ores reduced at customs mills. Of the 40,432 tons crushed at Gould & Curry’s mill 36,001 tons or 88 percent were actually amalgamated. The

remaining 12 percent or about 6,000 tons were lost in what were called “slimes and moisture in the ore”. The slimes were not necessary lost permanently; they could become tailings that required further refining to unlock the minerals in them. It was an accepted practice to assay the ore in its “wet” and crushed form and then to assay it again in its “dry” and amalgamated form. For Gould & Curry the wet assays came in at nearly $44 per ton and the dry assays at $33 per ton. The $33-per-ton figure matched up with the figure above,

although the bases from which the calculations were made were different. The “so-called “loss” of about 75 percent from the wet to the dry was about average for the Comstock. But the breakdown between gold at 30 percent ($364,000) and silver 70 percent ($825,000) was somewhat below what other mines were reporting. This ratio will fluctuate from mine to mine and from area to area.9

The matter of “slimes” was a continuing concern to Comstock millers. As the ore was pulverized either by breakers or crushers, it was mixed with water into what Mark Twain called a “creamy paste”. As this paste moved from the stamps into the amalgamation pans the water was drained off as slimes into wooden troughs and eventually into nearby pools or ravines. The slimes contained mud, rock, other metals and nuggets of gold and silver. Procedures for screening out the nuggets with course blankets, fine screens and other such gadgets did not totally succeed, and at the end of the trough slimes hardened into tailings. Tailings could be reworked to extract their minerals, although the reworking could be expensive and unpredictable. Working the slimes was not ennobling work, according to Twain. “Of all the recreations in the world, screening tailings on a hot day, with a long-handled shovel, is the most undesirable.” Twain asserted that about a third of the ore containing gold and silver floated away in the slimes, and that was in fact the same figure that miners and miller used when estimating how much would be lost between the wet and dry assay. Since the dry assay was taken from the cake of metal that emerged from the amalgamation, whatever metal was recovered from slimes was considered to be a bonus. Some mining companies in addition to their reduction mills built tailings mills, and some independent millers specialized in processing tailings. Janin did not recount how the tailings were handled, and the accounts, which he presented, made no reference to them. It was certain, though, that the tailings from the operations at Gould & Curry’s were not ignored. Piles of tailings all over the Comstock region served legitimate business enterprises such as tailings mills and, as Twain reminded his readers, inspired hucksters (even today): “I have seen men hunt over a pile of nearly worthless quartz for an hour, and at last find a little piece as large as a filbert, which was rich in gold and silver – and this was reserved for a fire-

9 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), 33.

7

Illustration 2: Santiago Mill, Ormsby County

THE COMSTOCK [I]

assay! Of course the fire-assay would demonstrate that a ton of rock would yield hundreds of dollars—and on such assay many an utterly worthless mine was sold.” In addition inferior ores could be scrapped and end up with the slimes. Although as much as a third of the ore may have ended up in tailings dumps, the quantity of tailings actually recovered and registered (for tax purposes) remained a fraction of the gold and silver amalgamated form the ore and presented to the mint.10

Based on Janin’s figures the cost for the Gould & Curry mill to reduce more than 40,000 tons of ore was $12.27 per ton.11

Janin stated that milling costs both at the company mill and at the custom mills averaged $13.30 per ton. It appears that the company milling was slightly less costly than custom milling. Beginning in the second half of the 1860s many of the local mills came under the ownership or the control of William Sharon. His plan was to

break the stranglehold of the independent millers and yet to make money milling ores from mines that he owned or controlled as well as from other mines. Although precise data on milling rates at custom mills in the early 1860s is seldom revealed in the surviving sources, the data after Sharon invoked his plan indicate that rates had fallen to about $15 per ton. Once Sharon’s plan proved successful other entrepreneurs began to emulate it, and that put rates under additional downward pressure. It would appear that both Gould & Curry’s mill as well as the custom millers came in at the low range of milling rates. At Gould & Curry’s mill of the nearly $500,000 in milling costs, 61 percent was for supplies and materials, 32 percent for labor and 7 percent for hauling. In a more detailed schedule Janin broke down refining costs into seven categories and then further divided each category into seven subsections, as shown in Figure 1 by dollars and cents per ton (functions in left-most column arranged by percentage):

FIGURE 2MILLING COSTS PER TON BY CATEGORY, GOULD & CURRY, 1867

Category Labor Wood Castings Copper Salt Mercury Sundries TotalPower $0.5888 $3.9784 $0.1249 $4.61 (38%)Amalgamation $0.7681 $0.0465 $0.5936 $0.4350 $0.2706 $0.8659 $0.1096 $3.09 (25%)Repairs $0.8410 $0.6941 $1.51 (12%)Batteries $0.6598 $0.2085 $0.1096 $0.98 (8%)Hauling $0.9000 $0.90 (7%)Foreman, etc. $0.7133 $0.71 (6%)Breakers $$0.4132 $0.333 $0.45 (4%)Totals $3.9042 $4.0249 $0.8021 $0.4350 $0.2706 $0.8659 $1.9648 $12.27

32% 33% 7% 4% 2% 7% 16% 101%Note: Batteries were stamps for crushing ores; foreman plus watchman and laborers – not clear how laborers in this column different from other laborers; breakers assigned to break up ore chunks in

10 Mark Twain [Samuel Clemens], Roughing It (New York: Penguin Books, 1981 [Reprint of 1872 edition]), 36. Almost no information on how the tailings mills were constructed or operated has shown up in he original sources that I have studied.11 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), 34. The Table in the text is a rearrangement of Janin’s data as given in his report. The percentages are mine.

8

Illustration 3: Gould & Curry Mill, Story County

THE COMSTOCK [I]

amalgamation pans; copper actually sulphate of copper; bottom row of percentages does not add up to 100% because of rounding up. Total Column rounded up. There is a tiny mistake in the summing of items for the function amalgamation - $3.0893 instead of $3.0896.]Sources: See footnote 11.

The arrangement of milling expenses is not in and of itself surprising. Power, typically a major operating cost, consumed $4.61 per ton or 38 percent of the total. The major component of power was the purchase of wood ($3.99 of the $4.61.) and the remainder, slightly more than 60 cents per ton, was spent on labor and supplies. Since wood powered nearly all the machinery used in Comstock mining, it was in constant demand. In the mills firewood was needed primarily to drive the breakers and stamps that crushed the ore. Some firewood was needed during the amalgamation itself, but it was accounted for separately. If the cost of firewood for amalgamating were combined with the cost of firewood for crushing (and a few other minor tasks) firewood purchases comprised a third of milling-component costs. Timber was harvested as far away as Lake Tahoe and then hauled (or “floated) to the Comstock. In the Surveyor-General’s mill survey Gould & Curry stated that it averaged 20 cords of wood per day (several times the average for all mills), and while Gould & Curry did not report the cost per cord, other mills reported that they paid between $13 and $16 a cord. Despite some discrepancies between the Surveyor-General’s survey and Janin’s accounts, it is possible to estimate that timber purchases cost Gould & Curry between $100,000 and $150,000 per year. The mill under normal operations may have used between 7,000 and 8,000 cords of wood to power the crushers, mixers, steamers and other machines in reducing the ore. Electrification did not arrive until late in the nineteenth century, long after the Comstock’s zenith, and the figures from Gould & Curry’s timber accounts reveal why logging became one of the ancillary industries to grow up around the Comstock and why some mining and milling entrepreneurs started or bought their own operations: to add to the bottom line as well as to assure a ready supply.

The next most costly item behind power was amalgamation at $3.09 or 25 percent of the total. Outlays expressed in percentages for the components were as follows: mercury (28 percent), labor (25 percent), castings (19 percent), sulphate of copper (14 percent), salt (9 percent), sundries (4 percent) and wood (2 percent). Not surprising mercury was the most costly item. Amalgamation was less efficient without salt and copper so that if these three ingredients were summed they would constitute more than half (51 percent) of the total costs. Labor represented about a quarter of the total and purchases of replacements for castings on machines about a fifth. Miscellaneous supplies came in at 4 percent and firewood at 2 percent. This did not include the preparation of the ore – “breakers” and “batteries” for crushing and pulverizing the ore – and if preparation and amalgamation were combined they would add up to $3.63 per ton, which was still less than the overall power costs. The cost of the central ingredient, mercury, was only 87 cents per ton or 7 percent of the total component cost at Gould & Curry. Since mercury could be recovered from batch to batch and was seldom totally lost (unlike firewood) a far smaller portion of the component costs was tied up in mercury than wood. Indeed labor, just behind firewood, was a much bigger component cost than mercury. Of course how much mercury could be recovered varied from mill to mill, and where efficiencies were rare or modest mercury could become a much larger expense.

9

THE COMSTOCK [I]

After accounting for power, amalgamation and preparation the remaining costs concerned repairs (12 percent), transportation (7 percent) and salaried personnel like foremen and watchmen (6 percent). With respect to repairs the major component was labor, which was billed at 84 cents per ton or 55 percent of total repairs. Hauling was simply listed at 90 cents per ton for “sundries”, and the personnel item was an expense that could not be included under any other category. Although one might wish for greater specificity in each category or component, one comes away from the report with a fairly clear understanding of how costs were spread across a milling operation. As important as mercury was, and in the opinion of some as costly as mercury was, it did not rank at the top of the list. Rather the cost of firewood to power the machines consumed $4.03 per ton and the cost of labor, a smaller component in milling than in mining, nonetheless ranked behind cost of power at $3.90 per ton or 32 percent. In a nation that was quickly industrializing and in an industry that was the beneficiary of that industrializing the role of power to drive more and increasingly complex machinery and the role of labor will loom large in how the Comstock industry confronted the cost structure. If the milling costs reported by Janin to Surveyor-General in the second half of the 1860s, they were, it would appear, as much as half the milling rates of the custom mills in the first half of he 1860s according to undocumented estimates.

On the basis of Janin’s figures for ore extracted and then processed in Gould & Curry’s mill the results appear to be positive. Of the 40,432 tons crushed at the mill 36,001 tons (11 percent loss) were actually submitted to amalgamation to yield $1.2 million in bullion, $825,000 in silver and $364,000 in gold. To extract the total crushed tonnage cost an estimated $7.86 per ton or $318,000.12 As noted above, to refine that tonnage cost $12.27 per ton or $496,005. Janin did break it down into three categories: $301,751 or 61 percent for on materials, $157,865 or 32 percent on labor and $36,389 or 7 percent for transportation. The ratio of mining to refining costs of $1 to $1.50 per ton was not out of line with what other companies reported in the second half for the 1860s and later. Even without considering the ore processed at custom mills the company had a gross profit of nearly $400,000. Obviously some costs that modern accounting rules would require have not been included, but the figure just cited could be treated as gross operating profits. The company was reported to have paid a dividend of $250,000, substantial but not spectacular in mining lore.13

At the time of the survey most of the large mining companies owned and operated their own mills, and like Gould & Curry they also used independent millers. The third leg in the milling complex in addition to custom mills and company mills was a separate milling business under the ownership of the principals of the mining companies, the so-called Sharon model. At the vanguard of the newly-emerging mining and milling corporate structure was a more shadowy Comstock personality, the San Franciscan

12 Janin’s extraction costs were based on 62,425 tons, not just the 40,032 tons submitted to Gould & Curry’s mill, so it cannot be determined if $7.86 was an appropriate estimate for extraction costs of the smaller volume. It is not possible to compute extraction costs except for total tonnage.13 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), 31-34. Dividend figures from Grant Smith Notebooks, NC229, Binder 1, Special Collections, Library, University of Nevada at Reno. In addition to Gould & Curry Savage reported that to mill 9,700 tons in the two mills (Atchison and Minnesota) that it owned in Washoe County cost $12.04 per ton, close

10

THE COMSTOCK [I]

financier, William Ralston. He had invested in and made money from several large mining ventures: Gould & Curry, Ophir and Mexican to name a few. As the shafts of these mines closed in on the 500-foot level they began to flood out. In addition Ralston’s own agents in Virginia City had mismanaged his properties to the extent that Ralston was the victim of theft. To protect his Comstock investments, which underwrote his other non-mining investment in San Francisco and across the West, he sent William Sharon to Virginia City in 1864. Sharon was frequently described in Napoleonic terms – a small, compact man who became by his own dint a towering figure. In the same year Ralston set up the Bank of California with Sharon as the chief cashier in Virginia City’s branch.14

With Sharon’s arrival to implement Ralston’s strategy the business of mining underwent a fundamental change. After an impressively thorough investigation of the Comstock mining and milling operations Sharon concluded that the Comstock despite a huge volume of water at the bottom of many of the active mining shafts was not washed up. He approved loans to mining companies even though in 1864-1865, as ore production and stock valuations fell in tandem, the Comstock was experiencing its first financial panic. Sharon’s approach was not to rely on one or a few assays but to order many assays in different mines. On the basis of these tests he became convinced that rich ores lay under the water.15 Sharon was also convinced that with respect to mining and milling extravagance rather than prudence had governed the Comstock operations. Even Lord credited Sharon with a new outlook: “where organization was to triumph over anarchy and cool calculations of self-interest were to be the only basis of recognized action.”16

And the search for order was no more apparent than in the milling sphere. In addition to lending to mine owners, Sharon also made loans to millers. But the Comstock was in a state of contraction. Borrowers easily fell behind on their bank payments (interest in some cases was 2 to 5 percent per month), and when they did, through foreclosure proceedings, the Bank of California ended up with the properties. Foreclosure was preferred to a forced sale because a forced sale could yield less than a loan’s face value and a foreclosure presented the opportunity to try to preserve the investment in plant and equipment by operating the mill. It cannot be ascertained with certainty that Ralston and Sharon had thought through all the likely scenarios that evolve from foreclosing on mills during a contraction. Did they really want to end up owning more capacity than they could use? Foreclosures that led to idle operations were money-losers. Milling properties deteriorated quickly, according to Lord, because the dyes, pans and shoes, all made from iron, became corroded with rust when not in use.17 That would represent substantial capacity at a time when the Comstock was struggling to recover. By 1867 the Bank may have owned as many as 17 mills. Whatever the number Ralston and Sharon decided to create a milling company called Union Mill and Mining Company, incorporated in California with a capitalization of $1.5 million in the form of 15,000 shares. Although the

to the Gould & Curry figure..14 While description and analysis of the roles played by Ralston and Sharon were standard fare in most Comstock histories, some of the most illuminating details appear in works by the Progressive historian, George Lyman. See in particular Ralston’s Ring, 34-35, 38-39. For a typical characterization of Sharon see Lord, Comstock Mining and Miners, 244.15 Lyman, Ralston’s Ring, 38-39. Many assays were made as close to the water level as possible.16 Lord, Comstock Mining and Miners, 245. This is a fine example of Lord’s devotion to laissez-faire principles.17 Lord, Comstock Mining and Miners, 246.

11

THE COMSTOCK [I]

charter investors include seven individuals, three of the seven – Ralston, Sharon and D. O. Mills (longtime colleague of Ralston) became the principals. Seventeen mills were far too many to operate economically, and once the company was in place consolidation became the order of the day. Acquiring mills along the Carson River where water-power was assured was a deliberate strategy to reduce the cost of power.18

How Ralston and Sharon carried out their strategy has not, to my knowledge, been examined in detail. There was no doubt that Union Mill and Mining became the dominant milling operation for Comstock and remained so well into the 1870s. Even before the 1867 incorporation according to the Surveyor-General’s mill survey from 1866 Sharon was listed as owner or agent for eight mills. Ralston’s name did not appear; nor did any of the names of the other investors in the soon-to-be-announced Union Mill and Mining. But the Ralston crowd owned mines that also owned mines. So surely the eight mills only represented a part of the total under the control of the Ralston, Sharon and their associates. Even with an incomplete list the mills directly connected to Sharon provide some illuminating details. It is worth noting that Sharon’s name appeared in the survey in several different ways: Wm. Or W. Sharon Agt. (6), Sharon & Co. (1) and Williams & Sharon (1).19

FIGURE 3MILLS LISTING WILLIAM SHARON AS OWNER OR AGENT, 1866

Mill Names Location-County Date Cost Power-HP

Stamps Crush per Month

Empire State 7 Mile Canyon-Story ND $35,000 Steam-? 15 700 tonsPacific Lower Gold Hill-Story 1863 $75,000 Steam-

8030 1,300 tons

Franklin Carson River-Dayton-Lyon

1861 $50,000 Water-? 10 500 tons

Gold Cañon Reduction

Silver City-Lyon 1861 $40,000 Steam-30

15 750 tons

Illinois Carson River-Dayton-Lyon

1864 $30,000 Steam-30

20 500 tons

Swansea Johntown-Lyon 1862 $60,000 Steam-40

12 600 tons

Brunswick Empire-Ormsby 1863 $50,000 Water-? 8 600 tonsCarson Carson-Ormsby 1862 $25,000 Water-? 10 ?Totals $365,000 120 4,950 tons

Sources: Footnote 13.

The mills were spread through three counties: two in Story near Virginia City; four in Lyon with two along the Carson River; and two in Ormby with both along the Carson River. Water-power drove three mills, and a fourth mill, Illinois, while located along the Carson River apparently used steam as did the other four. Statistical comparisons with Sharon-identified mills and the total survey would not be useful because some of the other mills were surely under the control of the Ralston/Sharon combine. The properties unmistakably linked to Sharon cost (the original owners) about 18 Lyman, Ralston’s Ring, 85-86.19 The Williams of Williams & Sharon could not be identified. The thought occurs that this could be a typographical error in that Sharon’s name was William and the entry perhaps should read William Sharon.

12

THE COMSTOCK [I]

$365,000 to build or $46,000 per mill. The most expensive was Pacific at $75,000 and the least expensive was Carson at $25,000. Pacific, built in 1863, had 30 stamps, two or three times the number at the other mills, and a capacity of 1,200 tons per ton, twice the capacity of other mills. That worked out to about $2,500 per stamp. Being located in Gold Hill away from any river Pacific was power by 80 horsepower steam engine. In terms of cost per stamp Illinois was the cheapest. Built in 1864 at a cost of $30,000, it had 20 stamps or $1,500 per stamp. Although on the Carson River it used steam power rather than water-power (30 horsepower engine) to operate the stamps with a monthly crushing capacity of 500 tons. The most expensive mill was Brunswick. It had the fewest stamps (8) at a cost of $6,250 per stamp with total construction costs of $50,000. It could crush 600 tons per month and was powered by water from the Carson River. Other factors such as the number and size of the amalgamation pans, the number of settlers and agitators for combining the ores with the mercury and other chemicals and the weight of each stamp had to be considered with respect to a mill’s cost and capacity. Still some of the figures cited above square with other information about the cost and capacity of Comstock mills.

Even though the 1866 survey had linked these eight mills directly to Sharon and his allies other mills owned by mining companies had also fallen under the control of the so-called Bank Crowd in the middle 1860s. They included Ophir, Gould & Curry and Yellow Jacket, all of whom had large mills. If the data assembled by the Surveyor-General on these three company mills were added to the foregoing mill data, then the growing concentration of the milling business in the hands of Ralston and Sharon was be far more pronounced. These three company mills with a total of 144 stamps and a crushing capacity per month of 7,000 tons cost at least $600,000 to construct or about $4,200 per stamp.20 One can presume that at the time of the Surveyor-General’s 1866 report as many as 11 mills with between 250 and 300 stamps, a crushing capacity per month of 12,000 tons and a price tag of at least $1 million could have fallen under the control of Ralston & Sharon. The total crushing capacity of all the mills in the four counties was about 60,000 tons per month, and the Bank Crowd may have controlled about a fifth of that capacity. Even though some very large mills were outside the control of Ralston and Sharon, they had a dominance that cannot be detected through the survey and other documents from 1866.21 As difficult as it is to pin down the exact number of mills owned or controlled by Ralston and Sharon in the years preceding the organization of the Union Mill and Mining Company in 1867, the trend toward what Grant Smith termed “private” milling had begun. Private milling existed along side of private mining, and while they had separate corporate identities, they were in fact set up by the mine owners who gleaned profits from both enterprises.22 The objective in creating Union Mill and Mining was to consolidate and concentrate milling operations. That meant that some

20 There was much conflicting information about the cost to build and rebuild the Ophir and Gould & Curry mills, and the figures cited by the Surveyor-General were very much on the low side. Without actual company records any resolution of these conflicts remains improbable.21 O’Neale, Rule & Co controlled three or four mills with a total crushing capacity of between 2,000 and 2,500 tons per month. In addition Crown Point Mining Company, which would eventually come under the control of Ralston and Sharon, had at least two mills with a crushing capacity of less than 2,000 tons per month.22 Smith, The Comstock Lode, 50-51.

13

THE COMSTOCK [I]

of the 17 mills could be sold or abandoned because they were inefficient, and the remaining mills, which could set their own rates irrespective of the custom milling rates, would not only be fed ores from their own mines but could also solicit business from other mining companies. The crucial point was to own enough milling capacity to dominate the sector and to restrain competition. Custom mills, of course, had always been under private ownership, usually a single proprietor or several partners, and their independence from the mine owners was a source of friction. It was their independence (which had allowed them to dictate prices in the early years) that the milling tycoons wanted to compromise. Although custom mills survived, private milling as envisioned by Ralston and Sharon became the standard on the Comstock.23

The business of refining had changed noticeably by 1873 when the State Mineralogist presented his biennial report to the 6th Session of the State Legislature. The data that he collected was from 1871 and 1872, and in the half-dozen years since the Surveyor-General’s survey the Sharon model had taken hold on the Comstock. The state had 162 mills with 1,904 stamps and the capacity of 5,183 tons per day. The four counties of Story, Lyon, Ormsby and Washoe had a total of 64 mills (40 percent) with 981 stamps (52 percent) and a daily capacity of 3,043 tons (59 percent). A direct comparison with the 1866 survey requires some care because the Mineralogist’s 1873 report included tailing mills and the 1866 survey did not. It is not known when independent tailings mills were first constructed. There is almost no discussion of tailings mills in standard published sources. Based on the 1873 Mineralogist’s report at least a half-dozen tailings mills had been built in Story and Lyon Counties by 1873. One of those mills, Occidental, was described as both a quartz mills and a tailings mill. If we exclude tailings mills from the 1873 report (excluding Occidental), we can then compare that report with the 1866 survey. The total number of quartz mills for the four counties in 1873 would fall from 64 to 57, a figure that was 26 percent below the total number of mills (77) in 1866. Along with the decline in the number of mills came a 33-percent decline in the number of stamps. A decrease in mills and stamps was counterbalanced to a degree by an increase of 13 percent in capacity (from 2,072 tons to 2,338 tons – tailings capacity not included). After the craze in mill building during the 1860s some mills had been abandoned, some may have been converted to tailings operations and some were remodeled and upgraded. New mill building did not cease in the 1870s. Several large, powerful and efficient mills were constructed in and around Virginia City, mainly in connection with mining bonanzas at Crown Point, Belcher, Consolidated Virginia and California. Since 1866 the number of mills in Story and Lyon – the two counties most densely populated with mills - had declined from 60 to 46 or 12 percent and the number of stamps from 1031 to 687 or 33 percent. On the other hand daily capacity had grown from 1,484 to 1,704 tons or 15 percent. Even with a decline in the number of mills and stamps Lyon and Story Counties still had a third or more of the milling facilities in Nevada.24

23 The mill data from “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd

Legislative Session (1867), insert after p. 21.24 “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th

Legislative Session (1873), 147. The 1866 data from the footnote above.

14

THE COMSTOCK [I]

Close scrutiny of the 1873 milling data reveals how the Comstock-related milling business had changed since 1866. Milling needed water, and the location of so many mills along rivers, especially the Carson River, was not an accident. Even though the ore had to be hauled 10 to 20 miles from the mines to the mills, that was initially cheaper than trying to bring water to the Comstock. The Washoe County mills being the most distance were the most vulnerable. In 1866 some of the largest mills yet built were in Washoe (City) and Franktown. The former town had two mills (Manhattan and New York & Washoe), owned New York & Nevada and New York & Washoe. Each mill had 24 stamps with a daily capacity of 45 tons at an estimated cost of $100,000 to build in 1863. In nearby Franktown Ophir Mining had built its mill in 1862 with 72 stamps and a capacity of 33 tons per day at a cost of $150,000, although in 1869 the Mineralogists declared that it cost over $500,000.25 Its grandeur did not escape Lord’s attention: 12 miles (16 miles according to the Surveyor-General) from the mine and covering an acre of ground the costly complex boosted not only a mill but also “shops, stables, carriage-houses, quarters for workmen, offices, and superintendent’s residence”, all of which “constituted a miniature city”.26 Even with the second highest number of stamps in the four counties (only Gould & Curry’s mill, discussed earlier, had more) the capacity – to refine ore - was only average for Washoe County mills and for mills in the four counties.27 Meanwhile in 1864 the Ophir Mining built a second mill along the Carson River in Lyon County about half the size of the Washoe County facility. Not far from the first Ophir Mill in Franktown J. H. Dall had built Washoe Valley Reduction with 60 stamps and a capacity of 60 tons daily for $140,000. By 1873, wrote the Mineralogist, all but one reduction mills in Washoe County were idle and most of those built in the decade before had been abandoned or dismantled. The Truckee Mill (not on the Surveyor-General list) was still reducing ores, and several tailings mills remained in business. The cause of their demise: the Virginia and Truckee Railroad that allowed miners to transport their ores more cheaply to the mills to the south of the Lode on the Carson River. Without specifying the names or types of mills or commenting on their operational status, the Mineralogist noted that Washoe County in 1873 had 5 mills (down from 9 or 45 percent in 1866), 84 stamps (down from 261 or 68 percent) and 124-ton per-day capacity (down from 308 or 60 percent). For all intents and purposes refining ceased to be a major business. Washoe County now had to depend on Reno and Wadsworth, both important rail centers, and farming and grazing outside the cities for its economic prosperity.28

Ormsby County, which included mainly Carson City, the State Capital, but was later incorporated into Douglas County, was like Washoe County some distance from the Comstock. Since the Carson River flowed thorough it, it had access to water-power In addition, unlike Washoe County, it had direct access to the Comstock mines through the Virginia and Truckee Railroad, which opened in late 1869. The number of operating

25 “Biennial Report of the State Mineralogist…1867 and 1868” Appendix to Journal of Senate, 4th

Legislative Session (1869), 21. Grant Smith cited the same figure without any source in The Comstock Lode, 80.26 Lord, Comstock Mining and Miners, 122-123. Lord did not give a price tag to build a miniature city.27 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), insert after p. 26.28 “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th

Legislative Session (1873), 138-139.

15

THE COMSTOCK [I]

mills actually dropped from eight to six (a decline of 25 percent) between the Surveyor-General’s report in 1866 and the Mineralogist’s report in 1873. At the same time the number of stamps increased from 170 in 1866 to 210 (up 24 percent). The explanation for this was renovations at Santiago (from 24 to 34 stamps, 42 percent increase) and Brunswick (from 8 to 56 stamps, 600 percent increase). During the early years of mill-construction frenzy two Comstock mining companies built expensive mills in Ormsby County: Mexican built a steam- and water-powered mill for $300,000 in 1863 in the town of Empire (under the ownership of Alsop & Company in 1866) and Yellow Jacket built a water-powered mill in 1864 for $150,000 in the same town. The 1866 survey reported that the eight mills, built between 1860 and 1864, cost a total of $825,000 or slightly more than $100,000 apiece on average. With the aforementioned 170 stamps the cost per stamp was just under $5,000. By 1866 two of the mills, Brunswick and Carson, had come under the control of Ralston and Sharon. It had fewer mills than Washoe in 1866, but the level of capitalization was somewhat higher. Whereas Washoe faded Ormsby remained a part of the milling complex associated with the Comstock until the end. In 1873 the Mineralogist reported that Brunswick, Mexican and Yellow Jacket Mills were then processing ore from Crown Point, whose bonanza began in 1871. With more stamps Ormsby’s monthly capacity jumped from 7,360 to 15,300 tons, an increase of 107 percent. This was accounted for in large part because Brunswick’s capacity skyrocketed from 20 to 120 daily or 500 percent. In a curious twist Ralston and Sharon had bought the Crown Point Mine in the late 1860s, and then lost control of it just as the bonanza began in 1871. Who owned the mills, and in particular who owned Brunswick, which was currently processing ore from a mine that they no longer owned? The Mineralogist’s Report was of little help because it did not list any of the owners of the mills in Ormsby. Eliot Lord wrote, however, that Ralston and Sharon after having lost Crown Point were further disappointed because they did not secure any contracts for Union Mill and Mining to refine Crown Point’s ores. Crown Point had a mill in Gold Hill (Rhode Island) near the mine, and that mill surely processed some of the ore. What was not refined there was processed at mills owned by Nevada Mill and Mining, which Crown Point’s owners, Haywood and Jones, had established in the mold of Union Mill and Mining. If the Mineralogist’s information was correct that these Ormsby County mills were fully occupied with ores from Crown Point, then Brunswick, Mexican and Yellow Jacket may well have belonged to Nevada Mill and Mining. Union Mill and Mining had sold other mills, and it may have disposed of Brunswick. Whoever owned the Ormsby’s mills in the early 1870s, they were valuable properties as a consequence of the recovery of the Lode’s southern end. None of the mills was idle, and none appeared to be processing tailings.29

From 1866 to 1873 Lyon County fared better than Washoe but less well than Ormsby. Lyon had the highest population of mills in Nevada, but, if only quartz mills were counted, then it was second behind Story. Lyon County sat between Story and Ormsby, and the availability of water from the American Flats and Carson Rivers made it a natural site for mill construction. The Virginia & Truckee Railroad from Virginia City to Carson City passed through the heart of Lyon County’s milling district and further 29 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), insert after p. 21; “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th Legislative Session (1873), 115-117, 132; Lord, Comstock Mining and Miners, 283-284.

16

THE COMSTOCK [I]

enhanced its position. In 1866 there were 27 amalgamation mills in Lyon County with 395 to 424 stamps in plants that cost between $1.4 and $1.5 million to build, or approximately $3,500 per stamp.30 According to Lyon County’s Assessor, George McFadden, who collected the Lyon County data that the Mineralogist incorporated in his 1873 report, the 24 quartz and tailings mills were located in the following areas: eight in Silver City (closest to the Comstock), six along the Carson River (farthest from the Comstock), five in Gold Cañon (between Silver City and Dayton), three in Dayton (a few miles southeast of Silver City) and two in Spring Valley (west of Dayton). Of the 24 mills 19 were classified as quartz (amalgamation) mills and five as tailings mills. More than half of Lyon County’s milling capacity was from tailings. If all the mills listed in the 1866 Surveyor-General’s survey were quartz mills (this seems likely) then the county had lost eight quartz mills between 1866 and 1873. Over time as the volume of tailings grew mills specializing in tailings also increased in number. In 1873 all of Lyon’s tailings mills were in operation whereas among the quartz mills five were idle. The Mineralogist’s Report did not explain why the mills were idle or how long they had been idle. Two of the idle mills were in Gold Cañon, and one each along the Carson River, in Dayton and in Spring Valley. The largest of the idle mills was Rock Point Mill (also known as Imperial because it was built by Imperial Mining) with 56 stamps and a monthly capacity of 112 tons. When it was built in 1861 at a cost of $250,000, it was the county’s largest and most expensive mill. At the time only the Gould & Curry Mill in Story County and the Mexican Mill in Ormsby County cost more to build. In the 1873 Mineralogist’s report the number of stamps remained the same at 56, but the capacity of the mill had risen from 90 tons per day to 112 tons per day. Its stamps were of average size with 16 weighing 600 pounds and 40 weighing 550 pounds. The Imperial Mining Company had enjoyed some success in the early 1860s, but along with many other Gold Hill mines Imperial produced little profitable ore after 1868, and that may explain why this large facility was idle in 1873. Despite the trend toward private milling companies Imperial may have remained a mine-linked mill. The other idle mills were of moderate size. Given that nearly a third of the quartz mills were not operating and all the tailings mills were, tailings operations had obviously grown in importance in Lyon County’s milling business. It was certainly more prominent in Lyon County than in any of the other three counties.

Two points of clarification should be made. That a mill was running with a certain capacity did not mean that it was running at full capacity every day. The Mineralogist’s report simply indicated what the potential capacity was and not what was being milled every day. Furthermore, tailings yielded metals of far less value per ton than amalgamation so that the quartz mills with less daily capacity might actually produce gold and silver of greater worth.31 Mills could make profits from tailings, however, and since Lyon County had so many quartz mills from the early 1860s, it probably had an ample supply of tailings for millers to buy and reprocess. The two largest tailings mills were the Carson Valley Mill along the Carson River and the Birdsail & Co. mill in Dayton, which could process up to 300 tons daily. The remaining three mills were smaller with a capacity of 25 to 50 tons. The largest of the operating quartz mills was 30 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), insert after p. 21.31 If Lyon County Assessment Rolls have survived, and I assume that many have although I have not consulted them, the relationship between quartz and tailings mills could be studied in greater detail.

17

THE COMSTOCK [I]

Eureka on the Carson River with 60 stamps and a capacity of 120 tons (compared for example to the idle Imperial with 50 stamps and a 112-ton capacity. Built in 1861 for $100,000, its owners in 1866 were Hurd, Wheeler & Dunker. It cannot be verified that they built the mill in 1861 or still owned it in 1873. It had been enlarged since 1866 when it was of average size with 20 stamps and a daily capacity of 22 tons. Even though it was 6.5 miles from the Comstock mines, it had access to the Carson River to power a large turbine and was close to the Virginia & Truckee railroad. According to the 1873 report Eureka was an operating mill, but the report made no reference as to who owned it or whose ore was being processed. Some of the other quartz mills noted by the County Assessor served mainly Lyon County mines: Dayton Mine-Atlanta Mill; Buckeye Mine-Horn and Hope Mills; and Cook & Geyer Mine-Franklin Mine. Only the Franklin Mill appeared on the 1866 survey with Sharon as its owner. Several other mines were described as flooded or abandoned. The remaining amalgamation mills, like Eureka, listed by the Surveyor-General were not identified with any mines. Five of those mills – Devil’s Gate, Bacon, Trench, Kelsey and Sacramento – will end up in the stable of mills owned or controlled by The Firm through the Pacific Mill and Mining Company to process ores from Consolidated Virginia and California Mines.32

For Story County the 1873 Mineralogist’s report added an important component. It had information on size and location of the mills, but it also included information on which mines the mills served. Story had a total of 29 mills only three of which processed tailings. Occidental was classified as a dual quartz and tailings mill. Eight mills (28 percent), none of which were tailings mills, were idle, about the same proportion as in Lyon County. Among the amalgamation mills the average number of stamps per mill was 13 and the average capacity was 37 tons per day or 1,100 tons a month. Story’s average-sized mill tended to be smaller in terms of number of stamps and overall capacity when compared to the average in Lyon and Ormsby but especially in Ormsby. Eight (28 percent) mills were located in Lower Gold Hill, six (21 percent) in Gold Cañon (further south where the boundary between Story and Lyon Counties was located), five (17 percent) each in 6-Mile and 7-Mile Cañons (east of Virginia City) and the remaining five (17 percent) in Virginia City (3), Silver Star (1) and Cedar Hill (1). Pacific (Gold Cañon) had the most stamps with 30 and a capacity of 70 tons per day or 2,100 tons per month while Petaluma (Lower Gold Hill) had 6 fewer stamps but the highest capacity of 75 tons per day or 2,100 tons per month. The three mills in Virginia City proper – Hoosier State, Nevada and Sierra Nevada – had more than the average number of stamps but only slightly more than the average capacity. Although the capacity of the tailings mills was not given, they seemed to play a smaller role in Story County’s milling business. Two tailings mills – Park & Bowie, Nos. 1 & 2 – were in 6 Mile Cañon, and the other, Occidental, was located in Silver Star. Half of the County’s mills listed in 1873 inventory appeared in the earlier 1866 survey. Among the largest (25 stamps and 50-ton per-day capacity) was Rhode Island, built at a cost of $100,000 in 1862 by Crown Point Mining Company. When Sharon and Ralston took control of Crown Point, they probably took control of Rhode Island. It is unclear if it became a property of the Union Mill and Mining Company because when the rivals of Sharon and Ralston won control of Crown

32 “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th

Legislative Session (1873), 100.

18

THE COMSTOCK [I]

Point in the early 1870s they apparently also came into possession of Rhode Island. Between 1866 and 1873 the capacity of Rhode Island was not increased so that its 50-ton-daily capacity remained the standard. Most of the mills on both inventories had undergone some enlargement and improvement. Both Pacific and Petaluma increased the number of stamps and their capacity after 1866. Several mills reduced the number of stamps but increased capacity. Although the total number of mills had declined from 33 in 1866 to 27 in 1873 or 18 percent, excluding tailings mills, and the number of stamps had fallen from 607 to 399 or 34 percent, capacity had risen 18 percent. Like Lyon County Story had idle amalgamation mills – seven of the 27 or 26 percent. They accounted for a quarter of the daily capacity. The reason for their idleness was not recorded. Four of the seven dated from the early 1860s, and age may have made them less competitive. Despite the bonanzas on the Comstock’s southern end Story County could still be saddled with milling overcapacity. Several of the idle mills, however, will be reactivated during the great bonanza that was just beginning on the northern end.33

In the early 1870s the output of four mines – Crown Point, Chollar Potosi, Savage and Belcher – dominated the milling business in Story County. Twelve of the 27 quartz mills with more than half of the stamps and daily capacity were engaged in processing ores from these mines. Among the operating mills this was to 72 percent of the stamps and 68 percent of the capacity. Four Story County mills – Ione (a small “croppings” mill), Petaluma, Sapphire and Rhode Island - with 69 stamps (17 percent) and 180-tons per-day capacity (18 percent) were processing ores from Crown Point, which the Mineralogist described as “the most valuable silver mine in the world”. These four mills, however, constituted a minor contingent of Crown Point’s milling facilities. The bulk of the ore was shipped to three mills – Brunswick, Mexican and Yellow Jacket – on the Carson River in Ormsby County.34 Their combined capacity was 345 tons per day, almost twice the volume of the Story County mills. The largest of the Story County contingent was Petaluma with a capacity of 75 tons that was equal to the capacity of Yellow Jacket, which ranked third on the list of Ormsby mills. It is possible, of course, that mills in Lyon County also processed Crown Point ore, although none was so identified. As noted earlier, the new owners of Crown Point set up their own private milling company, Nevada Mill and Mining, but what cannot be documented yet is which of these mills were folded into the Nevada operation. Three other Story County mills – Winfield, Landy and Nevada – with a total of 60 stamps and 150-tons capacity per day (4,500 tons per month) milled ores for Chollar Potosi Mining Company, and three other mills – Atlas, Hoosier State and Evans – with 38 stamps and 93 per-ton per-day capacity (2,800 tons per month) worked ores for Savage Mining Company. It was not stated whether these mills belonged to a milling combine under the control of the mine owners or were independent, custom mills. In the case of Savage the Mineralogists did state that except for a small quantity Savage’s ores were processed at customs mills. Savage owned two mills – Atchison and Minnesota – in Washoe County, both built in the early 1860s, and one of them (name of mill not given in report) processed about 1,000 tons. Low yields 33 “Annual Report of the Surveyor-General…1866” in State Journal and Appendix, 3rd Legislative Session (1867), insert after p. 21; “Biennial Report of the State Mineralogist...1871 and 1872” Appendix to Journal of Senate, 6th Legislative Session (1873), 138.34 “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th

Legislative Session (1873), 132.

19

THE COMSTOCK [I]

from Savage ores made the cost of transportation to Washoe prohibitive. A fourth mine, Belcher, at the onset of its bonanza, sent some of its ores to Pacific, the second largest Story mill, and a Sharon-Ralston property. Presumably other mills owned by Sharon and Ralston in Story and other counties could have been enlisted to mill the rising quantity of ore from Belcher. By the 1870’s large and powerful milling combines had emerged along side of large and power mining combines.35

When the Mineralogist’s Report (1875) filed his 1875 report with the 7th Biennial Legislature, it contained no mill surveys and very little general information about milling. It was regrettable that he did not provide a more detailed review of milling operations in Story and the surrounding counties at a point when the Comstock was about to enter its most flourishing period. In Lyon County he noted that most of the processing was tailings, a pattern that we observed in the 1873 report. Without naming the two tailings mills he reported that they had the combined capacity of 1,350 tons per day, more than twice what had been reported two years earlier. In Story County, he advised, there was insufficient milling to handle the upsurge in ore production mainly from Consolidated Virginia and California mines. He included some milling details concerning operations at Crown Point, Belcher and a few others mines, but he devoted most of milling report to the evolving milling behemoth in connection with Consolidated Virginia and California, a topic to be looked at closely in the next chapter. The bulk of his report, however, focused on mining rather than milling, which in everyone’s mind was on the verge of fulfilling the promise often made for the Comstock.36

The published accounts of Crown Point’s mining and milling operations for the fiscal year 1873-1874 offer details on the cost of preparing and processing the ores.37 For the fiscal year 1873-1874 11 mills were required to process slightly more than 140,000 tons of ore.38 Figure 3 lists pertinent information about the mills. Eight of the 11 mills were included on the Survey-General’s 1866 Report and nine of the 11 were included in the Mineralogist’s 1873 report. The two mills that did not appear on earlier inventories were Morgan and Sherman: the former was near Carson City in Ormsby County and Sherman was on the southern edge of Story County. More than a quarter of the ore was processed at Brunswick in Ormsby County. Behind Brunswick were two other Ormsby County mills, Mexican (19 percent) and Morgan (18 percent). These three accounted for 64 percent of the refined ore. In fourth place (11 percent) was Crown Point’s own mill, Rhode Island, built a decade before. The remaining seven mills handled a quarter of the ore. The yields ranged from a high of $67 per ton at Hoosier State Mill on 376 tons, the smallest quantity of ore processed by any of the mills, to a low of $35 per ton at Sherman Mill on 449 tons, the next smallest quantity. The average yield was $51 per ton, a figure 35 “Biennial Report of the State Mineralogist...1871 and 1872” in Appendix to Journal of Senate, 6th

Legislative Session (1873), 131-132, 134-136, 138.36 “Biennial Report of the State Mineralogist...1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875), 91-101, passim.37 The Superintendent’s Report covered the period May 1873-April 1874. Excerpts and summaries are found as a port of the “Biennial Report of the State Mineralogist...1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875), 106-112.38 Ore that was described as “ore worked” or as “working ores” usually meant ore that had been put through the refining process from crushing to amalgamating. Worked ore could be less than the volume of ore extracted from the mine and shipped to the mill.

20

THE COMSTOCK [I]

that characterized the yields of the four largest refiners (noted above). At this point the accounts require some interpolation. The milling costs at Rhode Island were included along with the general mining accounts, and the inclusion of milling accounts within the mine’s financial accounting suggests that the mill was still a property of the mining company. The refining costs of the other mills, some or perhaps all of which may have been properties of Nevada Mill and Mining, were listed under a single entry called crushing.39 The mining company spent $1.5 million to process 124,000 tons (the difference between the total of 140,000 and Rhode Island’s share of 16,000). The per-ton cost was $11.99 per ton. Rates at individual mills were not recorded. If $12 per ton was more or less the standard, it amounted to about a quarter of the average per-ton yield in bullion of $51. Add the $12 per-ton refining cost to the $9 per ton mining cost for a total of $21 to $22, leaving a surplus of nearly $30 per ton.

Refining costs at Rhode Island Mill appear to be somewhat lower per-ton than the calculated average. For the 16,000 tons processed at Rhode Island the cost including more than $1,000 for mill improvement was $174,000. Some other costs such as haulage and assays may not have been fully accounted for under entries for Rhode Island. In any event the per-ton rate there was $11 ($10.84), slightly lower than the rate for the other 10 mills. The breakdown (less precise than for an earlier discussion of Gould & Curry) is as follows: mercury, chemicals etc. - $66,602 or 39 percent; labor - $45,659 or 26 percent; wood - $28,987 or 17 percent; machines & castings - $23,003 or 13 percent; and water - $8,400 or 5 percent. Clearly mercury and the other ingredients necessary for amalgamation had jumped to the top of the cost structure. Two factors can be cited. First the demand for mercury had risen in step with increasing tonnage of ore to be processed, and that led to higher mercury prices. Further, the richer the ore the more “new” mercury had to be incorporated with each batch – in short more mercury was lost. In the case of Rhode Island mercury et al. cost about $4.19 per ton. If that were used as a benchmark for all the mills, then more than $550,000 was spent on mercury purchases. The next highest cost was labor at about $2.88 per ton. Firewood to power the steam turbine and machinery cost $1.81 and $1.44 per ton respectively and water cost slightly more than 50 cent per ton. Even as milling rates had declined since the early 1860s the allotment of those costs had also changed. No doubt part of this arose from the introduction of greater efficiencies in the preparing and processing of the ores, but the most notable change arose from the heavy, constant demand for mercury without which the Comstock’s success would have been greatly limited.40

Not much on milling appeared in subsequent reports by the Mineralogist, and with the abolition of the office in 1879 public reports on mining and milling on the Comstock and in Nevada almost ceased entirely. Some new mills were built and some

39 I have deduced that if the volume of ores refined at Rhode Island is subtracted from the total of ores processed, the difference is the amount listed as crushed but excluding Rhode Island. In order to estimate the cost of refining at the other mills the figure for “crushing” only refers to the refining of the ore outside of the Rhode Island Mill. The per-ton cost reached by dividing the total crushed figure by the tonnage delivered to the mills except Rhode Island is within a few cents of the per-ton refining cost stated for all the mills in the accounts. It is not clear why the per-ton cost was presented in this way without more detail.40 “Biennial Report of the State Mineralogist...1873 and 1874” Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875), 107. The percentage calculations are mine.

21

THE COMSTOCK [I]

old ones refurbished during the boom years of the middle 1870s, but as the boom faded, many mills, new, old and remodeled, were abandoned. The mills that continued to have some business were the tailings mills because as the output of ore from underground fell, the tailings were seen as potentially profitable especially as the techniques for recovering minerals from them were being improved. The state of the mines rather than the mills remained the principal interest of the official investigators.

FIGURE 4MILLS REFINING OF CROWN POINT ORES, 1873-1874

Mill County Tons Bullion Value ($) Per-Ton Yield ($) % TonsBrunswick Ormsby 37,620 $1,910,659 $50.79 26.85Mexican Ormsby 26,333 1,366,538 51.89 18.79Morgan Ormsby ? 25,480 1,280,062 50.23 18.18

Rhode Island Story 16,044 850,362 53.00 11.45Petaluma Story 12,333 624,544 50.64 8.80Pioneer Lyon 10,486 522,080 49.78 7.48

Atlas Story 7,490 386,122 51.54 5.35Sapphire Story 1,804 84,637 46.90 1.29

Devil's Gate Lyon 1,713 75,829 44.25 1.22Sherman Story/Lyon ? 449 15,858 35.22 0.32

Hoosier State Story 376 25,048 66.70 0.27Totals 140,128 $7,141,739 $50.97 100.00

Sources: Footnote 37.

22

THE COMSTOCK [K]

Chapter 11The Business of Mining:

The Sutro Tunnel, Ever-Expanding Technological Base

The “Feats of Labor”, to steal a phrase from Eliot Lord, was no more manifest on the Comstock than with the most controversial and colossal project ever undertaken – the Sutro Tunnel.1 It was an underground passage, four miles long, that began on the surface in a place called Sutro, to the east of the Comstock, and reached a depth of 1,700 to 1,800 feet when it connected to the Lode under Virginia City. It was designed with several tasks in mind, although drainage was the principal one. As impressive as this “feat of labor” was, it highlighted another feat that helped to define the Comstock – the search for and the application of new technologies. In any comparative assessment of New World mining, one has to be struck by how much mechanization had entered the business of mining by the second half of the nineteenth century, especially underground. Spanish colonial mining had little mechanization below ground and only some above ground at the refineries. The nineteenth century had a much stronger industrial base than previous centuries, and the application of that base was evident almost from the beginning at the Comstock, both above ground and below. Drills cut away the rock, pumps admitted air and drained water and elevators moved workers and ores in and out of the mine. Company correspondence referred to searches for better bits and bigger engines to accomplish the work. Machines did not replace humans, of course, but they in combination with human labor made it possible to be more productive at greater depths than ever before. There were limits, imposed by the physical environment, but not by the imagination of the entrepreneur. One of those projects of the imagination that almost became a fully achieved reality was the Sutro Tunnel.

The tunnel was the dream and the achievement of Adolph Sutro, whom Grant Smith described as “one of the most remarkable men that rose to power on the Comstock.”2 Because so many (including Sutro himself) have written about Sutro and his ambitions, I have chosen to confine my analysis to specific matters dealing with finances and technologies relating to the Sutro Tunnel rather than the career of Sutro. It is widely observed because the tunnel took a decade to build and therefore opened only after the Lode’s greatest bonanza had passed, it served as a postscript in the history of the Comstock. Even so after numerous setbacks and threatened abandonments the tunnel was completed, functioned as it was designed to function and was regarded as a success simply because it proved what could be accomplished in an age that combined the power of the machine and the capacity of labor. Indeed, one might conclude that the Sutro Tunnel was the final act in a drama that had raised the business of mining to unprecedented heights. As promoter, designer and entrepreneur, Sutro embraced the dreams of many of his compatriots except his dreams were grander and bolder. He has been caricatured as essentially a promoter – to the extent that he continually repackaged the venture to attract investors he was – but in promoting he was also advancing the power of technology. No doubt in the end Comstock companies found other ways to drain the Lode, but Sutro still left his mark, much to the chagrin of his many foes.

1 Lord, Comstock Mining and Miners, the title of Chapter 17.2 Smith, The Comstock Lode, 107.

1

THE COMSTOCK [K]

The history of Sutro’s tunnel began shortly after mining on the Comstock began. The idea for a tunnel was pitched to the Nevada Legislature [2nd Session] in 1865. The Legislature granted to Sutro an exclusive franchise to build a tunnel from the mouth of Webber Cañon in Lyon County to the Comstock at a point about 2,000 feet below the Gould & Curry croppings. A federal bill – The Sutro Tunnel Act – followed in 1866. It permitted him to buy public land for $1.25 per acre and private land for $5.00 per acre over the distance to the Lode. It also stipulated that anyone benefiting from the tunnel had to pay a fee to the company. What was not forthcoming in spite of many years of petitioning and imploring Congress was a federal loan. And the lack of capital would haunt Sutro to the very end of his participation in the tunnel project.3

The idea behind the tunnel was not irrational. The primary purpose of the tunnel was to drain water from a depth that was well below the levels that most of the underground operations had then reached. Sutro (and others) believed that mining companies would find richer ores the deeper they dug into the Lode. But a few hundred feet below the surface water had already become a problem and an expense for some mines, and the idea behind Sutro plan was to connect to the Lode at a depth sufficiently below the presumed location of the yet-to-be-discovered ores to let the water drain down and out. This idea was a variation on what Spanish miners had learned in Mexico and Peru. They would build an adit or tunnel below the vein of ore that they were working to remove the water. This was referred to in colonial documents as “dead work” because it had no other function except to drain water. These projects were expensive, time-consuming and often abandoned. They were more often built in Mexico than Peru because Mexican ores over time proved to be of higher grades

and therefore of greater yields than Peruvian ores. Adits could in fact pay for themselves.4

As efficient as Sutro’s tunnel might have been for diverting water, Sutro had other plans for the tunnel. In addition to drainage he envisioned that it could be used to transport workers, supplies, ores and even visitors into the interior of the Lode. Since it was to be used for more than moving water the interior of the tunnel had to have a system of ventilation and illumination, had to be wide and high enough to accommodate rails, cars and passengers and had to keep the drainage ditch separate from the rail system. Further it was necessary to build the tunnel on a grade to permit the natural flow of water and to intersect the Lode at an appropriately effective point. Under these conditions it was calculated that the interior of that tunnel would be about 2 million cubic feet. Tens of thousands, perhaps hundreds of thousands of tons of soil, rock and clay (not to mention scalding water) would have to be removed to bring the tunnel into existence. This plan called for careful engineering as well as long-term financing, compliant laborers and

3 Lord, Comstock Mining and Miners, 233-235.4 For a comparative discussion of colonial Peruvian and Mexican mining, see Garner, “Long-Term Silver Mining Trends,” American Historical Review, 93, 929-934.

2

Illustration 1: Sutro Entrance

THE COMSTOCK [K]

drilling technology, some of which did not yet exist. As was his nature, Sutro created an overly optimistic timetable of two and one half years for the completion of the tunnel. In a report to the 3rd Legislative Session the Surveyor-General thought the timetable was “impractical” and estimated that “with vigorous prosecution” five years would be needed.5 It actually took 13 years to complete the tunnel, and not only did the mining companies discover the rich ores that Sutro had predicted when the tunnel was launched but unfortunately they had removed most of the profitable ores before the tunnel was finished. Among his supporters and enemies there was a consensus that such a tunnel, if it could be built, would serve the Comstock well, but like so many Comstock projects this one became bogged down in financial disputes, technical failures, political intrigues and a general dislike and distrust of Sutro within the mining community. Whether or not a functioning tunnel during the boom years would have made a significant difference to the bottom line for the Comstock mining companies can hardly be tested. The historical interest in the Sutro Tunnel is that it got built at all.

Part of the appeal of the project may have been its monumentality. Big projects and big dreams were standard fare on the Comstock. There is no doubt that Sutro like many of his contemporaries overstated the prospects and in particular the financial prospects of the tunnel. In fact, though, it was completed much in the way that his original plan had envisioned.6 His franchise gave him a claim of land about one mile in width. From Webber Cañon the tunnel would be dug through the middle of the claim to connect with the Comstock (actually at the Savage Mine to the south of Gould & Curry) at between 1,600 and 1,700 feet. The depth of the tunnel would increase, of course, as the tunnel made its way under rising surface elevations until it reached the Comstock, a distance of 20,000 feet. Given the dual purpose of the tunnel – drainage and transportation - it was designed to be 7 feet high, 8 feet wide at the top and slightly wider (between 9 and 9.5 feet) at the bottom of the tunnel. Tracks for two railways would be laid on the floor of the tunnel along with a properly covered conduit for drainage of water. At the Comstock end a connection would be made at no less than 1,800 feet. The grade was to be not less than one inch per 100 feet. Sutro understood that time was of the essence so he planned to excavate from both directions. To accomplish this he proposed the construction of four shafts along the route at 4,000 to 5,000-foot intervals. Once these shafts reached their appropriate levels work digging the tunnel could be sped up. The shafts could also improve ventilation and facilitate maintenance of the tunnel. This part of the project ran into numerous delays and difficulties. The first two shafts were completed, and the third and the fourth, the deepest shafts, were abandoned. In the mid-1860s, when Sutro devised his plan, he was among those investors who believed that the Lode’s richest ores yet lay below the 1,000-foot level, which some companies had already begun to explore. It turned out, of course, that the richest ores lay between the 1,200- and 1,700-foot levels, and had Sutro been able to complete the tunnel as scheduled by the late 1860s or early 1870s these levels could have been connected to the tunnel and drained

5 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 24-25.6 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 24-25; Summary of Articles of Agreement between Gould & Curry and Sutro Tunnel Company (26 Mar 1866) in Folder from Virginia Consolidated Mining Company (29 Mar 1879), NC7/1/6, Special Collections, Library, University of Nevada, Reno.

3

THE COMSTOCK [K]

accordingly. If ores had discovered below the 1,700-foot level, the tunnel would have been less effective. Rich ores at greater depths would have required water to be pumped up where the tunnel intersected the Lode. But unbeknownst to Sutro and everyone else who speculated about the configuration of the Lode, the richest seams lay slightly above where his tunnel and Lode joined and below this level the ores petered out. When the tunnel and the Lode were joined, the tunnel project itself had become an anachronism, a victim of time, as was true of other monumental projects. By 1878, while a few water-logged, non-producing mines could have benefited from the tunnel, they remained barren of ore. Other mining companies were exploring depths below the connecting point, and even though management drew up plans to adapt the tunnel to the new underground reality, they were abandoned because in the face of continued barrenness costs were prohibitive.

In addition to draining the mines Sutro’s tunnel would also serve as a conduit for moving supplies, workers ores to and from the Lode. Being both a visionary and a businessman Sutro had concluded that if such a link were opened he would not only earn income from drainage and transport but he could also reap greater wealth by owning or controlling the mills that could be built at the end of his tunnel. It proved to be, of course, unrealistic and unrealizable. Even if the tunnel had been completed according to initial and overly optimistic predictable, the flow of material and personnel through a single artery could not accommodate the complexity that came to characterize Comstock mining. Moving hundreds and at times thousands of workers along with tens of thousands of tons of ore, residue and supplies on dual tracks over four miles was an invitation to disaster. Already by the mid-1860s the pattern of the infrastructure of the Comstock was in place. Mining companies were making larger and larger investments on their own to hoist ore, accommodate personal and process ore and had little financial incentive to turn such tasks over to a tunnel promoter who failed to keep to his original timetable. That plus a general distaste for the bravado and arrogance that Sutro constantly displayed landed him far fewer clients than he needed to make the project financially sound. Some drainage leases were signed early on but given the delays were soon abandoned. The anticipated revenue stream of companies signing such leases dried up, and increasingly, to keep the project afloat, Sutro, who never lost faith (at least publicly), had to entice investors outside the Comstock to put up the needed capital. That he succeeded over the years is itself another oddity in this long sage. The local community virtually ignored Sutro and the on-again, off-again tunnel project. As evidence of his confidence, he was alleged to have said that after Virginia City was abandoned, “the owls would roost” in the tunnel.7

In his 1879 (and last) legislative report the Mineralogist summarized various statistics from the long history of the tunnel and its final connection to the Lode. The distance of the Sutro Tunnel to a floor of the Savage Mine (rather than Gould & Curry) was 20,018 feet and to the mine’s shaft was 20,489 feet. The first was reached at 11 PM on 8 July 1878 when workers from Savage punched a 5-foot hole that joined the mine with the tunnel. The shaft was reached two months later. The initial connection was made

7 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 24-25; Smith, The Comstock Lode, 110.

4

THE COMSTOCK [K]

at a depth of 1,640 feet. Only two of the tunnel’s vertical shafts (1 and 2) had been sunk to their desired depths. Shafts 3 and 4 were abandoned at 456 feet and 674 feet respectively, about half the distance anticipated, because of flooding. Interior dimensions were close to what the original plan called for. The easiest digging was the first 2,000 feet; after that it was hard rock. Since digging on the tunnel did not begin until 1870, the tunnel took 8 years, 8 months and 19 days.8

Sutro hoped, of course, to discover rich ore deposits on the way to the Comstock. He found some ore but never enough to help to pay the bill for digging the tunnel. If the tunnel had been finished within two or three years after it was launched, it might have generated significant income, at least from drainage contracts, as the mining companies discovered both rich ore and voluminous water between 1,000 and 1,500 feet. But a four-mile tunnel at depths as great as 1,600 feet was not a feat to be easily and quickly accomplished, especially when capital to finance the project was in short supply. Sutro’s initial financing plan was to ask Comstock miners to sign leases that provided for a subscription of $3 million and a schedule of fees for the use of the tunnel. In the Spring of 1866 23 local mine owners agreed to the subscription and to pay the fees for drainage and other services, if they chose to use them.9 The leases committed mining companies to pay $2 per ton of ore extracted from mines drained by the tunnel. If companies used the tunnel to remove rock and other debris they would pay 25 cents per ton-mile and if they used it to transport workers they would pay 25 cents per worker. All such payments were to be made in gold coin and “not otherwise”. The $3-million subscription was to be spread over a ten year period with annual payments of $300,000, of which not less than $200,000 was to be in cash. The first payment was due 1 August 1867.10 The leases provided that the subscriptions would only be paid if the tunnel (not yet even started) could serve the companies advantageously. That phrase had an opened-ended quality. It is not clear exactly how much if any capital was raised locally in 1867 and 1868. If Sutro had raised $200,000 or $300,000, as stipulated, he could certainly have begun the tunnel. But the tunnel was not started. The leases did not yield what Sutro needed at once – money up front. As Comstock interest in Sutro’s tunnel waned, Sutro extended his search for investors to San Francisco and the East Coast. Opposed fiercely by William Sharon, the titan of the Lode at the time, and caught unexpectedly in a downdraft in Comstock production, Sutro lost nearly half of his leases by the spring of 1869. The remainder renewed their contracts for a year and apparently agreed to subscribe $600,000, although it is no clear how much if any of that was ever received by Sutro. On 29 November 1869 the certificate of incorporation for the Sutro Tunnel Company authorized the issuance of 1.2 million shares of stock at $10 per share for a total of $12 million. Sutro’s name was not among those listed in the incorporation, but his name was among those who

8 “Biennial Report of the State Mineralogist…1877 and 1878,” in Appendix to Journals of Senate and Assembly, 9th Legislative Session (1879), 84-85; Statement of the Condition of the Sutro Tunnel by Pelham W. Ames, Sec., Sutro Tunnel Company, 1878, MS-NC3, Bx 1, Nevada Historical Society; Smith, The Comstock Lode, 112.9 Smith, The Comstock Lode, 108. Not reported how many paid.10 Summary of Articles of Agreement between Gould & Curry and Sutro Tunnel Company (26 Mar 1866) in Folder from Virginia Consolidated Mining Company (29 Mar 1879), NC7/1/6, Special Collections, Library, University of Nevada, Reno. It is presumed that the agreement between Gould & Curry and Sutro Tunnel Company was more or less generic, typical of what other companies agreed to.

5

THE COMSTOCK [K]

transferred the ownership of the Sutro Tunnel to the new corporation. Some capital was also raised from the Miners Union. Having raised enough money to launch the project the company excavated about 1,800 feet in the first year. This was the easiest section of the tunnel to build, and yet the work had barely covered a tenth of the distance. At this point the lack of money and formidable technical problems caused Sutro to abandon the project, the first of several abandonments.11

In the early 1870s the task of raising capital shifted from Nevada and the West to Europe. In the absence of local subscriptions, Wall Street investments or federal assistance Sutro took his dog-and-pony show abroad. His position was strengthened when rich ore deposits were discovered at 1,000 to 1,200 feet, first at Crown Point and then at Belcher and other mines. He was quick to remind everyone that he had long said that rich ore bodies lay above the tunnel’s proposed depth, and these discoveries proved him right. In spite of his clairvoyance or luck further boasting did not win him any new friends or subscriptions locally. Sharon’s implacable opposition continued and intensified. Sutro’s salvation came by way of a London banking firm, McCalmont Brothers with offices at 15 Philpot Lane. Their partners were other European investors, Abraham and Isaac Seligman. Their association with Sutro over more than a decade was a rocky relationship at best. To the bankers Sutro appeared cocky, impulsive and flamboyant, too often a loose cannon instead of a serious businessman, and, not surprisingly, Sutro found the bankers to be staid, rigid and uninformed. Hundreds of letters and telegrams flew back and forth across the Atlantic. Sutro made at least one trip to London, and in 1878 because the relationship had grown so acrimonious, he was told in no uncertain terms not to make another trip. Sutro was not reluctant to speak his mind, and in one letter he disparaged the brothers for their inability to understand the business of mining. In their reply the brothers wrote: “We prefer to pass over your remarks as to our ‘shortsightedness and blindness’.”12

In combing through numerous documents from several archives, one cannot always be certain which agreements were signed or scrapped and which revisions were accepted or rejected by all the parties. One uncontested point is that although the initial McCalmont investment of several hundred thousands dollars was small, it soon grew through various refinancing schemes to millions of dollars. The pivotal years were 1873 and 1874. In 1873 the McCalmont Brothers and the Seligmans were designated the “Mortgage Trustees” for the issuance of bonds worth 1.6 million pounds sterling or nearly $8 million. As such, they held a lien on the tunnel and other (unspecified) properties. Although the documentation of the Sutro tunnel is extensive, it has proven difficult to pin down exactly how many bonds were sold and how much money, if any, was raised beyond what the bankers and their partners had subscribed by 1873. Moreover, the documentary evidence is not very helpful relative to the early financing of the Sutro Tunnel. Since the digging had resumed in 1871, certain costs had to be met for the tunnel to have added the several thousand feet that it did. These may have been covered by money borrowed from the European bankers and investors. There is no 11 Bound Volume of Abstract of Titles, 1877, pp. 6, 7, 32, Sutro Tunnel Company, MS-NC3, Bx 4, Nevada Historical Society.12 McCalmont Brothers to Adolph Sutro, 3 December 1878, Sutro Tunnel Company, MS-NC3, Bx 1, Nevada Historical Society.

6

THE COMSTOCK [K]

indication, however, that the banking house had raised or advanced part or all of $8 millions. In a draft of a Memorandum of an Agreement between Sutro and McCalmont Brothers & Co, revised over a period of several months in late 1873 and early 1874, a bond-backed mortgage worth 600,000 pounds or $2.9 million was canceled (without explanation) and a second bond-backed mortgage held by McCalmont Brothers worth 133,000 pounds or $648,000 was rescheduled from 133,000 pounds to 100,000 pounds. At the same time McCalmont was permitted to purchase 300,000 shares of company stock at a price of $10 (2.05 pounds) per share. Not all the money raised from the sale of stock to the brothers would become available to the company. The bankers would retain ten shillings or about $2 per share to retire liabilities arising from the 133,000 pounds in mortgage bonds, reduced to 100,000 pounds, under the control of the McCalmont Brothers. The Sutro Tunnel Company would be charged interest of 4 percent on all the money (even that which was retained) used to purchase the 300,000 shares of stock (since Sutro had no income with which to pay dividends). The company would pay $6,000 a month from December 1873 to October 1874 on half of the 300,000 shares for a total of $60,000. And it would pay $3,000 a month from October 1874 until April 1876 on the other half. It was presumed that the tunnel would be open and generating revenue by 1876. At this point, it would appear, the Europeans were on the hook for $2 to 3 million in a company that had no earnings. Quite possibly what the Europeans did was to assume any and all outstanding debts from previous years. The extent to which the company had accumulated debts since the project was launched and then suspended is not known precisely, but the work that had been done could hardly have been paid for with lease payments or company revenues. That the company had debts was intimated in Sutro’s own statement that with this new arrangement the company was not only debt-free but also had funds on hand to proceed.13

Work on the tunnel did proceed with only a few interruptions for the next half-dozen years but with continual wrangling between the company and its financiers. Extant financial documents are sparser than necessary to reconstruct a full financial profile of Sutro operations after 1873. The tunnel did not open in 1876, as promised, and the company repeatedly made demands on the banks to advance more money and to modify the terms of the agreements. It appears that the London firm fully expected the tunnel to become a paying proposition even as the Comstock entered a post-bonanza cycle. When completed in 1878 the tunnel had missed the opportunity to serve the Comstock in the way envisioned by Sutro. He quietly sold out and the London bankers were left as the principal owners of a project that would not ever generate any significant revenue. The new owners could not turn around the company, and finally in 1889, when McCalmont foreclosed on the tunnel, it was reorganized as The Comstock Tunnel Company and continued in existence until the 1930s. Up to 1885 the tunnel never had enough business to pay its bills or satisfy its creditors. It may have cost McCalmont Brothers and its other stockholders and investors between $5 and 6 million to complete the tunnel and another

13 Drawn from various copies of correspondence between Sutro Tunnel Company and McCalmont Brothers, November and December, 1873, Letterpress Book, Sutro Tunnel Company, MS-NC3, Bx 2, Nevada Historical Society. See also a working draft of a “Memorandum of Agreement made this [blank] 1874 Between The Sutro Tunnel Company…and Messrs McCalmont Brothers & Co…,” MS-NC7/1/5, Nevada Historical Society. This was not the final agreement, since it was not signed and some text was crossed out and new text was penciled in.

7

THE COMSTOCK [K]

$1 to $2 million to manage it. In the 1880s its stock was nearly worthless, although it continued to trade. Shrewd to the very end Sutro managed to sell his shares for several million dollars in 1879 and took his fortune to San Francisco where he became a controversial and colorful real estate developer. While Sutro can be faulted for his promotional antics, he did in fact complete a functioning tunnel. Whether or not the McCalmont firm were victims of Sutro’s endless sales pitches, they were certainly guilty of the lack of due diligence, to use today’s jargon. They had little first-hand knowledge of the risks associated with the Comstock. That they continued to support the tunnel under Sutro and then after his tenure to manage the tunnel seemed to have but one rationale – to try to save what was a less than “quality-grade” investment in the first instance.14

The story of the Sutro Tunnel has another side. As intriguing as the financial wheeling and dealing were, the fact that the tunnel was completed for the length and at the depth in accordance with the basic plan represented a major technical achievement. It was a prime example of the convergence of entrepreneurship and technology in the new industrial culture of late nineteenth-century America. The technical hurdles were numerous, and modifications of and refinements to the plan had to be accommodated. Without a new generation of “tools and machines”, however, the project would surely have remained a fantasy. Various maps from the Becker Atlas shows that for the first 3.5 miles the tunnel passed through various types of andesite rocks, mainly what the surveys described as “later hornblende andesite” for the first half of the distance and then “augite andesite” for the latter half. Along the way it passed through several other lodes before it reached the Comstock Lode. They include the “Great Flowery Lode” near Shaft 1 or about 2,200 feet from the mouth; the “Coryell Lode” between Shafts 2 and 3 or between 10,000 and 10,600 feet; the “Occidental Lode” just beyond Coryell or between 11,600 and 11,700 feet; and “Solferino Lode” between Shafts 3 and 4 or between 14,000 and 15,500 feet. Some of these Lodes contained vein matter and quartz. Once the tunnel reached 17,000 feet it was in the vicinity of the Comstock Lode. The rock type changed to various forms of diorite. When Sutro began the project, the geology had not been mapped yet. He did not know what he would encounter, and perhaps he had convinced himself that despite the lack of specifics he knew enough about the geology and the technology to press ahead. In the first few years before the project was shut down for lack of money and support, it had reached about 2,000. Once the project was revived in the early 1870s the pace picked up. It is important to stress the figures for how many feet were dug in any given year included explorations for gold and silver on either side of the tunnel itself. It had been Sutro’s hope that he could pay for the pay through the discovery of profitable ores in the vicinity of the tunnel. While the tunnel’s path crossed several quartz formations before reaching the Comstock Lode, these minor lodes were mainly vein matter with few or no profitable ores. From 1871 when construction resumed some

14 Lord, writing in the early 1880s after Sutro had sold his stake, put the cost of construction at more than $2 million. His figures were based on data from the company’s annual reports and other correspondence. Other sources indicate that the total cost (construction, management, loans, etc.) probably reached $5 to $6 million. It is worth noting that when Lord wrote his Comstock study, he was undecided as to whether the Sutro Tunnel was worth the investment. It was not yet clear even to someone as perspicacious as Lord that the Comstock had run its course and without new rich deposits the Sutro Tunnel could not repay its investors or revitalize the Lode. Comstock Mining and Miners, 342-343, 346-347. See also Smith, The Comstock Lode, 115.

8

THE COMSTOCK [K]

of the excavation data include those additional excursions. In 1871 and 1872 3,480 feet were dug or about 72 feet per month. The next year (1873) the number jumped to 1,919 feet or 105 per month. The length had reached 5,394 feet. In 1874 2,682 feet (223 feet per month) was added for a total length of 8,079 feet. These advances were largely possible because of the installation of six Burleigh drills. Burleighs were among the most advanced (and most expensive) drills available. But the drills constituted only part of the mechanization of the operation. Air compressors were needed to drive the drills. Along with the purchase of new Burleighs the tunnel company bought a new air compressor from the Humboldt Company of Germany for installation in Shaft 2 to complement the air compressor built by Société Cockerill of Belgium in Shaft 1. In 1875 the monthly gain of 312 feet a month or 3,728 feet for the year was the best yet. In 1876, however, progress slowed to 261 feet per month or 3,130 feet for the year. By the end of 1876 the tunnel had reached almost 15,000 feet, and because it was passing through a quartz formation known as the Solferina Lode progress had slowed. The company reported that exceptionally hard rock had stymied even the Burleigh drills. In 1877 two Burleighs were taken off the compressors in order to improve the efficiency of the remaining drills. In the next year and a half (January 1877-July, 1878) the remaining 5,400 feet to access the west wall of the Comstock Lode was cut through at depths between 1,600 and 1,700 feet. Since the vertical shafts # 3 and #4 had never been completed all the tools and supplies had to be conveyed through more than 10,000 feet of the tunnel. Plans were to extend the tunnel into Mt Davidson proper at a depth of perhaps 3,600 feet. That, of course, did not ever become a reality.15

A single connection to the Comstock would have had only minor consequences for draining the Lode. The lateral tunnel along the Comstock had to be built to connect other mines. Such a tunnel was planned to the same specifications as the main tunnel. The southern branch of the lateral tunnel began at 19,715 feet, 400 to 500 feet before the tunnel actually broke through to the Savage mine, and was to connect with the Julia Mine, a distance of about 1,400 feet. In October and November 1878, nearly 900 feet of the southern lateral tunnel had been cut. Julia Mine was under contract to pay $100,000 of which it had already advanced $40,000. The lateral did reach Julia, but the balance if paid was not recorded. Julia may have been drained but still remained unproductive. The southern lateral was originally planned to run about 8,500 feet to Alta Mine and the northern lateral about 4,500 feet to Union Mine. Much of the equipment for the lateral work was contained in Shaft 2, a distance of about 10,000 feet. It was noted that the aforementioned compressor to power both Burleigh and Ingersoll drills as well as the blower for ventilation and the hoist for moving workers and supplies were all located in that shaft. Indeed some of the equipment was located in Shaft 1, which was even farther from the site of the work.16 Although Sutro Tunnel abandoned plans to extend the main tunnel into Mt Davidson, it continued sporadically to work on the lateral tunnels until it

15 “Biennial Report of the State Mineralogist…1877 and 1878,” in Appendix to Journals of Senate and Assembly, 9th Legislative Session (1879), 81-85. Also information on the progress of the tunnel including workers employed, temperatures of air and water, nature of the ground and rock, etc. can be found in various correspondence folders with dates of 1867, 1871, 1874-1879 (most prolific for 1878) in Sutro Tunnel Company, MS-NC3, Bxs 1-3, Nevada Historical Society. The Mineralogist’s data were collected from company reports and interviews, and while they could not be absolutely verified from other documentation, they appear to be generally in line with the actual results.

9

THE COMSTOCK [K]

had traversed a substantial part of the length of the Lode. Like the main tunnel the lateral tunnels assisted in the drainage of a Lode that had exhausted its wealth.

As monumental as the Sutro tunnel was, it was not the nation’s only large-scale engineering accomplishment. The nation’s longest tunnel was The Hoosac Tunnel, built under the Berkshire Mountains in western Massachusetts. The project was launched in 1851 and after several delays it was completed two decades later in 1875. It was longer than Sutro by almost 5,000 feet and bigger with an interior height of 20 feet and a width of 24. It cost twice as much to build, not only because of its size but also in part because the interior was bricked. At the eastern entrance the summit of the Hoosac Mountain was 1,429 feet high and on the western entrance it was more than 1,718 high. Sutro was somewhat deeper. The Hoosac had three shafts for ventilation and light while Sutro had four planned but only two finished. The grade in Hoosac was much greater than in Sutro. There were essential differences. The most obvious was that Hoosac was a tunnel with light on both ends, whereas Sutro, being a underground tunnel, ended in darkness. Hoosac rocks consisted of mica slate, mica schist and milky quartz instead of andesites and diorites. There was no indication that Hoosac workers had to contend with scalding water and high temperatures to the same degree that Sutro workers did. Both structures epitomized bold thinking about overcoming environmental and geological barriers with the help, of course, of new technologies.17

Key to the construction of both tunnels (as well as very deep underground mining) was drilling equipment, in particular the Burleigh drill, which eventually found their way to the Comstock. For centuries “tunneling, mining and quarrying” required intensive human labor. Pounding and cracking the rock and then inserting a wedge to break the rock apart were the accepted techniques. In some cases heating the rock and splashing it with cold water could create fissures into which wedges could be driven. The use of gunpowder as an explosive in the seventeenth century added another tool, but underground explosives from the outset had posed problems. First was cutting the hole for the powder, not always an easy task. Additionally, controlling the reaction within the area of the blast and then venting it of noxious chemicals were not easily accomplished. It has been generally argued, however, that the introduction of powder in Spanish American silver mining helped to raise output in many older mines. By the nineteenth century the application of explosives underground was better understood and more widely practiced, although cutting and extracting the rock with hammers and chisels continued to be the workers’ primary tools. Toward the middle of the nineteenth century a Massachusetts inventor, Joseph Crouch, fashioned a steam-powered drill that repeatedly slammed into the rock until it broke the rock apart, and while it could be used in quarrying, it was too bulky to be used in underground tunneling or mining. Steam was fast becoming a source of power for many machines, but the residue of steam posed further breathing problems for workers already suffering from bad air in confined underground spaces that could be

16 Statement of condition by P. W. Ames, Sec., of the Sutro Tunnel Company, 1878, MS-NC3, Bx 1, Nevada Historical Society. Also see Smith, The Comstock Lode, 113.17 See www.boudillion.com/hoosac for data on the tunnel. Also data on the Hoosac, Sutro and other long American and European tunnels was compiled for the 1880 Census available On-Line at www.census.gov/prod/www/abs/decennial/1880.htm, United States Census Bureau. Statistics and Technology of the Precious Metals, vol. 13, 125, Table XVII.

10

THE COMSTOCK [K]

avoided in open areas. During the construction of Mt Cenis Tunnel between Italy and France in the early 1860s the chief engineer, Germaine Sommeiler, and his associates replaced steam with compressed air, and rather than steam contaminating the work area the air cooled it. But the drill itself, even when driven by air, remained unreliable and cumbersome. Thus, in the middle 1860s during the construction of the Hoosac Tunnel Charles Burleigh introduced the first pneumatic drill that was easier to use, although it could not be quickly set up or moved about. The Burleigh design not only inserted and retracted the drill, but they also turned the drill slightly for each new contact with the rock. Further improvements of the pneumatic drills made them lighter and simpler and above all easier to assemble and move.18

The advance in drilling had to be accompanied by an advance in the bits that the drills use to break up the rock. Diamonds, of course, being the hardest known mineral, would cut any rock such as quartz, which was three levels below diamonds in hardness. Egyptians apparently used diamond-pointed drills in their stone quarries. But the first “diamond core” drill was invented in France by a French engineer, Rodolphe Leschot, in 1863 in connection with the Mt Cenis tunnel project. The diamond bit on the end of the drill was a “tube or cylinder” with six stones or more distributed between the outside and inside circumference of the bit. Later models apparently had more than twice that number. Some diamonds were superior to others, although Leschot, since he had been a watchmaker, may have used jewel-grade diamonds that were less effective than other grades. Leschot device was patented in the United States about the same time that Burleigh had invented his device.19 Diamond bits combined with pneumatic drills came along at an opportune time for the Sutro Tunnel in particular and for the deeper and deeper probes along the Comstock Lode. Although Sutro, starting in 1874, could have acquired more than a half-dozen Burleighs, the Yellow Jacket Mining may have been the first company to acquire a Burleigh in 1872.20 Company accounts (to be discussed later) document that some companies purchased diamond bits to be used on their pneumatic drills. Within a few years of Yellow Jacket’s purchase diamond bits and pneumatic drills had become a part of the basic underground equipment for building tunnels and extracting ores.

Once the main tunnel had reached the Lode at Savage and the lateral tunnel branched off to serve other mines, the drainage of the Comstock, as Sutro had envisioned it, began in earnest. Water at the level of the tunnel or above it could be easily channeled into the Sutro through drainage ditches or pipes. Water below the 1,600-foot level had to be pumped up to the tunnel, a more expensive and less convenient operation. In removing or controlling water within the mines, according to the Mineralogist, cost mining companies about $3 million per year. He assumed that the Sutro Tunnel could greatly reduce that cost. The figure cannot be verified, but according to the Sutro pumping records the volume of water carried by tunnel once it had reached the Lode averaged about a million and a quarter gallons a day. In a progress report from 1878 the figure of

18 See www.fofweb.com for article by Rudi Volti, “Pneumatic Drills,” The Facts on File, Encyclopedia of Science, Technology, and Society (New York: Facts on File, Inc, 1999, 2003).19 See www.oilhistory.com for discussion of drills and bits by Samuel Pees.20 Lord, Comstock Mining and Miners, illustration between 336 and 337.

11

THE COMSTOCK [K]

1,285,000 was cited as the daily flow.21 An immediate beneficiary was the Combination Shaft and the consortium of three companies, Chollar Potosi, Savage and Hale & Norcross, which was building the shaft. It had reached 2,200 feet only to encounter hot water that quickly flooded Savage and Hale & Norcross up to the 1,800-foot level. Pumping by the companies had little effect in reducing flood levels and was very costly. When the connection was made with the Combination Shaft on 30 June 1879, Sutro wrote to Ames, the Secretary of the Board, that pumping had begun at 6 AM and the water reached the mouth of tunnel at 7:20 AM. The water temperature at the mouth was initially 90 degrees and gradually increased to 114 degrees. “Everything works like a charm,” wrote Sutro. The heat of the water did not “discommode” any of the tunnel machinery or equipment. The water flowed through the tunnel to the Carson River as if “it had been going there for years”. The interiors of the shaft and mines were soon made dry enough to be worked. To honor the occasion Sutro gave his men the day off and ordered that fires would be lit on the ranges around the Comstock that evening to celebrate. Unfortunately, celebratory fires on the ranges of the Comstock would not turn water into gold or silver. As he praised the performance of his creation, however, he already had an eye on the exit from the Comstock.22

Since the opening of the tunnel in 1878 Sutro had expressed disappointment at the volume of water draining from the Comstock. Since the tunnel’s only business appeared to be drainage of water, volume was an indicator of how many mining operations had been signed up to use Sutro’s drainage services. Many of the mines on the Lode’s southern branch had pipes connecting to the lateral tunnel, and his next effort was to accomplish the same on the northern branch. This would double the flow of water, he said, and twice the flow meant more mines paying fees to keep their operations dry.23 In the meantime, mining companies could continue their search for new ore bodies at even greater depths. And his plans for expansion and improvement did not end there. Surely, though, at the same time Sutro knew what the most seasoned observers knew – the boom was over, and the Lode was running out of ore. His European backers were certainly beginning to show more skepticism. After the initial connection was made in July of 1878 McCalmont Brothers warned Sutro to concentrate on signing up mining companies to use the tunnel as it currently existed in order to generate some income and to abandon any plans for expansion and improvement. Writing on 2 July 1878 McCalmont urged Sutro “…[to] make the best bargains you can with the Comstock mines…,” although the Brothers did agree to some minor improvements for roads and cultivation of alfalfa and barley for the animals. “We adhere to existing terms of mortgage due 1891.”24 A few weeks later the Brothers issued a further rebuke. Since the goal had been reached, London will provide no further outlays. “We are aware of Mr. Sutro’s ambitious views, 21 Reports of Progress of Work, 1878, Sutro Pumping Company, MS-NC3, Bx 1, Nevada Historical Society.22 “Biennial Report of the State Mineralogist…1877 and 1878,” in Appendix to Journals of Senate and Assembly, 9th Legislative Session (1879), 85; Letter from A. Sutro, Supt., to P. W. Ames, Sec., Sutro Tunnel Company, 30 Jun 1879, MS-NC3, Bx 4, Nevada Historical Society. It is not reported in Sutro’s letter how much of the daily flow was from the Combination Shaft.23 Letter from A. Sutro, Supt., to P. W. Ames, Sec., Sutro Tunnel Company, 30 Jun 1879, MS-NC3, Bx 4, Nevada Historical Society.24 Copy of Letter from McCalmont Brothers, London, to A. Sutro, 2 Jul 1878, Sutro Tunnel Company,, MS-NC3, Bx 1, Miscellaneous Letters, Nevada Historical Society.

12

THE COMSTOCK [K]

necessitating enormous expenditures in the future, such as draining the tunnel, leveling the floor, new lines of rails, smoothing sides of the tunnel, extensive drifts, prospecting, locomotive power, or wire ropes, etc. etc., all of which, however necessary they may be, we can no longer provide.” They intimated that they might not pay the next installment due Sutro under the terms of the mortgage on 1 August.25 A week later they wrote: “We can but repeat what we said in our last that if you are unable to make arrangements to procure funds from other sources, we see nothing for it but to suspend work, and close up pending operations with as little prejudice to all concerned as possible.”26 Such was the nature of the correspondence between Sutro and his backers for a year. The tunnel was losing money, and Sutro’s response was for the company to grow its way into prosperity while the London firm was set on curtailing expansion, generating revenue and reducing indebtedness. In 1879 after 15 years of almost endless warfare Sutro quit. He dissolved his association with the company for several million dollars, and a new group took control under the direction of the trustee, C. W. Brush. It did not matter who owned the tunnel. Its business, so intimately linked to the health of the Lode mining entrepreneurs would, like them, end up in bankruptcy. Fewer enterprises meant fewer leases, and fewer leases meant fewer receipts despite the tunnel’s success. That anyone would pay as much as Sutro was paid remains a mystery (at least to me).

For the new owners making the tunnel profitable under a worsening economic environment was daunting to say the least. In letters and reports from George Sprecht, the chief administrator of the Sutro Tunnel Company, to C. W. Brush, a trustee, during 1881 – the worse year for production in Comstock mining – discussed some strategies for doing that. The detailed calculations would have warmed the cockles of every cost accountant’s heart. But unfortunately some of the figures are not fully explained and the totals cannot always be duplicated. Accountancy had assumed a new importance in corporate American, and the Comstock mining industry was no exception, but detailed cost statements did not necessarily provide accurate cost information. Part of the problem in regard to the Sutro Tunnel Company was that the information was contained in several different reports, each of which had a slightly different objective. Sprecht reiterated that his amortization plan called for paying $500,000 per year over 10 years to retire the $5 million mortgage and to accomplish this assumed surpluses from the following revenue sources: 40 percent from drainage royalties, 30 percent from transportation contracts, 15 percent from reduction of ores and 15 percent from opening new mines within the tunnel’s own right-a-way. If transportation contracts were to yield $200,000 in surpluses to cover their share of the annual mortgage payment, two or three times that amount would have to be generated in income to pay expenses before any surpluses could be realized. In some of the agreements between the tunnel company and the mining companies they included provisions that the transport of ore was $2 per ton, rock and waste 25 cents per ton-mile and workers 25 cents per person each way.27 How much

25 Copies of Letters from McCalmont Brothers, London, to A. Sutro and C. W. Brush, 25 Jul 1878, Sutro Tunnel Company,, MS-NC3, Bx 1, Miscellaneous Letters, Nevada Historical Society.26 Copy of Letter from McCalmont Brothers, London, to A. Sutro, 30 Jul 1878 Sutro Tunnel Company, MS-NC3, Bx 1, Miscellaneous Letters, Nevada Historical Society.27 Articles of Agreement between Sutro Tunnel Company and Consolidated Virginia Mining and California Mining Companies, 29 March 1879, Article 12 (p. 27), NC7/1/6, Special Collections, Library, University of Nevada, Reno; Articles of Articles of Agreement between Sutro Tunnel Company and Segregate Belcher

13

THE COMSTOCK [K]

haulage business had Sutro rounded up since the opening of the tunnel? No direct documentation has been found thus far, but based on some indirect evidence the answer appears to almost none. The company did report that between September 1878 and December 1880 the tunnel was used to haul on average 116 tons (58 carloads) of rock per day. What is not clear is where rock came from - Sutro’s own excavations or mining company excavation? If one assumed that all the rock came from paying customers at the stipulated rate of 25 cents per ton-mile, the total income would be a measly $10,000 to $11,000 dollars, a long way from the hundreds of thousands needed to reach the company’s financial goals.28

The flurry of activity in 1881 by Sprecht to find new strategies for improving revenues appeared to focus mainly on how to make the tunnel more of a transport conduit than it had been. The immediate question was whether the mode of transport – mule-driven trams – should be replaced. To remove the aforementioned 116 tons on average per day the company employed six daily trains of 10 cars with three mules and one mule driver per train. Without accounting for the cost of the equipment or the wage of the driver the report stated that to move a ton of rock cost 5.73 cents per ton-mile (round-trip calculated at 10 miles). Mule power was then compared to steam and air (compressed) power. At Bald Mountain Mining Company steam cost about 6.1 cents per ton-mile without any other specific being offered. Compressed air was estimated at 5.29 cents per ton-mile, although that figure was suspect since compressed air could only be used in part of the main tunnel and would have to be combined with some other mode in the rest of the main tunnel and the lateral tunnels. Sutro had a stable of 72 mules, which had to be fed, shod and generally cared for, and while the figures are fuzzy and not always reconcilable, the cost of maintaining the mules accounted for perhaps half of the total cost of 5.7 cents per ton-mile. The other expenses included lubricating and illuminating oils (each train carried seven torches) and repairs of tracks and cars.29 To replace mules with a locomotive powered by steam or air a source of power had to be tapped. The preferred source was water. The Lode and the tunnel, of course, had ample water, but the flow was apparently inadequate to generate the needed power. At the mouth of the tunnel was the Carson River, which could be harnessed to power the steam locomotive system that Sprecht leaned toward. In comparing hoisting and hauling costs for Comstock mines Sprecht concluded that the average was $2.90 per ton with existing facilities but could be reduced to $1.55 per ton with upgraded Sutro operations. Sprecht’s figures included some hoisting charges inside the mines since the mines were lifting ore and waste from depths below the level of the tunnel itself. His haulage figures also included the costs for installing the locomotive system, servicing the mortgage (nearly half the total) and operating the tram. Calculated on strictly a per-ton basis, since this was how mining

Mining Company, 29 March 1879, Article 12, MS-NC3, Bx 1 Sutro Tunnel Company, Nevada Historical Society. With respect to ore, if the gold yielded a coin at less than $40, the rate dropped to $1 per ton.28 Letters from George Sprecht to C. W. Brush, Trustee, Sutro Tunnel Company, 5 May 1881 and 5 June 1881, MS-NC3, Bx 1, Miscellaneous Letters from April 1881, Nevada Historical Society.29 Duplicating the calculations as given in the document proved to be difficult. I have accepted the report’s figure of 5.7 cents per ton-mile without being able to verify its accuracy. The aim here is to provide a comparative benchmark, and no more. See Letter from George Sprecht to C. W. Brush, Trustee, Sutro Tunnel Company, 5 May 1881, MS-NC3, Bx 1, Miscellaneous Letters from April 1881, Nevada Historical Society.

14

THE COMSTOCK [K]

companies calculated their hoisting and hauling costs rather than per ton-mile, Sutro could save the mining companies on average $1.35 per ton (on paper).30

Even as large as the savings might have been (under ideal circumstances), they offered little or no incentive for mining companies in 1881. Not only did Sutro lack the capital to rehabilitate the tunnel – mule-driven trams remained for decades – but the mining companies also lacked the financial means to abandon an old system and embrace a new one. Efficiencies in hoisting and hauling could be realized as long as the quantity and the quality of the ore continued to decline as rapidly as it had since 1878. By Sutro’s own calculation the company would have had to contract to move hundreds of thousands of tons to generate the level of income needed to meet various obligations, in particular the repayment of the debt, at a time when tonnage had reached the lowest levels in the history of the Comstock. Despite a valiant effort to rejuvenate the tunnel business, the company could not rejuvenate the Lode and therefore could not rejuvenate itself.

Underground mining was a constant war with the natural forces on a daily basis. With the Sutro Tunnel one could observe the beneficial impact of new technologies in taming those natural forces. The fact was that while Sutro “stumbled” toward completion mining companies had sunk some of the deepest shafts and built some of the longest tunnels in the world with a combination of old and new technologies. Adaptability appeared to be the key to success. Although hard to quantify, it comes through in the hundreds of pages of daily or weekly reports written by foremen and superintendents. References to new machines and techniques were frequent, but much of the content of these reports concerned low-tech matters of digging and re-digging, building and rebuilding, timbering and re-timbering the interior spaces that the workers and the machines needed. Logistical questions always loomed large because the means had to be found to move workers, ores, supplies and even machines from the surface to the bottom and back to the top or from one part of the mine to another part. Bigger engines, stronger cables, larger cages and other technological innovation let shafts operate faster and more safely, but even after better technology had been put to work, the shafts themselves, mostly constructed from wooden timbers, had to be secured constantly against bulging and snapping because of the movement of the earth around them. Mining companies were as much in the business of reconstruction as construction. Once a facility had been built it had to be serviced, upgraded and at some point replaced.

By the time the Sutro Tunnel began to drain mines on the northern end of the Comstock Lode in 1878, the search for ore had already moved well below the 1,600- to 1,700-foot level where the linkage occurred. There was the hope, of course, that by draining old works above the level of the tunnel new ore deposits would be located and that given the network in place they could be easily and profitably accessible. But while such discoveries were a possibility, for which some precedent existed, the main focus of

30 These conclusions require a “certain faith” in the way Sprecht or his associates computed their costs. Theoretically it was possible that under the appropriate reconfiguration of the tunnel it would be cheaper to move people and things through the tunnel to the Lode. That ignored, of course, the fact that large sums had been invested over the years in other strategies for servicing the mines. See Letter plus accompaniments to C. W. Brush, Trustee, The Sutro Tunnel Company, 5 June 1881, MS-NC3, Bx 1, Miscellaneous Letter from April 1881, Nevada Historical Society.

15

THE COMSTOCK [K]

the remaining mining companies appeared to be deeper rather than shallower probes. By the 1880s mining companies were opening up new work areas 2,000 to 3,000 feet (and more) below the surface. Numerous examples from company records could be cited. Yellow Jacket, still a William Sharon property, had fallen from among the ranking producers after the 1868 fire. It had a claim nearly 1,200 feet long, and in November 1876 it began the construction of a new shaft between two existing shafts. The shaft to the north had served for the exploitation of relatively shallow ores, 100 to 400 feet below the surface, which it shared with its northern neighbors Confidence and Challenge. The southern shaft, however, built to extract ores shared with Kentuck and Crown Point on its southern boundary had reached the 2,400-foot level. The new shaft was pushed to 2,636 feet by June 1879, and another 400 to 500 feet would be added during the next several years before the project was halted.31 To reach 2,600 feet the company averaged about 80 feet a month. Divided into fiscal years from July to July progress on the shaft was reported as 768 feet in 1877, 780 feet in 1878 and 1,088 feet in 1879. The range was from a high of 155 feet in December 1876 to a low of 33 feet in July 1877. During the fiscal year ending 1 July 1879 in addition to sinking and timbering the shaft almost 1,100 feet other work was underway. Water tanks were constructed at the 1,550- and 2,300-foot levels (from surveyor’s point at Gould & Curry) to hold 31.5 tons (7,554 gallons) and 21.5 tons (5,096 gallons) respectively. Pipes for compressed air were installed from the surface to 2,300 feet. At 2,500 feet more than 1,400 feet of drifts were cut during the year. Air circulation was always a concern, and with the extended shaft and repairs to some of the winzes, ventilation had been improved vastly, all the way to the 2,500-foot level. Moreover the creation of two stations adjacent to and connected with the new shaft at 2,300 feet and 2,500 feet improved the airflow and lowered the temperature. The total volume of air that passed down the new shaft through the repaired passages was measured at 34,200 cubic feet per minute. Temperatures now ranged from 66 degree to 96 degrees Fahrenheit. Perhaps more importantly Yellow Jacket no longer had to depend on adjoining mines for ventilation. Two air compressors, a Burleigh and a Warring, supported excavating for the shaft and mining of the ore. Both had been used previously in the older shaft. Because of the depths new hoisting equipment had to be purchased. An order had been placed with Risdon Iron Works for the construction of “a pair of horizontal, direct-acting hoisting engines, eight feet stroke by twenty-eight inches diameter of cylinder, with complete appurtenances for a first-class hoisting apparatus [sic].” The contract called for fabrication and transport of the machines in 125 days at a cost of $142,500, one-third to be paid when the work was half done, one-third when the machines were shipped and the final third after the engines were in operation. New cables also had been ordered from England. They were 3,700 feet long, eight inches wide and three-eights of an inch thick, and they were scheduled for delivery in December 1879. In the meantime, until the new equipment was installed, the current hoisting machinery was being supplemented with a “donkey engine” at 2,300 feet. Rock excavated from below this point was lifted by the donkey engine to 2,300 feet where it was then stored. To try to hoist from the new depths to the surface with the existing “geared hoisting machinery” would be unsafe under the strain necessarily imposed upon it…,” said the company. The

31 Grant Smith wrote that the shaft reached 3,080 feet or just below the 3,400-foot level. Smith, The Comstock Lode, 280. See also Becker, “Longitudinal Vertical Projection of the Comstock Lode…,” in the Atlas, Sheet X.

16

THE COMSTOCK [K]

final matter to be considered was water. About 1,000 tons a month appeared in the shaft at the 1,550-foot level where it is stored in a tank and another 300 tons below that level. Water raised through the shaft averaged about 300,000 gallons per month. The biggest problem, however, was that even though a vein of about 700 feet was found at the 2,500 feet, it was filled with porphyry and not worth much. All the work for the year had failed to produce much ore that would cover the costs of repairing and expanding the mine. The mills, owned by Sharon and associates, refined the low-grade ores at a small profit, but that did not pay for mine renovations.32

The Superintendent’s Annual Report (1878-1879) included figures on Yellow Jacket’s finances. The balance sheet showed that the company had receipts and disbursements of $446,000. Receipts included no money from mining of ore. Eighty percent or $360,000 of the receipts came from assessments against stockholders. Another 20 percent was the balance carried over from the previous fiscal year (1877-1878). On the disbursement side 70 percent or $313,000 of the total outlays ($446,000) was for the construction of the new shaft and another 22 percent was cash on hand ($41,000), labor in the old works ($31,000) and purchases of mining supplies ($28,000). The breakdown for construction of the new shaft was fairly precise. The list below shows total cost for each category and the percentage, as calculated by the company (dollars rounded):

Labor-Miners' Wages $134,319 42.84%Machinery-All Foundry Work & Machinery $89,533 28.83%Timber-All Wood Work $24,029 7.68%Wood-Coal & Fuel $22,083 7.06%Iron & Steel-All Hardware $12,842 4.10%Powder & Fuse $8,845 2.83%Freights-Virginia & Truckee RR-Machinery, supplies $5,260 1.68%Water & Ice $4,188 1.34%Candles & Oil $3,623 1.15%Taxes-State, County, Town $2,694 0.86%Construction Engineer-W. H. Patton $2,500 0.79%Sundries-Not Specified $1,820 0.58%Masonry-Sand, Stone, etc. $843 0.26%Total $312,579 100.00%

The two major expenditures were labor (43 percent) and machinery (29 percent). They combined for 72 percent of the total. Two other items of interest were costs for timber (7.68 percent) and wood (7.06 percent) – the former for framing a shaft that had grown by 1,088 feet ($20 to $25 per foot) and the latter for fuel (plus coal) to power the equipment. It is worth noting that W. H. Patton, who had a long career in Comstock

32 “Annual Report of the Yellow Jacket Silver Mining Co. for the Year Ending June 30 th, 1879,” with accompanying sketches and plans, NC61 and NC61/2, pp. 5-7, Special Collections, Library, University of Nevada, Reno. See also Smith, The Comstock Lode, 280-281. Interesting observations by Smith on size of pumps, fly-wheels and rod-catchers on pumps and breakdown of the pumps in 1880 from diary of Superintendent Thomas G. Taylor. Lord briefly described size and horsepower of engines that drove hoists in Comstock Mining and Miners, 347.

17

THE COMSTOCK [K]

mining, was the consulting engineer at an annual salary of $2,500. The company computed the average cost of the shaft per foot between November 1876 and June 1879 at $374 to reach 2,636 feet. The most impressive gains were in the first three months (November 1876-January 1877) when the shaft had reached nearly 440 feet (one sixth of the total distance and just under 150 per month) before the advance fell off to more modest monthly averages of 80 feet per month. The cost per foot for the fiscal year 1876-1877 (only eight months) was $166 per foot to excavate 768 feet. In the next fiscal year (1877-1878) outlays rose sharply to nearly $700 per foot or a total of $545,714 to add 780 feet. Finally in the fiscal year July 1878-June 1879 when 1,088 feet were added the cost per foot was $287, a decline of more than 60 percent from the previous year. By any measure, at a time of a deepening depression, the expenditure of a million dollars to build a new shaft to explore a region one thousand feet below the last profitable ore findings was risky if not wasteful. But it was that kind of ambition that had served the Comstock well for two decades. It would eventually become clear to speculators and investors alike that the richness of the Lode did in fact have a limit.33 Yellow Jacket did begin to produce refinable ores in 1883 and continued to do so through 1885, the end of the period under review here. In one or two quarters yields exceeded costs, but in most quarters the ore was not valuable enough to cover operating expenses. Yields per tons ran in the range of $10 to $25 with the lower yields predominating. It is doubtful hat the new shaft was ever paid for with ore from the mine.

Shafts allowed miners to reach new depths, but once there the work of tunneling had to begin. Underground tunneling had many different aspects and components. The Atlas assembled by George Becker and his team as a part of the 1882 publication Geology of the Comstock Lode and the Washoe District was a tour de force. Ophir was one of the earliest quartz mines, and twenty years later (having been own by William Sharon and now by John Mackey) with a checkered career it produced some ore but mainly consisted of a vast underground network that was still under construction. Ophir ended up with a claim about 700 feet long. Its main deposits were relatively shallow. They were located between the surface and about 500 feet on the claim’s southern half. Four or five different shafts had been constructed to intersect the Lode, which as noted earlier, angled toward the east before it was squeezed out completely. Below 500 feet in the underground area served by these shafts there was virtually no further tunneling. Hard rock had replaced vein matter. To the east toward the hanging wall the company dropped the Ophir Shaft, which would eventually reach 2,500 feet. A small deposit of rich ores was found between 1,500 and 1,600 feet at approximately the same depth as the Consolidated Virginia-California finds of the mid-1870s. It had a limited duration. But it spawned new underground projects. Tunneling moved in both directions from the Ophir Shaft, which more or less bisected the claim, toward the Mexican Mine on the northern boundary and the California Mine on the southern boundary. In the 1879 Annual report the Ophir’s President, C. W. Weller, acknowledged that the mine “even in periods of great depression …never ceased to be a favorite with the public.” In the current year 33 Annual Report of the Yellow Jacket Silver Mining Co. for the Year Ending June 30th, 1879,” with accompanying sketches and plans, NC61 and NC61/2, pp. 8-9, Special Collections, Library, University of Nevada, Reno. No taxable bullion was recorded for Yellow Jacket in 1880, but some appeared in later years. See The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.

18

THE COMSTOCK [K]

people “felt” confident about the mine’s future even though most of the construction could be appropriately classed as “dead work” that was necessary to find and extract the ore. Feeling that the mine had a bright future resulted from the discovery of the so-called Hardy Vein about 2,000 feet below the surface. In 1879 it produced about $1.3 million in bullion on 20,000 tons at an average yield of $64 per ton. Because the vein was irregular it was costly to exploit. Even though the company had paid a small dividend the cost came in at about $56 per ton. Nonetheless the President concluded his report with conviction that the future prospects were bright and the flow of dividends would continue.34

To reach these depths the main shaft had to be extended. During the previous year the Ophir Shaft had reached 2,200 feet. In 1879 it had been extended 498 feet to a point 30 feet below the station at 2,500 feet. That would appear to be less than the actual distance should be, and the reason was that the shaft was being extended on an incline rather than strictly vertically. The tunnel was said to have “passed through” alternating “stratas of vein porphyry, birds-eye porphyry and quartz, dipping to the west passed through near the 2300 level showing about three feet thick and giving good assays.” At 2,500 feet the quartz dipped eastward, and it may have been richer than the quartz noted above. Large rooms were excavated and timbered at 2,200 and 2,300 feet. Several “bobs” had to be replaced, and new tanks and chutes had to be installed. Drainpipes were constructed through adjoining mines to Savage where a connection with the Sutro Tunnel was made. A new air compressor was attached to the hoisting engine in a configuration that saved some money because the compressor could be driven “by the weight of the descending cable and giraffe” and then allowed to stand “without motion” when the hoist was actually in operation. “The practical result of this…will be to give us over 3000 cubic feet of air per hour, at a pressure of 80 pounds to the square inch, at no additional expense” while simultaneously saving “the wear of the brake machinery heretofore used to control the descent of the cable and giraffe.” Finally and perhaps most demanding work was to keep the shaft properly timbered. Between 700 and 1,400 feet the ground was so unstable that a crew of at least 40 men was required daily to keep it in proper condition.35

Extensive tunneling was also described in Superintendent W. H. Patton’s 1879 Report. At 1,600 feet drifts had been constructed both north to the Mexican and Union mines (approximately 600 to 700 feet) and south to the California Mine (approximately 400 to 500 feet) for purposes of ventilation and drainage. Repairing and maintaining drifts (of similar length) with same mines at 1,700 was also necessary to protect the air and remove the water. Work at 1,900 feet was primarily ore extraction in drifts that covered hundreds of feet. According to Becker’s illustration the drift at 1,900 was (by 1882) a five-sided loop that measured about 1,500 feet. It was located between the Ophir Shaft and the California border on the south. In fact, it crossed over the border into

34Annual Report of the Ophir Silver Mining Company, December 1879 (San Francisco: Bunker and Hiester Printers, 1879), 5-7, NC56, Special Collections, Library, University of Nevada, Reno. See assessments in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.35 Annual Report Ophir Mining, 1879, 15-17, NC56, Special Collections, Library, University of Nevada, Reno.

19

THE COMSTOCK [K]

California ground, but that mattered little since both Ophir and California had the same owner. On the north side of the main shaft a V-shaped drift from 500 to 600 feet in length was constructed. At the Mexican border it turned west (creating a V) and eventually connected with a winze from the 1,700. The main drift at 2,000 feet measured nearly 1,500 from the main shaft to California on the south and Mexican on the north. Much of the work had been completed prior to 1879. The Mexican and Union Consolidated Mines pushed the drift further northward to connect with the Union Shaft. On the south the drift continued through California, Consolidated Virginia and Best & Belcher to Gould & Curry where it connected to the main shaft. This drift across seven different properties greatly improved the ventilation in all the connecting galleries. On the Mexican boundary a winze was dropped to the drift at 2,300 feet (a distance of 300 feet) through a drift at 2,100 feet. A joint (with Mexican) crosscut was run about 300 feet in a western direction. Both the winze and the crosscut “passed through alternate streaks of hard porphyry and vein matter having a westerly dip, showing some quartz, giving low assays” but also improving with depth (thus the apparent reason behind the winze). Because of the appearance of water in the crosscut work was suspended as of August 1879 until new pumps could be installed. The northeastern drift at 2,100 feet was extended to Mexican and connected to the joint Ophir-Mexican winze from 2,000 feet. To the south of the main shaft the drift consisted of two parts. A southwesterly drift, beginning in April 1879, was extended about 150 feet. It ran through the so-called Hardy Vein, and for about 100 feet good quality ore was found, after which the assays fell sharply. Half way along this drift an upraise was constructed to reach the ore above the drift. The other part, moving in a northeasterly direction was started in May 1879 and had reached more than 400 feet. After almost 200 feet of vein matter the drift entered “good milling ore with a width of about 3 feet.” This continued for about 100 feet and then gave way to low-grade ore. The face of the stope at the terminus of the northeasterly drift looked promising again (at the time the report was written). An upraise was constructed in order to connect to the drift at 2,000 feet and an east-west crosscut was also under construction. The upraise passed through some good ores, but the crosscut found mainly hard rock and vein matter. At 2,300, 2,400 and 2,500 feet, in addition to completing or enlarging the stations at each level on the main incline some drifts were being started or extended to the north and to the south. A fairly long drift at 370 feet was finished from the shaft to the northern boundary for a connection with the adjoining Mexican mine. All of this work on the main incline shaft and on hundreds if not thousands of feet of drifts, upraises and winzes found pockets of good-quality ore, but, as Superintendent Patton himself concluded, the main ore vein remained elusive. This was an extraordinarily active year (typical of a Mackay venture) in pursuit of the Hardy Vein. Expensive as it was, Patton was happy to report that enough millable ore had been lifted to cover the costs, to pay a dividend of $1 per share ($10,800) and even to retain a surplus ($134,892). (Typical outcome for Mackay ventures, although of late his luck had been running in reverse.) And the future was bright because with more of the Hardy Vein above 2,100 feet to be exploited funds would be available to push ahead with prospecting in all directions and on all levels.36

36 Annual Report Ophir Mining, 1879, 10-17. NC56, Special Collections, Library, University of Nevada, Reno.

20

THE COMSTOCK [K]

In the Inventory of Property attached to the 1879 Annual Report Patton listed the value of buildings, equipment, supplies and merchandise as of 1 December 1879. The total value of the property was nearly $350,000. The inventory did not explain how the valuations were arrived at, and more than likely they involved a formula based on replacement costs. Two items – real estate and buildings – totaled $72,000. The buildings included hoisting works, incline and pumping engines, ore dumps, administrative offices, work and worker areas and furnishing. Perhaps the most relevant category, given the discussion above, was machinery. The list with the valuations is shown below:

2 hoisting engines, reel & gear, complete $29,0001 double incline engine, 2 hydraulic engines attached 75,0001 Burleigh air compressor 5,5001 Booth air compressor 4,0002 double engines, underground, on winzes 2,800 7 large Ingersoll drills 2,4506 small Ingersoll drills 2,0005 Burleigh drills 2,0001 Baker blower, 2 giraffes, 4 tanks, 6 cages, 38 ore cars 3,6001 engine to drive saws 9001 large pumping engine 34,500Plunger and Cornish pumps, iron bobs, various pipes 17,5002 boiler pumps 1,00011,262 feet round steel wire cable 18,00010,900 feet flat steel cable 12,9002,000 feet water pipes, hydrants & hoses 9,50010 boilers 18,000Blacksmith & machinist tools – lathe, punch, press 6,500Total $241,750

The inventory contained at least 18 drills, with a stated total worth of $6,500. Within the group the Burleighs appear to have a somewhat higher valuation at $400 apiece compared to the 7 large and 6 small Ingersolls at $325 to $350 each. Two air compressors totaled $9,500 with the Burleigh being a third more than the Booth. Two sets of cables with a total length of more than 22,000 feet were said to be worth $30,000. These three categories added up to $47,000. The largest group consisted of engines, pumps and boilers and their attachments such as pipes, tanks, etc. with a total valuation of about $195,000. The hoisting engine and the double engine for the incline shaft (described above) and their accouterments were set at $104,000, while several pumps with their attachments were set at $52,000. The double engine for the incline shaft had the highest valuation at $75,000. In addition to buildings and machines the inventory included supplies that totaled about $15,000. These included almost 500 cords of wood ($4,828), 326,303 feet of timber ($5,547), more than 100 gallons of coal, lard and machine oil, 24,500 tons of Cumberland coal, hundreds of pick and sledge handles and shovels and axes and many sundries such a powder, fuses and rails. In the course of the year (1879) Ophir extracted 20,000 tons of ore and removed 61,000 tons of rock. The ore yielded about $1.2 million in bullion. Ophir’s inventory at year’s end was comparable to

21

THE COMSTOCK [K]

inventories compiled by other mining companies. For example at the end of 1875 in the midst of a real bonanza Consolidated Virginia declared its inventory to be worth about $400,000, and a year later sharing in the same bonanza California also declared an inventory of about $400,000. What is more important than the valuations is the degree to which one can judge how important machinery and technology was for these operations. Much of mining was still the result of manual labor but greatly aided by pneumatic drills, heavy-duty cables and powerful engines.37

Ophir’s Balance Sheet for the year revealed more details about financing these operations. Most of Ophir’s income (unlike the previously discussed Yellow Jacket) was derived from bullion, about $1.3 million of $1.6 million. Other revenues derived from the three neighboring mines, Union Consolidated, Mexican and California, paying Ophir over $200,000 for material, labor, power and pumping with Mexican, its northern neighbor, owing more than $100,000 of the amount. As noted above, Ophir and Mexican engaged in several joint projects to extend and connect their drifts, and that would account for Mexican’s share. On the expense side the largest item, not surprisingly given the extent of tunneling already discussed was labor at a third - $535,000. These figures suggest the possibility that over the course of the year Ophir employed several hundred workers. Such a number does not seem unrealistic when the range of underground construction is considered. More than $400,000 was spent on supplies including equipment, although the actual items purchased during 1879 were not specified. These purchases, however, were no doubt reflected in the inventory totals cited above. Reducing the ore cost $173,000 or $8 to $9 per ton. More than $300,000 was composed of stockholder dividends, ore and cash on hand and bullion discounts. The last was necessary because the bookkeeping value ascribed to silver was higher than the market value. In almost all companies during the 1870s the value of silver per ounce was pegged at a certain amount even though the sale of an ounce of silver on the open market would yield 10 to 20 percent less than what was entered. Eventually that had to be accounted for in the companies’ year-end statements. The remaining $100,000 or so was allocated to office expenses, freight, assays, insurance, etc. According to its declarations before Story County’s Assessor, the company had direct expenses of $1.1 million with almost a million of that devoted to extraction to generate $1.3 million in bullion. That meant that the yield per ton of ore was about $64 and the cost per ton was $58. This did not make for a highly profitable operation and did explain the relatively low dividend of about $5 per ton.38 The underground work described in the Superintendent’s report and summarized above was costly, and they were justified on grounds that the Hardy Vein located at 1,900 feet would lead to a substantial deposit and hopefully a new bonanza. The Hardy Vein petered out, and by the end of 1880 the mining costs per ton were twice the yields per ton. The Ophir, which more or less inaugurated quartz mining on the Comstock, would also serve as the last hurrah. The Hardy Vein was rich enough to animate the long-held hope that new bonanzas lay at greater depths and given the technology could be

37 Annual Report Ophir Mining, 1879, 18-20, NC56, Special Collections, Library, University of Nevada, Reno; Annual Report, Consolidated Virginia Mining Company, 1875, NC99/1/5/1, 13, and Annual Report, California Mining Company, 1876, NC99/1/5/6, 14-15, Special Collections, Library, University of Nevada, Reno.38 Annual Report, Ophir Mining, 1879, 22-23, NC56, Special Collections, Library, University of Nevada, Reno.

22

THE COMSTOCK [K]

successfully and profitably exploited. In fact the dissolution of the Hardy Vein sealed once and for all the northern Comstock’s fate. Returns on investments between 1880 and 1885, the silver anniversary of the discovery of ore, ceased to exist. And with that came the end of a remarkable saga that witnessed the conjuncture of ambitious and at times reckless entrepreneurs and of widespread application of a changing technology.

SPECIAL APPENDIX: Elevation map of the Sutro Tunnel, from Becker, Atlas, Sheet XI. May appears in four section from the opening in the town of Sutro to the connection at the Savage Mine on the Comstock Lode. Each of the four shafts contemplated are shown, although Shafts #3 & #4 were abandoned before completion. The tunnel actually passed through several lodes before reaching the Comstock. Little ore was found along the way, asnd most of the rosk was described by Becker as diabase.

23

THE COMSTOCK [K] 24

THE COMSTOCK [K]

Chapter 11The Business of Mining:

The Sutro Tunnel, Ever-Expanding Technological Base

The “Feats of Labor”, to steal a phrase from Eliot Lord, was no more manifest on the Comstock than with the most controversial and colossal project ever undertaken – the Sutro Tunnel.1 It was an underground passage, four miles long, that began on the surface in a place called Sutro, to the east of the Comstock, and reached a depth of 1,700 to 1,800 feet when it connected to the Lode under Virginia City. It was designed with several tasks in mind, although drainage was the principal one. As impressive as this “feat of labor” was, it highlighted another feat that helped to define the Comstock – the search for and the application of new technologies. In any comparative assessment of New World mining, one has to be struck by how much mechanization had entered the business of mining by the second half of the nineteenth century, especially underground. Spanish colonial mining had little mechanization below ground and only some above ground at the refineries. The nineteenth century had a much stronger industrial base than previous centuries, and the application of that base was evident almost from the beginning at the Comstock, both above ground and below. Drills cut away the rock, pumps admitted air and drained water and elevators moved workers and ores in and out of the mine. Company correspondence referred to searches for better bits and bigger engines to accomplish the work. Machines did not replace humans, of course, but they in combination with human labor made it possible to be more productive at greater depths than ever before. There were limits, imposed by the physical environment, but not by the imagination of the entrepreneur. One of those projects of the imagination that almost became a fully achieved reality was the Sutro Tunnel.

The tunnel was the dream and the achievement of Adolph Sutro, whom Grant Smith described as “one of the most remarkable men that rose to power on the Comstock.”2 Because so many (including Sutro himself) have written about Sutro and his ambitions, I have chosen to confine my analysis to specific matters dealing with finances and technologies relating to the Sutro Tunnel rather than the career of Sutro. It is widely observed because the tunnel took a decade to build and therefore opened only after the Lode’s greatest bonanza had passed, it served as a postscript in the history of the Comstock. Even so after numerous setbacks and threatened abandonments the tunnel was completed, functioned as it was designed to function and was regarded as a success simply because it proved what could be accomplished in an age that combined the power of the machine and the capacity of labor. Indeed, one might conclude that the Sutro Tunnel was the final act in a drama that had raised the business of mining to unprecedented heights. As promoter, designer and entrepreneur, Sutro embraced the dreams of many of his compatriots except his dreams were grander and bolder. He has been caricatured as essentially a promoter – to the extent that he continually repackaged the venture to attract investors he was – but in promoting he was also advancing the power of technology. No doubt in the end Comstock companies found other ways to drain the Lode, but Sutro still left his mark, much to the chagrin of his many foes.

1 Lord, Comstock Mining and Miners, the title of Chapter 17.2 Smith, The Comstock Lode, 107.

1

THE COMSTOCK [K]

The history of Sutro’s tunnel began shortly after mining on the Comstock began. The idea for a tunnel was pitched to the Nevada Legislature [2nd Session] in 1865. The Legislature granted to Sutro an exclusive franchise to build a tunnel from the mouth of Webber Cañon in Lyon County to the Comstock at a point about 2,000 feet below the Gould & Curry croppings. A federal bill – The Sutro Tunnel Act – followed in 1866. It permitted him to buy public land for $1.25 per acre and private land for $5.00 per acre over the distance to the Lode. It also stipulated that anyone benefiting from the tunnel had to pay a fee to the company. What was not forthcoming in spite of many years of petitioning and imploring Congress was a federal loan. And the lack of capital would haunt Sutro to the very end of his participation in the tunnel project.3

The idea behind the tunnel was not irrational. The primary purpose of the tunnel was to drain water from a depth that was well below the levels that most of the underground operations had then reached. Sutro (and others) believed that mining companies would find richer ores the deeper they dug into the Lode. But a few hundred feet below the surface water had already become a problem and an expense for some mines, and the idea behind Sutro plan was to connect to the Lode at a depth sufficiently below the presumed location of the yet-to-be-discovered ores to let the water drain down and out. This idea was a variation on what Spanish miners had learned in Mexico and Peru. They would build an adit or tunnel below the vein of ore that they were working to remove the water. This was referred to in colonial documents as “dead work” because it had no other function except to drain water. These projects were expensive, time-consuming and often abandoned. They were more often built in Mexico than Peru because Mexican ores over time proved to be of higher grades

and therefore of greater yields than Peruvian ores. Adits could in fact pay for themselves.4

As efficient as Sutro’s tunnel might have been for diverting water, Sutro had other plans for the tunnel. In addition to drainage he envisioned that it could be used to transport workers, supplies, ores and even visitors into the interior of the Lode. Since it was to be used for more than moving water the interior of the tunnel had to have a system of ventilation and illumination, had to be wide and high enough to accommodate rails, cars and passengers and had to keep the drainage ditch separate from the rail system. Further it was necessary to build the tunnel on a grade to permit the natural flow of water and to intersect the Lode at an appropriately effective point. Under these conditions it was calculated that the interior of that tunnel would be about 2 million cubic feet. Tens of thousands, perhaps hundreds of thousands of tons of soil, rock and clay (not to mention scalding water) would have to be removed to bring the tunnel into existence. This plan called for careful engineering as well as long-term financing, compliant laborers and

3 Lord, Comstock Mining and Miners, 233-235.4 For a comparative discussion of colonial Peruvian and Mexican mining, see Garner, “Long-Term Silver Mining Trends,” American Historical Review, 93, 929-934.

2

Illustration 1: Sutro Entrance

THE COMSTOCK [K]

drilling technology, some of which did not yet exist. As was his nature, Sutro created an overly optimistic timetable of two and one half years for the completion of the tunnel. In a report to the 3rd Legislative Session the Surveyor-General thought the timetable was “impractical” and estimated that “with vigorous prosecution” five years would be needed.5 It actually took 13 years to complete the tunnel, and not only did the mining companies discover the rich ores that Sutro had predicted when the tunnel was launched but unfortunately they had removed most of the profitable ores before the tunnel was finished. Among his supporters and enemies there was a consensus that such a tunnel, if it could be built, would serve the Comstock well, but like so many Comstock projects this one became bogged down in financial disputes, technical failures, political intrigues and a general dislike and distrust of Sutro within the mining community. Whether or not a functioning tunnel during the boom years would have made a significant difference to the bottom line for the Comstock mining companies can hardly be tested. The historical interest in the Sutro Tunnel is that it got built at all.

Part of the appeal of the project may have been its monumentality. Big projects and big dreams were standard fare on the Comstock. There is no doubt that Sutro like many of his contemporaries overstated the prospects and in particular the financial prospects of the tunnel. In fact, though, it was completed much in the way that his original plan had envisioned.6 His franchise gave him a claim of land about one mile in width. From Webber Cañon the tunnel would be dug through the middle of the claim to connect with the Comstock (actually at the Savage Mine to the south of Gould & Curry) at between 1,600 and 1,700 feet. The depth of the tunnel would increase, of course, as the tunnel made its way under rising surface elevations until it reached the Comstock, a distance of 20,000 feet. Given the dual purpose of the tunnel – drainage and transportation - it was designed to be 7 feet high, 8 feet wide at the top and slightly wider (between 9 and 9.5 feet) at the bottom of the tunnel. Tracks for two railways would be laid on the floor of the tunnel along with a properly covered conduit for drainage of water. At the Comstock end a connection would be made at no less than 1,800 feet. The grade was to be not less than one inch per 100 feet. Sutro understood that time was of the essence so he planned to excavate from both directions. To accomplish this he proposed the construction of four shafts along the route at 4,000 to 5,000-foot intervals. Once these shafts reached their appropriate levels work digging the tunnel could be sped up. The shafts could also improve ventilation and facilitate maintenance of the tunnel. This part of the project ran into numerous delays and difficulties. The first two shafts were completed, and the third and the fourth, the deepest shafts, were abandoned. In the mid-1860s, when Sutro devised his plan, he was among those investors who believed that the Lode’s richest ores yet lay below the 1,000-foot level, which some companies had already begun to explore. It turned out, of course, that the richest ores lay between the 1,200- and 1,700-foot levels, and had Sutro been able to complete the tunnel as scheduled by the late 1860s or early 1870s these levels could have been connected to the tunnel and drained

5 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 24-25.6 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 24-25; Summary of Articles of Agreement between Gould & Curry and Sutro Tunnel Company (26 Mar 1866) in Folder from Virginia Consolidated Mining Company (29 Mar 1879), NC7/1/6, Special Collections, Library, University of Nevada, Reno.

3

THE COMSTOCK [K]

accordingly. If ores had discovered below the 1,700-foot level, the tunnel would have been less effective. Rich ores at greater depths would have required water to be pumped up where the tunnel intersected the Lode. But unbeknownst to Sutro and everyone else who speculated about the configuration of the Lode, the richest seams lay slightly above where his tunnel and Lode joined and below this level the ores petered out. When the tunnel and the Lode were joined, the tunnel project itself had become an anachronism, a victim of time, as was true of other monumental projects. By 1878, while a few water-logged, non-producing mines could have benefited from the tunnel, they remained barren of ore. Other mining companies were exploring depths below the connecting point, and even though management drew up plans to adapt the tunnel to the new underground reality, they were abandoned because in the face of continued barrenness costs were prohibitive.

In addition to draining the mines Sutro’s tunnel would also serve as a conduit for moving supplies, workers ores to and from the Lode. Being both a visionary and a businessman Sutro had concluded that if such a link were opened he would not only earn income from drainage and transport but he could also reap greater wealth by owning or controlling the mills that could be built at the end of his tunnel. It proved to be, of course, unrealistic and unrealizable. Even if the tunnel had been completed according to initial and overly optimistic predictable, the flow of material and personnel through a single artery could not accommodate the complexity that came to characterize Comstock mining. Moving hundreds and at times thousands of workers along with tens of thousands of tons of ore, residue and supplies on dual tracks over four miles was an invitation to disaster. Already by the mid-1860s the pattern of the infrastructure of the Comstock was in place. Mining companies were making larger and larger investments on their own to hoist ore, accommodate personal and process ore and had little financial incentive to turn such tasks over to a tunnel promoter who failed to keep to his original timetable. That plus a general distaste for the bravado and arrogance that Sutro constantly displayed landed him far fewer clients than he needed to make the project financially sound. Some drainage leases were signed early on but given the delays were soon abandoned. The anticipated revenue stream of companies signing such leases dried up, and increasingly, to keep the project afloat, Sutro, who never lost faith (at least publicly), had to entice investors outside the Comstock to put up the needed capital. That he succeeded over the years is itself another oddity in this long sage. The local community virtually ignored Sutro and the on-again, off-again tunnel project. As evidence of his confidence, he was alleged to have said that after Virginia City was abandoned, “the owls would roost” in the tunnel.7

In his 1879 (and last) legislative report the Mineralogist summarized various statistics from the long history of the tunnel and its final connection to the Lode. The distance of the Sutro Tunnel to a floor of the Savage Mine (rather than Gould & Curry) was 20,018 feet and to the mine’s shaft was 20,489 feet. The first was reached at 11 PM on 8 July 1878 when workers from Savage punched a 5-foot hole that joined the mine with the tunnel. The shaft was reached two months later. The initial connection was made

7 “Annual Report of the Surveyor-General…1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 24-25; Smith, The Comstock Lode, 110.

4

THE COMSTOCK [K]

at a depth of 1,640 feet. Only two of the tunnel’s vertical shafts (1 and 2) had been sunk to their desired depths. Shafts 3 and 4 were abandoned at 456 feet and 674 feet respectively, about half the distance anticipated, because of flooding. Interior dimensions were close to what the original plan called for. The easiest digging was the first 2,000 feet; after that it was hard rock. Since digging on the tunnel did not begin until 1870, the tunnel took 8 years, 8 months and 19 days.8

Sutro hoped, of course, to discover rich ore deposits on the way to the Comstock. He found some ore but never enough to help to pay the bill for digging the tunnel. If the tunnel had been finished within two or three years after it was launched, it might have generated significant income, at least from drainage contracts, as the mining companies discovered both rich ore and voluminous water between 1,000 and 1,500 feet. But a four-mile tunnel at depths as great as 1,600 feet was not a feat to be easily and quickly accomplished, especially when capital to finance the project was in short supply. Sutro’s initial financing plan was to ask Comstock miners to sign leases that provided for a subscription of $3 million and a schedule of fees for the use of the tunnel. In the Spring of 1866 23 local mine owners agreed to the subscription and to pay the fees for drainage and other services, if they chose to use them.9 The leases committed mining companies to pay $2 per ton of ore extracted from mines drained by the tunnel. If companies used the tunnel to remove rock and other debris they would pay 25 cents per ton-mile and if they used it to transport workers they would pay 25 cents per worker. All such payments were to be made in gold coin and “not otherwise”. The $3-million subscription was to be spread over a ten year period with annual payments of $300,000, of which not less than $200,000 was to be in cash. The first payment was due 1 August 1867.10 The leases provided that the subscriptions would only be paid if the tunnel (not yet even started) could serve the companies advantageously. That phrase had an opened-ended quality. It is not clear exactly how much if any capital was raised locally in 1867 and 1868. If Sutro had raised $200,000 or $300,000, as stipulated, he could certainly have begun the tunnel. But the tunnel was not started. The leases did not yield what Sutro needed at once – money up front. As Comstock interest in Sutro’s tunnel waned, Sutro extended his search for investors to San Francisco and the East Coast. Opposed fiercely by William Sharon, the titan of the Lode at the time, and caught unexpectedly in a downdraft in Comstock production, Sutro lost nearly half of his leases by the spring of 1869. The remainder renewed their contracts for a year and apparently agreed to subscribe $600,000, although it is no clear how much if any of that was ever received by Sutro. On 29 November 1869 the certificate of incorporation for the Sutro Tunnel Company authorized the issuance of 1.2 million shares of stock at $10 per share for a total of $12 million. Sutro’s name was not among those listed in the incorporation, but his name was among those who

8 “Biennial Report of the State Mineralogist…1877 and 1878,” in Appendix to Journals of Senate and Assembly, 9th Legislative Session (1879), 84-85; Statement of the Condition of the Sutro Tunnel by Pelham W. Ames, Sec., Sutro Tunnel Company, 1878, MS-NC3, Bx 1, Nevada Historical Society; Smith, The Comstock Lode, 112.9 Smith, The Comstock Lode, 108. Not reported how many paid.10 Summary of Articles of Agreement between Gould & Curry and Sutro Tunnel Company (26 Mar 1866) in Folder from Virginia Consolidated Mining Company (29 Mar 1879), NC7/1/6, Special Collections, Library, University of Nevada, Reno. It is presumed that the agreement between Gould & Curry and Sutro Tunnel Company was more or less generic, typical of what other companies agreed to.

5

THE COMSTOCK [K]

transferred the ownership of the Sutro Tunnel to the new corporation. Some capital was also raised from the Miners Union. Having raised enough money to launch the project the company excavated about 1,800 feet in the first year. This was the easiest section of the tunnel to build, and yet the work had barely covered a tenth of the distance. At this point the lack of money and formidable technical problems caused Sutro to abandon the project, the first of several abandonments.11

In the early 1870s the task of raising capital shifted from Nevada and the West to Europe. In the absence of local subscriptions, Wall Street investments or federal assistance Sutro took his dog-and-pony show abroad. His position was strengthened when rich ore deposits were discovered at 1,000 to 1,200 feet, first at Crown Point and then at Belcher and other mines. He was quick to remind everyone that he had long said that rich ore bodies lay above the tunnel’s proposed depth, and these discoveries proved him right. In spite of his clairvoyance or luck further boasting did not win him any new friends or subscriptions locally. Sharon’s implacable opposition continued and intensified. Sutro’s salvation came by way of a London banking firm, McCalmont Brothers with offices at 15 Philpot Lane. Their partners were other European investors, Abraham and Isaac Seligman. Their association with Sutro over more than a decade was a rocky relationship at best. To the bankers Sutro appeared cocky, impulsive and flamboyant, too often a loose cannon instead of a serious businessman, and, not surprisingly, Sutro found the bankers to be staid, rigid and uninformed. Hundreds of letters and telegrams flew back and forth across the Atlantic. Sutro made at least one trip to London, and in 1878 because the relationship had grown so acrimonious, he was told in no uncertain terms not to make another trip. Sutro was not reluctant to speak his mind, and in one letter he disparaged the brothers for their inability to understand the business of mining. In their reply the brothers wrote: “We prefer to pass over your remarks as to our ‘shortsightedness and blindness’.”12

In combing through numerous documents from several archives, one cannot always be certain which agreements were signed or scrapped and which revisions were accepted or rejected by all the parties. One uncontested point is that although the initial McCalmont investment of several hundred thousands dollars was small, it soon grew through various refinancing schemes to millions of dollars. The pivotal years were 1873 and 1874. In 1873 the McCalmont Brothers and the Seligmans were designated the “Mortgage Trustees” for the issuance of bonds worth 1.6 million pounds sterling or nearly $8 million. As such, they held a lien on the tunnel and other (unspecified) properties. Although the documentation of the Sutro tunnel is extensive, it has proven difficult to pin down exactly how many bonds were sold and how much money, if any, was raised beyond what the bankers and their partners had subscribed by 1873. Moreover, the documentary evidence is not very helpful relative to the early financing of the Sutro Tunnel. Since the digging had resumed in 1871, certain costs had to be met for the tunnel to have added the several thousand feet that it did. These may have been covered by money borrowed from the European bankers and investors. There is no 11 Bound Volume of Abstract of Titles, 1877, pp. 6, 7, 32, Sutro Tunnel Company, MS-NC3, Bx 4, Nevada Historical Society.12 McCalmont Brothers to Adolph Sutro, 3 December 1878, Sutro Tunnel Company, MS-NC3, Bx 1, Nevada Historical Society.

6

THE COMSTOCK [K]

indication, however, that the banking house had raised or advanced part or all of $8 millions. In a draft of a Memorandum of an Agreement between Sutro and McCalmont Brothers & Co, revised over a period of several months in late 1873 and early 1874, a bond-backed mortgage worth 600,000 pounds or $2.9 million was canceled (without explanation) and a second bond-backed mortgage held by McCalmont Brothers worth 133,000 pounds or $648,000 was rescheduled from 133,000 pounds to 100,000 pounds. At the same time McCalmont was permitted to purchase 300,000 shares of company stock at a price of $10 (2.05 pounds) per share. Not all the money raised from the sale of stock to the brothers would become available to the company. The bankers would retain ten shillings or about $2 per share to retire liabilities arising from the 133,000 pounds in mortgage bonds, reduced to 100,000 pounds, under the control of the McCalmont Brothers. The Sutro Tunnel Company would be charged interest of 4 percent on all the money (even that which was retained) used to purchase the 300,000 shares of stock (since Sutro had no income with which to pay dividends). The company would pay $6,000 a month from December 1873 to October 1874 on half of the 300,000 shares for a total of $60,000. And it would pay $3,000 a month from October 1874 until April 1876 on the other half. It was presumed that the tunnel would be open and generating revenue by 1876. At this point, it would appear, the Europeans were on the hook for $2 to 3 million in a company that had no earnings. Quite possibly what the Europeans did was to assume any and all outstanding debts from previous years. The extent to which the company had accumulated debts since the project was launched and then suspended is not known precisely, but the work that had been done could hardly have been paid for with lease payments or company revenues. That the company had debts was intimated in Sutro’s own statement that with this new arrangement the company was not only debt-free but also had funds on hand to proceed.13

Work on the tunnel did proceed with only a few interruptions for the next half-dozen years but with continual wrangling between the company and its financiers. Extant financial documents are sparser than necessary to reconstruct a full financial profile of Sutro operations after 1873. The tunnel did not open in 1876, as promised, and the company repeatedly made demands on the banks to advance more money and to modify the terms of the agreements. It appears that the London firm fully expected the tunnel to become a paying proposition even as the Comstock entered a post-bonanza cycle. When completed in 1878 the tunnel had missed the opportunity to serve the Comstock in the way envisioned by Sutro. He quietly sold out and the London bankers were left as the principal owners of a project that would not ever generate any significant revenue. The new owners could not turn around the company, and finally in 1889, when McCalmont foreclosed on the tunnel, it was reorganized as The Comstock Tunnel Company and continued in existence until the 1930s. Up to 1885 the tunnel never had enough business to pay its bills or satisfy its creditors. It may have cost McCalmont Brothers and its other stockholders and investors between $5 and 6 million to complete the tunnel and another

13 Drawn from various copies of correspondence between Sutro Tunnel Company and McCalmont Brothers, November and December, 1873, Letterpress Book, Sutro Tunnel Company, MS-NC3, Bx 2, Nevada Historical Society. See also a working draft of a “Memorandum of Agreement made this [blank] 1874 Between The Sutro Tunnel Company…and Messrs McCalmont Brothers & Co…,” MS-NC7/1/5, Nevada Historical Society. This was not the final agreement, since it was not signed and some text was crossed out and new text was penciled in.

7

THE COMSTOCK [K]

$1 to $2 million to manage it. In the 1880s its stock was nearly worthless, although it continued to trade. Shrewd to the very end Sutro managed to sell his shares for several million dollars in 1879 and took his fortune to San Francisco where he became a controversial and colorful real estate developer. While Sutro can be faulted for his promotional antics, he did in fact complete a functioning tunnel. Whether or not the McCalmont firm were victims of Sutro’s endless sales pitches, they were certainly guilty of the lack of due diligence, to use today’s jargon. They had little first-hand knowledge of the risks associated with the Comstock. That they continued to support the tunnel under Sutro and then after his tenure to manage the tunnel seemed to have but one rationale – to try to save what was a less than “quality-grade” investment in the first instance.14

The story of the Sutro Tunnel has another side. As intriguing as the financial wheeling and dealing were, the fact that the tunnel was completed for the length and at the depth in accordance with the basic plan represented a major technical achievement. It was a prime example of the convergence of entrepreneurship and technology in the new industrial culture of late nineteenth-century America. The technical hurdles were numerous, and modifications of and refinements to the plan had to be accommodated. Without a new generation of “tools and machines”, however, the project would surely have remained a fantasy. Various maps from the Becker Atlas shows that for the first 3.5 miles the tunnel passed through various types of andesite rocks, mainly what the surveys described as “later hornblende andesite” for the first half of the distance and then “augite andesite” for the latter half. Along the way it passed through several other lodes before it reached the Comstock Lode. They include the “Great Flowery Lode” near Shaft 1 or about 2,200 feet from the mouth; the “Coryell Lode” between Shafts 2 and 3 or between 10,000 and 10,600 feet; the “Occidental Lode” just beyond Coryell or between 11,600 and 11,700 feet; and “Solferino Lode” between Shafts 3 and 4 or between 14,000 and 15,500 feet. Some of these Lodes contained vein matter and quartz. Once the tunnel reached 17,000 feet it was in the vicinity of the Comstock Lode. The rock type changed to various forms of diorite. When Sutro began the project, the geology had not been mapped yet. He did not know what he would encounter, and perhaps he had convinced himself that despite the lack of specifics he knew enough about the geology and the technology to press ahead. In the first few years before the project was shut down for lack of money and support, it had reached about 2,000. Once the project was revived in the early 1870s the pace picked up. It is important to stress the figures for how many feet were dug in any given year included explorations for gold and silver on either side of the tunnel itself. It had been Sutro’s hope that he could pay for the pay through the discovery of profitable ores in the vicinity of the tunnel. While the tunnel’s path crossed several quartz formations before reaching the Comstock Lode, these minor lodes were mainly vein matter with few or no profitable ores. From 1871 when construction resumed some

14 Lord, writing in the early 1880s after Sutro had sold his stake, put the cost of construction at more than $2 million. His figures were based on data from the company’s annual reports and other correspondence. Other sources indicate that the total cost (construction, management, loans, etc.) probably reached $5 to $6 million. It is worth noting that when Lord wrote his Comstock study, he was undecided as to whether the Sutro Tunnel was worth the investment. It was not yet clear even to someone as perspicacious as Lord that the Comstock had run its course and without new rich deposits the Sutro Tunnel could not repay its investors or revitalize the Lode. Comstock Mining and Miners, 342-343, 346-347. See also Smith, The Comstock Lode, 115.

8

THE COMSTOCK [K]

of the excavation data include those additional excursions. In 1871 and 1872 3,480 feet were dug or about 72 feet per month. The next year (1873) the number jumped to 1,919 feet or 105 per month. The length had reached 5,394 feet. In 1874 2,682 feet (223 feet per month) was added for a total length of 8,079 feet. These advances were largely possible because of the installation of six Burleigh drills. Burleighs were among the most advanced (and most expensive) drills available. But the drills constituted only part of the mechanization of the operation. Air compressors were needed to drive the drills. Along with the purchase of new Burleighs the tunnel company bought a new air compressor from the Humboldt Company of Germany for installation in Shaft 2 to complement the air compressor built by Société Cockerill of Belgium in Shaft 1. In 1875 the monthly gain of 312 feet a month or 3,728 feet for the year was the best yet. In 1876, however, progress slowed to 261 feet per month or 3,130 feet for the year. By the end of 1876 the tunnel had reached almost 15,000 feet, and because it was passing through a quartz formation known as the Solferina Lode progress had slowed. The company reported that exceptionally hard rock had stymied even the Burleigh drills. In 1877 two Burleighs were taken off the compressors in order to improve the efficiency of the remaining drills. In the next year and a half (January 1877-July, 1878) the remaining 5,400 feet to access the west wall of the Comstock Lode was cut through at depths between 1,600 and 1,700 feet. Since the vertical shafts # 3 and #4 had never been completed all the tools and supplies had to be conveyed through more than 10,000 feet of the tunnel. Plans were to extend the tunnel into Mt Davidson proper at a depth of perhaps 3,600 feet. That, of course, did not ever become a reality.15

A single connection to the Comstock would have had only minor consequences for draining the Lode. The lateral tunnel along the Comstock had to be built to connect other mines. Such a tunnel was planned to the same specifications as the main tunnel. The southern branch of the lateral tunnel began at 19,715 feet, 400 to 500 feet before the tunnel actually broke through to the Savage mine, and was to connect with the Julia Mine, a distance of about 1,400 feet. In October and November 1878, nearly 900 feet of the southern lateral tunnel had been cut. Julia Mine was under contract to pay $100,000 of which it had already advanced $40,000. The lateral did reach Julia, but the balance if paid was not recorded. Julia may have been drained but still remained unproductive. The southern lateral was originally planned to run about 8,500 feet to Alta Mine and the northern lateral about 4,500 feet to Union Mine. Much of the equipment for the lateral work was contained in Shaft 2, a distance of about 10,000 feet. It was noted that the aforementioned compressor to power both Burleigh and Ingersoll drills as well as the blower for ventilation and the hoist for moving workers and supplies were all located in that shaft. Indeed some of the equipment was located in Shaft 1, which was even farther from the site of the work.16 Although Sutro Tunnel abandoned plans to extend the main tunnel into Mt Davidson, it continued sporadically to work on the lateral tunnels until it

15 “Biennial Report of the State Mineralogist…1877 and 1878,” in Appendix to Journals of Senate and Assembly, 9th Legislative Session (1879), 81-85. Also information on the progress of the tunnel including workers employed, temperatures of air and water, nature of the ground and rock, etc. can be found in various correspondence folders with dates of 1867, 1871, 1874-1879 (most prolific for 1878) in Sutro Tunnel Company, MS-NC3, Bxs 1-3, Nevada Historical Society. The Mineralogist’s data were collected from company reports and interviews, and while they could not be absolutely verified from other documentation, they appear to be generally in line with the actual results.

9

THE COMSTOCK [K]

had traversed a substantial part of the length of the Lode. Like the main tunnel the lateral tunnels assisted in the drainage of a Lode that had exhausted its wealth.

As monumental as the Sutro tunnel was, it was not the nation’s only large-scale engineering accomplishment. The nation’s longest tunnel was The Hoosac Tunnel, built under the Berkshire Mountains in western Massachusetts. The project was launched in 1851 and after several delays it was completed two decades later in 1875. It was longer than Sutro by almost 5,000 feet and bigger with an interior height of 20 feet and a width of 24. It cost twice as much to build, not only because of its size but also in part because the interior was bricked. At the eastern entrance the summit of the Hoosac Mountain was 1,429 feet high and on the western entrance it was more than 1,718 high. Sutro was somewhat deeper. The Hoosac had three shafts for ventilation and light while Sutro had four planned but only two finished. The grade in Hoosac was much greater than in Sutro. There were essential differences. The most obvious was that Hoosac was a tunnel with light on both ends, whereas Sutro, being a underground tunnel, ended in darkness. Hoosac rocks consisted of mica slate, mica schist and milky quartz instead of andesites and diorites. There was no indication that Hoosac workers had to contend with scalding water and high temperatures to the same degree that Sutro workers did. Both structures epitomized bold thinking about overcoming environmental and geological barriers with the help, of course, of new technologies.17

Key to the construction of both tunnels (as well as very deep underground mining) was drilling equipment, in particular the Burleigh drill, which eventually found their way to the Comstock. For centuries “tunneling, mining and quarrying” required intensive human labor. Pounding and cracking the rock and then inserting a wedge to break the rock apart were the accepted techniques. In some cases heating the rock and splashing it with cold water could create fissures into which wedges could be driven. The use of gunpowder as an explosive in the seventeenth century added another tool, but underground explosives from the outset had posed problems. First was cutting the hole for the powder, not always an easy task. Additionally, controlling the reaction within the area of the blast and then venting it of noxious chemicals were not easily accomplished. It has been generally argued, however, that the introduction of powder in Spanish American silver mining helped to raise output in many older mines. By the nineteenth century the application of explosives underground was better understood and more widely practiced, although cutting and extracting the rock with hammers and chisels continued to be the workers’ primary tools. Toward the middle of the nineteenth century a Massachusetts inventor, Joseph Crouch, fashioned a steam-powered drill that repeatedly slammed into the rock until it broke the rock apart, and while it could be used in quarrying, it was too bulky to be used in underground tunneling or mining. Steam was fast becoming a source of power for many machines, but the residue of steam posed further breathing problems for workers already suffering from bad air in confined underground spaces that could be

16 Statement of condition by P. W. Ames, Sec., of the Sutro Tunnel Company, 1878, MS-NC3, Bx 1, Nevada Historical Society. Also see Smith, The Comstock Lode, 113.17 See www.boudillion.com/hoosac for data on the tunnel. Also data on the Hoosac, Sutro and other long American and European tunnels was compiled for the 1880 Census available On-Line at www.census.gov/prod/www/abs/decennial/1880.htm, United States Census Bureau. Statistics and Technology of the Precious Metals, vol. 13, 125, Table XVII.

10

THE COMSTOCK [K]

avoided in open areas. During the construction of Mt Cenis Tunnel between Italy and France in the early 1860s the chief engineer, Germaine Sommeiler, and his associates replaced steam with compressed air, and rather than steam contaminating the work area the air cooled it. But the drill itself, even when driven by air, remained unreliable and cumbersome. Thus, in the middle 1860s during the construction of the Hoosac Tunnel Charles Burleigh introduced the first pneumatic drill that was easier to use, although it could not be quickly set up or moved about. The Burleigh design not only inserted and retracted the drill, but they also turned the drill slightly for each new contact with the rock. Further improvements of the pneumatic drills made them lighter and simpler and above all easier to assemble and move.18

The advance in drilling had to be accompanied by an advance in the bits that the drills use to break up the rock. Diamonds, of course, being the hardest known mineral, would cut any rock such as quartz, which was three levels below diamonds in hardness. Egyptians apparently used diamond-pointed drills in their stone quarries. But the first “diamond core” drill was invented in France by a French engineer, Rodolphe Leschot, in 1863 in connection with the Mt Cenis tunnel project. The diamond bit on the end of the drill was a “tube or cylinder” with six stones or more distributed between the outside and inside circumference of the bit. Later models apparently had more than twice that number. Some diamonds were superior to others, although Leschot, since he had been a watchmaker, may have used jewel-grade diamonds that were less effective than other grades. Leschot device was patented in the United States about the same time that Burleigh had invented his device.19 Diamond bits combined with pneumatic drills came along at an opportune time for the Sutro Tunnel in particular and for the deeper and deeper probes along the Comstock Lode. Although Sutro, starting in 1874, could have acquired more than a half-dozen Burleighs, the Yellow Jacket Mining may have been the first company to acquire a Burleigh in 1872.20 Company accounts (to be discussed later) document that some companies purchased diamond bits to be used on their pneumatic drills. Within a few years of Yellow Jacket’s purchase diamond bits and pneumatic drills had become a part of the basic underground equipment for building tunnels and extracting ores.

Once the main tunnel had reached the Lode at Savage and the lateral tunnel branched off to serve other mines, the drainage of the Comstock, as Sutro had envisioned it, began in earnest. Water at the level of the tunnel or above it could be easily channeled into the Sutro through drainage ditches or pipes. Water below the 1,600-foot level had to be pumped up to the tunnel, a more expensive and less convenient operation. In removing or controlling water within the mines, according to the Mineralogist, cost mining companies about $3 million per year. He assumed that the Sutro Tunnel could greatly reduce that cost. The figure cannot be verified, but according to the Sutro pumping records the volume of water carried by tunnel once it had reached the Lode averaged about a million and a quarter gallons a day. In a progress report from 1878 the figure of

18 See www.fofweb.com for article by Rudi Volti, “Pneumatic Drills,” The Facts on File, Encyclopedia of Science, Technology, and Society (New York: Facts on File, Inc, 1999, 2003).19 See www.oilhistory.com for discussion of drills and bits by Samuel Pees.20 Lord, Comstock Mining and Miners, illustration between 336 and 337.

11

THE COMSTOCK [K]

1,285,000 was cited as the daily flow.21 An immediate beneficiary was the Combination Shaft and the consortium of three companies, Chollar Potosi, Savage and Hale & Norcross, which was building the shaft. It had reached 2,200 feet only to encounter hot water that quickly flooded Savage and Hale & Norcross up to the 1,800-foot level. Pumping by the companies had little effect in reducing flood levels and was very costly. When the connection was made with the Combination Shaft on 30 June 1879, Sutro wrote to Ames, the Secretary of the Board, that pumping had begun at 6 AM and the water reached the mouth of tunnel at 7:20 AM. The water temperature at the mouth was initially 90 degrees and gradually increased to 114 degrees. “Everything works like a charm,” wrote Sutro. The heat of the water did not “discommode” any of the tunnel machinery or equipment. The water flowed through the tunnel to the Carson River as if “it had been going there for years”. The interiors of the shaft and mines were soon made dry enough to be worked. To honor the occasion Sutro gave his men the day off and ordered that fires would be lit on the ranges around the Comstock that evening to celebrate. Unfortunately, celebratory fires on the ranges of the Comstock would not turn water into gold or silver. As he praised the performance of his creation, however, he already had an eye on the exit from the Comstock.22

Since the opening of the tunnel in 1878 Sutro had expressed disappointment at the volume of water draining from the Comstock. Since the tunnel’s only business appeared to be drainage of water, volume was an indicator of how many mining operations had been signed up to use Sutro’s drainage services. Many of the mines on the Lode’s southern branch had pipes connecting to the lateral tunnel, and his next effort was to accomplish the same on the northern branch. This would double the flow of water, he said, and twice the flow meant more mines paying fees to keep their operations dry.23 In the meantime, mining companies could continue their search for new ore bodies at even greater depths. And his plans for expansion and improvement did not end there. Surely, though, at the same time Sutro knew what the most seasoned observers knew – the boom was over, and the Lode was running out of ore. His European backers were certainly beginning to show more skepticism. After the initial connection was made in July of 1878 McCalmont Brothers warned Sutro to concentrate on signing up mining companies to use the tunnel as it currently existed in order to generate some income and to abandon any plans for expansion and improvement. Writing on 2 July 1878 McCalmont urged Sutro “…[to] make the best bargains you can with the Comstock mines…,” although the Brothers did agree to some minor improvements for roads and cultivation of alfalfa and barley for the animals. “We adhere to existing terms of mortgage due 1891.”24 A few weeks later the Brothers issued a further rebuke. Since the goal had been reached, London will provide no further outlays. “We are aware of Mr. Sutro’s ambitious views, 21 Reports of Progress of Work, 1878, Sutro Pumping Company, MS-NC3, Bx 1, Nevada Historical Society.22 “Biennial Report of the State Mineralogist…1877 and 1878,” in Appendix to Journals of Senate and Assembly, 9th Legislative Session (1879), 85; Letter from A. Sutro, Supt., to P. W. Ames, Sec., Sutro Tunnel Company, 30 Jun 1879, MS-NC3, Bx 4, Nevada Historical Society. It is not reported in Sutro’s letter how much of the daily flow was from the Combination Shaft.23 Letter from A. Sutro, Supt., to P. W. Ames, Sec., Sutro Tunnel Company, 30 Jun 1879, MS-NC3, Bx 4, Nevada Historical Society.24 Copy of Letter from McCalmont Brothers, London, to A. Sutro, 2 Jul 1878, Sutro Tunnel Company,, MS-NC3, Bx 1, Miscellaneous Letters, Nevada Historical Society.

12

THE COMSTOCK [K]

necessitating enormous expenditures in the future, such as draining the tunnel, leveling the floor, new lines of rails, smoothing sides of the tunnel, extensive drifts, prospecting, locomotive power, or wire ropes, etc. etc., all of which, however necessary they may be, we can no longer provide.” They intimated that they might not pay the next installment due Sutro under the terms of the mortgage on 1 August.25 A week later they wrote: “We can but repeat what we said in our last that if you are unable to make arrangements to procure funds from other sources, we see nothing for it but to suspend work, and close up pending operations with as little prejudice to all concerned as possible.”26 Such was the nature of the correspondence between Sutro and his backers for a year. The tunnel was losing money, and Sutro’s response was for the company to grow its way into prosperity while the London firm was set on curtailing expansion, generating revenue and reducing indebtedness. In 1879 after 15 years of almost endless warfare Sutro quit. He dissolved his association with the company for several million dollars, and a new group took control under the direction of the trustee, C. W. Brush. It did not matter who owned the tunnel. Its business, so intimately linked to the health of the Lode mining entrepreneurs would, like them, end up in bankruptcy. Fewer enterprises meant fewer leases, and fewer leases meant fewer receipts despite the tunnel’s success. That anyone would pay as much as Sutro was paid remains a mystery (at least to me).

For the new owners making the tunnel profitable under a worsening economic environment was daunting to say the least. In letters and reports from George Sprecht, the chief administrator of the Sutro Tunnel Company, to C. W. Brush, a trustee, during 1881 – the worse year for production in Comstock mining – discussed some strategies for doing that. The detailed calculations would have warmed the cockles of every cost accountant’s heart. But unfortunately some of the figures are not fully explained and the totals cannot always be duplicated. Accountancy had assumed a new importance in corporate American, and the Comstock mining industry was no exception, but detailed cost statements did not necessarily provide accurate cost information. Part of the problem in regard to the Sutro Tunnel Company was that the information was contained in several different reports, each of which had a slightly different objective. Sprecht reiterated that his amortization plan called for paying $500,000 per year over 10 years to retire the $5 million mortgage and to accomplish this assumed surpluses from the following revenue sources: 40 percent from drainage royalties, 30 percent from transportation contracts, 15 percent from reduction of ores and 15 percent from opening new mines within the tunnel’s own right-a-way. If transportation contracts were to yield $200,000 in surpluses to cover their share of the annual mortgage payment, two or three times that amount would have to be generated in income to pay expenses before any surpluses could be realized. In some of the agreements between the tunnel company and the mining companies they included provisions that the transport of ore was $2 per ton, rock and waste 25 cents per ton-mile and workers 25 cents per person each way.27 How much

25 Copies of Letters from McCalmont Brothers, London, to A. Sutro and C. W. Brush, 25 Jul 1878, Sutro Tunnel Company,, MS-NC3, Bx 1, Miscellaneous Letters, Nevada Historical Society.26 Copy of Letter from McCalmont Brothers, London, to A. Sutro, 30 Jul 1878 Sutro Tunnel Company, MS-NC3, Bx 1, Miscellaneous Letters, Nevada Historical Society.27 Articles of Agreement between Sutro Tunnel Company and Consolidated Virginia Mining and California Mining Companies, 29 March 1879, Article 12 (p. 27), NC7/1/6, Special Collections, Library, University of Nevada, Reno; Articles of Articles of Agreement between Sutro Tunnel Company and Segregate Belcher

13

THE COMSTOCK [K]

haulage business had Sutro rounded up since the opening of the tunnel? No direct documentation has been found thus far, but based on some indirect evidence the answer appears to almost none. The company did report that between September 1878 and December 1880 the tunnel was used to haul on average 116 tons (58 carloads) of rock per day. What is not clear is where rock came from - Sutro’s own excavations or mining company excavation? If one assumed that all the rock came from paying customers at the stipulated rate of 25 cents per ton-mile, the total income would be a measly $10,000 to $11,000 dollars, a long way from the hundreds of thousands needed to reach the company’s financial goals.28

The flurry of activity in 1881 by Sprecht to find new strategies for improving revenues appeared to focus mainly on how to make the tunnel more of a transport conduit than it had been. The immediate question was whether the mode of transport – mule-driven trams – should be replaced. To remove the aforementioned 116 tons on average per day the company employed six daily trains of 10 cars with three mules and one mule driver per train. Without accounting for the cost of the equipment or the wage of the driver the report stated that to move a ton of rock cost 5.73 cents per ton-mile (round-trip calculated at 10 miles). Mule power was then compared to steam and air (compressed) power. At Bald Mountain Mining Company steam cost about 6.1 cents per ton-mile without any other specific being offered. Compressed air was estimated at 5.29 cents per ton-mile, although that figure was suspect since compressed air could only be used in part of the main tunnel and would have to be combined with some other mode in the rest of the main tunnel and the lateral tunnels. Sutro had a stable of 72 mules, which had to be fed, shod and generally cared for, and while the figures are fuzzy and not always reconcilable, the cost of maintaining the mules accounted for perhaps half of the total cost of 5.7 cents per ton-mile. The other expenses included lubricating and illuminating oils (each train carried seven torches) and repairs of tracks and cars.29 To replace mules with a locomotive powered by steam or air a source of power had to be tapped. The preferred source was water. The Lode and the tunnel, of course, had ample water, but the flow was apparently inadequate to generate the needed power. At the mouth of the tunnel was the Carson River, which could be harnessed to power the steam locomotive system that Sprecht leaned toward. In comparing hoisting and hauling costs for Comstock mines Sprecht concluded that the average was $2.90 per ton with existing facilities but could be reduced to $1.55 per ton with upgraded Sutro operations. Sprecht’s figures included some hoisting charges inside the mines since the mines were lifting ore and waste from depths below the level of the tunnel itself. His haulage figures also included the costs for installing the locomotive system, servicing the mortgage (nearly half the total) and operating the tram. Calculated on strictly a per-ton basis, since this was how mining

Mining Company, 29 March 1879, Article 12, MS-NC3, Bx 1 Sutro Tunnel Company, Nevada Historical Society. With respect to ore, if the gold yielded a coin at less than $40, the rate dropped to $1 per ton.28 Letters from George Sprecht to C. W. Brush, Trustee, Sutro Tunnel Company, 5 May 1881 and 5 June 1881, MS-NC3, Bx 1, Miscellaneous Letters from April 1881, Nevada Historical Society.29 Duplicating the calculations as given in the document proved to be difficult. I have accepted the report’s figure of 5.7 cents per ton-mile without being able to verify its accuracy. The aim here is to provide a comparative benchmark, and no more. See Letter from George Sprecht to C. W. Brush, Trustee, Sutro Tunnel Company, 5 May 1881, MS-NC3, Bx 1, Miscellaneous Letters from April 1881, Nevada Historical Society.

14

THE COMSTOCK [K]

companies calculated their hoisting and hauling costs rather than per ton-mile, Sutro could save the mining companies on average $1.35 per ton (on paper).30

Even as large as the savings might have been (under ideal circumstances), they offered little or no incentive for mining companies in 1881. Not only did Sutro lack the capital to rehabilitate the tunnel – mule-driven trams remained for decades – but the mining companies also lacked the financial means to abandon an old system and embrace a new one. Efficiencies in hoisting and hauling could be realized as long as the quantity and the quality of the ore continued to decline as rapidly as it had since 1878. By Sutro’s own calculation the company would have had to contract to move hundreds of thousands of tons to generate the level of income needed to meet various obligations, in particular the repayment of the debt, at a time when tonnage had reached the lowest levels in the history of the Comstock. Despite a valiant effort to rejuvenate the tunnel business, the company could not rejuvenate the Lode and therefore could not rejuvenate itself.

Underground mining was a constant war with the natural forces on a daily basis. With the Sutro Tunnel one could observe the beneficial impact of new technologies in taming those natural forces. The fact was that while Sutro “stumbled” toward completion mining companies had sunk some of the deepest shafts and built some of the longest tunnels in the world with a combination of old and new technologies. Adaptability appeared to be the key to success. Although hard to quantify, it comes through in the hundreds of pages of daily or weekly reports written by foremen and superintendents. References to new machines and techniques were frequent, but much of the content of these reports concerned low-tech matters of digging and re-digging, building and rebuilding, timbering and re-timbering the interior spaces that the workers and the machines needed. Logistical questions always loomed large because the means had to be found to move workers, ores, supplies and even machines from the surface to the bottom and back to the top or from one part of the mine to another part. Bigger engines, stronger cables, larger cages and other technological innovation let shafts operate faster and more safely, but even after better technology had been put to work, the shafts themselves, mostly constructed from wooden timbers, had to be secured constantly against bulging and snapping because of the movement of the earth around them. Mining companies were as much in the business of reconstruction as construction. Once a facility had been built it had to be serviced, upgraded and at some point replaced.

By the time the Sutro Tunnel began to drain mines on the northern end of the Comstock Lode in 1878, the search for ore had already moved well below the 1,600- to 1,700-foot level where the linkage occurred. There was the hope, of course, that by draining old works above the level of the tunnel new ore deposits would be located and that given the network in place they could be easily and profitably accessible. But while such discoveries were a possibility, for which some precedent existed, the main focus of

30 These conclusions require a “certain faith” in the way Sprecht or his associates computed their costs. Theoretically it was possible that under the appropriate reconfiguration of the tunnel it would be cheaper to move people and things through the tunnel to the Lode. That ignored, of course, the fact that large sums had been invested over the years in other strategies for servicing the mines. See Letter plus accompaniments to C. W. Brush, Trustee, The Sutro Tunnel Company, 5 June 1881, MS-NC3, Bx 1, Miscellaneous Letter from April 1881, Nevada Historical Society.

15

THE COMSTOCK [K]

the remaining mining companies appeared to be deeper rather than shallower probes. By the 1880s mining companies were opening up new work areas 2,000 to 3,000 feet (and more) below the surface. Numerous examples from company records could be cited. Yellow Jacket, still a William Sharon property, had fallen from among the ranking producers after the 1868 fire. It had a claim nearly 1,200 feet long, and in November 1876 it began the construction of a new shaft between two existing shafts. The shaft to the north had served for the exploitation of relatively shallow ores, 100 to 400 feet below the surface, which it shared with its northern neighbors Confidence and Challenge. The southern shaft, however, built to extract ores shared with Kentuck and Crown Point on its southern boundary had reached the 2,400-foot level. The new shaft was pushed to 2,636 feet by June 1879, and another 400 to 500 feet would be added during the next several years before the project was halted.31 To reach 2,600 feet the company averaged about 80 feet a month. Divided into fiscal years from July to July progress on the shaft was reported as 768 feet in 1877, 780 feet in 1878 and 1,088 feet in 1879. The range was from a high of 155 feet in December 1876 to a low of 33 feet in July 1877. During the fiscal year ending 1 July 1879 in addition to sinking and timbering the shaft almost 1,100 feet other work was underway. Water tanks were constructed at the 1,550- and 2,300-foot levels (from surveyor’s point at Gould & Curry) to hold 31.5 tons (7,554 gallons) and 21.5 tons (5,096 gallons) respectively. Pipes for compressed air were installed from the surface to 2,300 feet. At 2,500 feet more than 1,400 feet of drifts were cut during the year. Air circulation was always a concern, and with the extended shaft and repairs to some of the winzes, ventilation had been improved vastly, all the way to the 2,500-foot level. Moreover the creation of two stations adjacent to and connected with the new shaft at 2,300 feet and 2,500 feet improved the airflow and lowered the temperature. The total volume of air that passed down the new shaft through the repaired passages was measured at 34,200 cubic feet per minute. Temperatures now ranged from 66 degree to 96 degrees Fahrenheit. Perhaps more importantly Yellow Jacket no longer had to depend on adjoining mines for ventilation. Two air compressors, a Burleigh and a Warring, supported excavating for the shaft and mining of the ore. Both had been used previously in the older shaft. Because of the depths new hoisting equipment had to be purchased. An order had been placed with Risdon Iron Works for the construction of “a pair of horizontal, direct-acting hoisting engines, eight feet stroke by twenty-eight inches diameter of cylinder, with complete appurtenances for a first-class hoisting apparatus [sic].” The contract called for fabrication and transport of the machines in 125 days at a cost of $142,500, one-third to be paid when the work was half done, one-third when the machines were shipped and the final third after the engines were in operation. New cables also had been ordered from England. They were 3,700 feet long, eight inches wide and three-eights of an inch thick, and they were scheduled for delivery in December 1879. In the meantime, until the new equipment was installed, the current hoisting machinery was being supplemented with a “donkey engine” at 2,300 feet. Rock excavated from below this point was lifted by the donkey engine to 2,300 feet where it was then stored. To try to hoist from the new depths to the surface with the existing “geared hoisting machinery” would be unsafe under the strain necessarily imposed upon it…,” said the company. The

31 Grant Smith wrote that the shaft reached 3,080 feet or just below the 3,400-foot level. Smith, The Comstock Lode, 280. See also Becker, “Longitudinal Vertical Projection of the Comstock Lode…,” in the Atlas, Sheet X.

16

THE COMSTOCK [K]

final matter to be considered was water. About 1,000 tons a month appeared in the shaft at the 1,550-foot level where it is stored in a tank and another 300 tons below that level. Water raised through the shaft averaged about 300,000 gallons per month. The biggest problem, however, was that even though a vein of about 700 feet was found at the 2,500 feet, it was filled with porphyry and not worth much. All the work for the year had failed to produce much ore that would cover the costs of repairing and expanding the mine. The mills, owned by Sharon and associates, refined the low-grade ores at a small profit, but that did not pay for mine renovations.32

The Superintendent’s Annual Report (1878-1879) included figures on Yellow Jacket’s finances. The balance sheet showed that the company had receipts and disbursements of $446,000. Receipts included no money from mining of ore. Eighty percent or $360,000 of the receipts came from assessments against stockholders. Another 20 percent was the balance carried over from the previous fiscal year (1877-1878). On the disbursement side 70 percent or $313,000 of the total outlays ($446,000) was for the construction of the new shaft and another 22 percent was cash on hand ($41,000), labor in the old works ($31,000) and purchases of mining supplies ($28,000). The breakdown for construction of the new shaft was fairly precise. The list below shows total cost for each category and the percentage, as calculated by the company (dollars rounded):

Labor-Miners' Wages $134,319 42.84%Machinery-All Foundry Work & Machinery $89,533 28.83%Timber-All Wood Work $24,029 7.68%Wood-Coal & Fuel $22,083 7.06%Iron & Steel-All Hardware $12,842 4.10%Powder & Fuse $8,845 2.83%Freights-Virginia & Truckee RR-Machinery, supplies $5,260 1.68%Water & Ice $4,188 1.34%Candles & Oil $3,623 1.15%Taxes-State, County, Town $2,694 0.86%Construction Engineer-W. H. Patton $2,500 0.79%Sundries-Not Specified $1,820 0.58%Masonry-Sand, Stone, etc. $843 0.26%Total $312,579 100.00%

The two major expenditures were labor (43 percent) and machinery (29 percent). They combined for 72 percent of the total. Two other items of interest were costs for timber (7.68 percent) and wood (7.06 percent) – the former for framing a shaft that had grown by 1,088 feet ($20 to $25 per foot) and the latter for fuel (plus coal) to power the equipment. It is worth noting that W. H. Patton, who had a long career in Comstock

32 “Annual Report of the Yellow Jacket Silver Mining Co. for the Year Ending June 30 th, 1879,” with accompanying sketches and plans, NC61 and NC61/2, pp. 5-7, Special Collections, Library, University of Nevada, Reno. See also Smith, The Comstock Lode, 280-281. Interesting observations by Smith on size of pumps, fly-wheels and rod-catchers on pumps and breakdown of the pumps in 1880 from diary of Superintendent Thomas G. Taylor. Lord briefly described size and horsepower of engines that drove hoists in Comstock Mining and Miners, 347.

17

THE COMSTOCK [K]

mining, was the consulting engineer at an annual salary of $2,500. The company computed the average cost of the shaft per foot between November 1876 and June 1879 at $374 to reach 2,636 feet. The most impressive gains were in the first three months (November 1876-January 1877) when the shaft had reached nearly 440 feet (one sixth of the total distance and just under 150 per month) before the advance fell off to more modest monthly averages of 80 feet per month. The cost per foot for the fiscal year 1876-1877 (only eight months) was $166 per foot to excavate 768 feet. In the next fiscal year (1877-1878) outlays rose sharply to nearly $700 per foot or a total of $545,714 to add 780 feet. Finally in the fiscal year July 1878-June 1879 when 1,088 feet were added the cost per foot was $287, a decline of more than 60 percent from the previous year. By any measure, at a time of a deepening depression, the expenditure of a million dollars to build a new shaft to explore a region one thousand feet below the last profitable ore findings was risky if not wasteful. But it was that kind of ambition that had served the Comstock well for two decades. It would eventually become clear to speculators and investors alike that the richness of the Lode did in fact have a limit.33 Yellow Jacket did begin to produce refinable ores in 1883 and continued to do so through 1885, the end of the period under review here. In one or two quarters yields exceeded costs, but in most quarters the ore was not valuable enough to cover operating expenses. Yields per tons ran in the range of $10 to $25 with the lower yields predominating. It is doubtful hat the new shaft was ever paid for with ore from the mine.

Shafts allowed miners to reach new depths, but once there the work of tunneling had to begin. Underground tunneling had many different aspects and components. The Atlas assembled by George Becker and his team as a part of the 1882 publication Geology of the Comstock Lode and the Washoe District was a tour de force. Ophir was one of the earliest quartz mines, and twenty years later (having been own by William Sharon and now by John Mackey) with a checkered career it produced some ore but mainly consisted of a vast underground network that was still under construction. Ophir ended up with a claim about 700 feet long. Its main deposits were relatively shallow. They were located between the surface and about 500 feet on the claim’s southern half. Four or five different shafts had been constructed to intersect the Lode, which as noted earlier, angled toward the east before it was squeezed out completely. Below 500 feet in the underground area served by these shafts there was virtually no further tunneling. Hard rock had replaced vein matter. To the east toward the hanging wall the company dropped the Ophir Shaft, which would eventually reach 2,500 feet. A small deposit of rich ores was found between 1,500 and 1,600 feet at approximately the same depth as the Consolidated Virginia-California finds of the mid-1870s. It had a limited duration. But it spawned new underground projects. Tunneling moved in both directions from the Ophir Shaft, which more or less bisected the claim, toward the Mexican Mine on the northern boundary and the California Mine on the southern boundary. In the 1879 Annual report the Ophir’s President, C. W. Weller, acknowledged that the mine “even in periods of great depression …never ceased to be a favorite with the public.” In the current year 33 Annual Report of the Yellow Jacket Silver Mining Co. for the Year Ending June 30th, 1879,” with accompanying sketches and plans, NC61 and NC61/2, pp. 8-9, Special Collections, Library, University of Nevada, Reno. No taxable bullion was recorded for Yellow Jacket in 1880, but some appeared in later years. See The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.

18

THE COMSTOCK [K]

people “felt” confident about the mine’s future even though most of the construction could be appropriately classed as “dead work” that was necessary to find and extract the ore. Feeling that the mine had a bright future resulted from the discovery of the so-called Hardy Vein about 2,000 feet below the surface. In 1879 it produced about $1.3 million in bullion on 20,000 tons at an average yield of $64 per ton. Because the vein was irregular it was costly to exploit. Even though the company had paid a small dividend the cost came in at about $56 per ton. Nonetheless the President concluded his report with conviction that the future prospects were bright and the flow of dividends would continue.34

To reach these depths the main shaft had to be extended. During the previous year the Ophir Shaft had reached 2,200 feet. In 1879 it had been extended 498 feet to a point 30 feet below the station at 2,500 feet. That would appear to be less than the actual distance should be, and the reason was that the shaft was being extended on an incline rather than strictly vertically. The tunnel was said to have “passed through” alternating “stratas of vein porphyry, birds-eye porphyry and quartz, dipping to the west passed through near the 2300 level showing about three feet thick and giving good assays.” At 2,500 feet the quartz dipped eastward, and it may have been richer than the quartz noted above. Large rooms were excavated and timbered at 2,200 and 2,300 feet. Several “bobs” had to be replaced, and new tanks and chutes had to be installed. Drainpipes were constructed through adjoining mines to Savage where a connection with the Sutro Tunnel was made. A new air compressor was attached to the hoisting engine in a configuration that saved some money because the compressor could be driven “by the weight of the descending cable and giraffe” and then allowed to stand “without motion” when the hoist was actually in operation. “The practical result of this…will be to give us over 3000 cubic feet of air per hour, at a pressure of 80 pounds to the square inch, at no additional expense” while simultaneously saving “the wear of the brake machinery heretofore used to control the descent of the cable and giraffe.” Finally and perhaps most demanding work was to keep the shaft properly timbered. Between 700 and 1,400 feet the ground was so unstable that a crew of at least 40 men was required daily to keep it in proper condition.35

Extensive tunneling was also described in Superintendent W. H. Patton’s 1879 Report. At 1,600 feet drifts had been constructed both north to the Mexican and Union mines (approximately 600 to 700 feet) and south to the California Mine (approximately 400 to 500 feet) for purposes of ventilation and drainage. Repairing and maintaining drifts (of similar length) with same mines at 1,700 was also necessary to protect the air and remove the water. Work at 1,900 feet was primarily ore extraction in drifts that covered hundreds of feet. According to Becker’s illustration the drift at 1,900 was (by 1882) a five-sided loop that measured about 1,500 feet. It was located between the Ophir Shaft and the California border on the south. In fact, it crossed over the border into

34Annual Report of the Ophir Silver Mining Company, December 1879 (San Francisco: Bunker and Hiester Printers, 1879), 5-7, NC56, Special Collections, Library, University of Nevada, Reno. See assessments in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.35 Annual Report Ophir Mining, 1879, 15-17, NC56, Special Collections, Library, University of Nevada, Reno.

19

THE COMSTOCK [K]

California ground, but that mattered little since both Ophir and California had the same owner. On the north side of the main shaft a V-shaped drift from 500 to 600 feet in length was constructed. At the Mexican border it turned west (creating a V) and eventually connected with a winze from the 1,700. The main drift at 2,000 feet measured nearly 1,500 from the main shaft to California on the south and Mexican on the north. Much of the work had been completed prior to 1879. The Mexican and Union Consolidated Mines pushed the drift further northward to connect with the Union Shaft. On the south the drift continued through California, Consolidated Virginia and Best & Belcher to Gould & Curry where it connected to the main shaft. This drift across seven different properties greatly improved the ventilation in all the connecting galleries. On the Mexican boundary a winze was dropped to the drift at 2,300 feet (a distance of 300 feet) through a drift at 2,100 feet. A joint (with Mexican) crosscut was run about 300 feet in a western direction. Both the winze and the crosscut “passed through alternate streaks of hard porphyry and vein matter having a westerly dip, showing some quartz, giving low assays” but also improving with depth (thus the apparent reason behind the winze). Because of the appearance of water in the crosscut work was suspended as of August 1879 until new pumps could be installed. The northeastern drift at 2,100 feet was extended to Mexican and connected to the joint Ophir-Mexican winze from 2,000 feet. To the south of the main shaft the drift consisted of two parts. A southwesterly drift, beginning in April 1879, was extended about 150 feet. It ran through the so-called Hardy Vein, and for about 100 feet good quality ore was found, after which the assays fell sharply. Half way along this drift an upraise was constructed to reach the ore above the drift. The other part, moving in a northeasterly direction was started in May 1879 and had reached more than 400 feet. After almost 200 feet of vein matter the drift entered “good milling ore with a width of about 3 feet.” This continued for about 100 feet and then gave way to low-grade ore. The face of the stope at the terminus of the northeasterly drift looked promising again (at the time the report was written). An upraise was constructed in order to connect to the drift at 2,000 feet and an east-west crosscut was also under construction. The upraise passed through some good ores, but the crosscut found mainly hard rock and vein matter. At 2,300, 2,400 and 2,500 feet, in addition to completing or enlarging the stations at each level on the main incline some drifts were being started or extended to the north and to the south. A fairly long drift at 370 feet was finished from the shaft to the northern boundary for a connection with the adjoining Mexican mine. All of this work on the main incline shaft and on hundreds if not thousands of feet of drifts, upraises and winzes found pockets of good-quality ore, but, as Superintendent Patton himself concluded, the main ore vein remained elusive. This was an extraordinarily active year (typical of a Mackay venture) in pursuit of the Hardy Vein. Expensive as it was, Patton was happy to report that enough millable ore had been lifted to cover the costs, to pay a dividend of $1 per share ($10,800) and even to retain a surplus ($134,892). (Typical outcome for Mackay ventures, although of late his luck had been running in reverse.) And the future was bright because with more of the Hardy Vein above 2,100 feet to be exploited funds would be available to push ahead with prospecting in all directions and on all levels.36

36 Annual Report Ophir Mining, 1879, 10-17. NC56, Special Collections, Library, University of Nevada, Reno.

20

THE COMSTOCK [K]

In the Inventory of Property attached to the 1879 Annual Report Patton listed the value of buildings, equipment, supplies and merchandise as of 1 December 1879. The total value of the property was nearly $350,000. The inventory did not explain how the valuations were arrived at, and more than likely they involved a formula based on replacement costs. Two items – real estate and buildings – totaled $72,000. The buildings included hoisting works, incline and pumping engines, ore dumps, administrative offices, work and worker areas and furnishing. Perhaps the most relevant category, given the discussion above, was machinery. The list with the valuations is shown below:

2 hoisting engines, reel & gear, complete $29,0001 double incline engine, 2 hydraulic engines attached 75,0001 Burleigh air compressor 5,5001 Booth air compressor 4,0002 double engines, underground, on winzes 2,800 7 large Ingersoll drills 2,4506 small Ingersoll drills 2,0005 Burleigh drills 2,0001 Baker blower, 2 giraffes, 4 tanks, 6 cages, 38 ore cars 3,6001 engine to drive saws 9001 large pumping engine 34,500Plunger and Cornish pumps, iron bobs, various pipes 17,5002 boiler pumps 1,00011,262 feet round steel wire cable 18,00010,900 feet flat steel cable 12,9002,000 feet water pipes, hydrants & hoses 9,50010 boilers 18,000Blacksmith & machinist tools – lathe, punch, press 6,500Total $241,750

The inventory contained at least 18 drills, with a stated total worth of $6,500. Within the group the Burleighs appear to have a somewhat higher valuation at $400 apiece compared to the 7 large and 6 small Ingersolls at $325 to $350 each. Two air compressors totaled $9,500 with the Burleigh being a third more than the Booth. Two sets of cables with a total length of more than 22,000 feet were said to be worth $30,000. These three categories added up to $47,000. The largest group consisted of engines, pumps and boilers and their attachments such as pipes, tanks, etc. with a total valuation of about $195,000. The hoisting engine and the double engine for the incline shaft (described above) and their accouterments were set at $104,000, while several pumps with their attachments were set at $52,000. The double engine for the incline shaft had the highest valuation at $75,000. In addition to buildings and machines the inventory included supplies that totaled about $15,000. These included almost 500 cords of wood ($4,828), 326,303 feet of timber ($5,547), more than 100 gallons of coal, lard and machine oil, 24,500 tons of Cumberland coal, hundreds of pick and sledge handles and shovels and axes and many sundries such a powder, fuses and rails. In the course of the year (1879) Ophir extracted 20,000 tons of ore and removed 61,000 tons of rock. The ore yielded about $1.2 million in bullion. Ophir’s inventory at year’s end was comparable to

21

THE COMSTOCK [K]

inventories compiled by other mining companies. For example at the end of 1875 in the midst of a real bonanza Consolidated Virginia declared its inventory to be worth about $400,000, and a year later sharing in the same bonanza California also declared an inventory of about $400,000. What is more important than the valuations is the degree to which one can judge how important machinery and technology was for these operations. Much of mining was still the result of manual labor but greatly aided by pneumatic drills, heavy-duty cables and powerful engines.37

Ophir’s Balance Sheet for the year revealed more details about financing these operations. Most of Ophir’s income (unlike the previously discussed Yellow Jacket) was derived from bullion, about $1.3 million of $1.6 million. Other revenues derived from the three neighboring mines, Union Consolidated, Mexican and California, paying Ophir over $200,000 for material, labor, power and pumping with Mexican, its northern neighbor, owing more than $100,000 of the amount. As noted above, Ophir and Mexican engaged in several joint projects to extend and connect their drifts, and that would account for Mexican’s share. On the expense side the largest item, not surprisingly given the extent of tunneling already discussed was labor at a third - $535,000. These figures suggest the possibility that over the course of the year Ophir employed several hundred workers. Such a number does not seem unrealistic when the range of underground construction is considered. More than $400,000 was spent on supplies including equipment, although the actual items purchased during 1879 were not specified. These purchases, however, were no doubt reflected in the inventory totals cited above. Reducing the ore cost $173,000 or $8 to $9 per ton. More than $300,000 was composed of stockholder dividends, ore and cash on hand and bullion discounts. The last was necessary because the bookkeeping value ascribed to silver was higher than the market value. In almost all companies during the 1870s the value of silver per ounce was pegged at a certain amount even though the sale of an ounce of silver on the open market would yield 10 to 20 percent less than what was entered. Eventually that had to be accounted for in the companies’ year-end statements. The remaining $100,000 or so was allocated to office expenses, freight, assays, insurance, etc. According to its declarations before Story County’s Assessor, the company had direct expenses of $1.1 million with almost a million of that devoted to extraction to generate $1.3 million in bullion. That meant that the yield per ton of ore was about $64 and the cost per ton was $58. This did not make for a highly profitable operation and did explain the relatively low dividend of about $5 per ton.38 The underground work described in the Superintendent’s report and summarized above was costly, and they were justified on grounds that the Hardy Vein located at 1,900 feet would lead to a substantial deposit and hopefully a new bonanza. The Hardy Vein petered out, and by the end of 1880 the mining costs per ton were twice the yields per ton. The Ophir, which more or less inaugurated quartz mining on the Comstock, would also serve as the last hurrah. The Hardy Vein was rich enough to animate the long-held hope that new bonanzas lay at greater depths and given the technology could be

37 Annual Report Ophir Mining, 1879, 18-20, NC56, Special Collections, Library, University of Nevada, Reno; Annual Report, Consolidated Virginia Mining Company, 1875, NC99/1/5/1, 13, and Annual Report, California Mining Company, 1876, NC99/1/5/6, 14-15, Special Collections, Library, University of Nevada, Reno.38 Annual Report, Ophir Mining, 1879, 22-23, NC56, Special Collections, Library, University of Nevada, Reno.

22

THE COMSTOCK [K]

successfully and profitably exploited. In fact the dissolution of the Hardy Vein sealed once and for all the northern Comstock’s fate. Returns on investments between 1880 and 1885, the silver anniversary of the discovery of ore, ceased to exist. And with that came the end of a remarkable saga that witnessed the conjuncture of ambitious and at times reckless entrepreneurs and of widespread application of a changing technology.

SPECIAL APPENDIX: Elevation map of the Sutro Tunnel, from Becker, Atlas, Sheet XI. May appears in four section from the opening in the town of Sutro to the connection at the Savage Mine on the Comstock Lode. Each of the four shafts contemplated are shown, although Shafts #3 & #4 were abandoned before completion. The tunnel actually passed through several lodes before reaching the Comstock. Little ore was found along the way, asnd most of the rosk was described by Becker as diabase.

23

THE COMSTOCK [K] 24

THE COMSTOCK [L]

Chapter 11The Biggest Bonanza:

Location & Size of Bonanza, The Founders

The Comstock saga would be incomplete without reexamining the history of the biggest and richest strike ever on the Lode and perhaps in the annals of American mining. Two mines located almost directly under the center of Virginia City dominated the headlines for several years in the mid-1870s. Consolidated Virginia and its companion California accounted for three-quarters of all the ore produced between 1865 and 1885. The importance of these two properties to the overall history of the Comstock Lode is hard to overstate. Without these ore bodies the history of mining on the Comstock would have been less spectacular and perhaps no more than a minor event in the history of Western mining.

The individuals who controlled these (and several other mining properties) are well known to mining-history enthusiasts. They were a Quartet of Irish-Americans: John Mackay, James Fair, James Flood and William O’Brien. All had been active in Comstock mining since the mid-1860s and had enjoyed success in opening and rehabilitating other mines before Consolidated Virginia and California almost single-handedly rewrote the history of the Comstock. Although the properties were incorporated in California as mining companies, they were often referred to in the press and among contemporary writers as The Firm or The Bonanza Company. The Quartet’s exploits from the earliest years have been the subject of many published works. The Comstock had spawned its share of colorful, flamboyant personalities, many of whom could be portrayed as rascals if not out-and-out thieves. The Quartet was not spared from allegations of outrageous behavior, personal and financial, but their flaws paled in significance against their accomplishments. Unlike so many of their peers they were acknowledged to be serious-minded businessmen with a commitment to, almost an obsession with, having in place systems for organizing, financing and managing their operations. The archives of the Consolidated Virginia Mining Company and the California Mining Company, among the largest of such collections, testify to their skill, daring and foresight. Luck is always part of the equation in mining – who knew their mines held the richest ore bodies until they were actually located – but then luck required execution, the mantra of The Firm.

Work had begun in Consolidated Virginia inauspiciously in 1871 and 1872. It had been created out of smaller claims – Sides and White & Murphy - none of which had ever produced any ore. The State Mineralogist’s summary of activities in 1871-1872 (for his 1873 report) was a brief 12 lines. New hoisting equipment had been placed in a shaft that had reached 525 feet. That shaft was to be extended to 1,200 feet to connect with a drift from Gould & Curry (at 1,336-foot level on the survey map). At 525 feet the Lode was 200 feet wide. Although no ore had been removed, the Mineralogist reported that expectations were positive. What encouraged the company to continue was the absence of water, which was drained through adits at Ophir and Gould & Curry. The Mineralogist

1

THE COMSTOCK [L]

provided no details on how these draining operations worked. Many other Comstock probes may have begun the same way, high expectations with few results.1

Two years later (1875), when the Mineralogist made his next report, the situation had changed radically. The shaft had reached 1,550 feet, and the bonanza was underway. Earlier bonanzas on the southern end at Crown Point and the Belcher had pointed the way because Consolidated Virginia’s ore existed at approximately the same level as measured from the survey point of the Savage Mine. Of course the hope was that bonanzas would be found in all the mines across the Lode at the 1,200- to 1,500-foot levels and lower. The Comstock would disappoint again. At these levels there would be only two bonanzas – the southern one that was waning and the northern one that was burgeoning at such a pace that the dozen lines in the 1873 Report became eight pages in the 1875 Report. Not only had the company added 1,000 feet to the shaft, it had also constructed drifts south to Gould & Curry and north to Ophir at depths of 1,200, 1,300, 1,400 and 1,500 feet. The northern drifts actually passed though “Old California” that will be split off into a newly- incorporated company known as California Mining. The massiveness of the ore body almost defied description. Again, as Smith and other writers have done, I turn to George Becker’s excellent illustration (Figure 1) of the underground workings at Consolidated Virginia (and California) in the 1882 Atlas to assist the reader in visualizing the extent of both the ore bodies and the mining operations at 1,200 to 1,600 feet underground. To begin with, one must orient oneself as if looking down into the underground at locations of either underground works or ore bodies. Colored lines (of varying widths) for tunnels, drifts, shafts, etc. or for ore bodies are correlated with depth. Two figures indicate the depths: distance from the surface (without parentheses) and distance from the surveyor’s point at Gould & Curry (with parentheses). In Figure 1 with respect to ore bodies at Consolidated Virginia and California the shallowest was maroon at the 1,300-foot level (approximately 1,200 feet from the surface) and the deepest was green at the 1,700-foot level (approximately 1,600 feet from the surface); in between was biege at the 1,400-foot level, yellow at the 1,500-foot level and brown at the 1,600-foot level. There was a small block of deeper pink at the 1,800-foot level, and below that there were colored lines but no colored blocks. The ore bodies had ended.2

In Figure 1 the levels with ore bodies lie on top of each other. Hence, at the 1,400-foot-level at the upper end of the colored block one can observe the overlay of the ore body at the 1,300-foot level. Following the beige color one can observe that it overlay ore bodies at the next two lower levels. Each square is 100 square feet so that the extent of these ore bodies, especially at the 1,600-foot level is readily observable. This was typical of other ore bodies in other bonanza mines.3 In mining parlance they were known as horses because of their shape. In simple language they were almost like solid walls of

1 “Biennial Report of the State Mineralogist of the State of Nevada for the years 1871 and 1872” in Appendix to Journal of Senate, 6th Legislative Session, 1873, 136-137.2 George Becker, Atlas to Accompany the Monograph on the Geology of the Comstock Lode and the Washoe District (Washington: Department of the Interior, United States Geological Survey, 1882), Sheet 15. Smith, The Comstock Lode, 165-171.3 Becker provided illustrations of all mining properties from Utah on the north to Baltimore-American on the south, and the extent of the ore bodies can be compared.

2

THE COMSTOCK [L]

ore, hundreds of feet across and deep. Not only were these concentrated ore bodies rich in quality but they were also inexpensive to mine once the infrastructure was in place.

FIGURE 1ORE DEPOSITS FOR CONSOLIDATED VIRGINIA AND CALIFORNIA MINES

FROM GEORGE BECKER, ATLAS, SHEET 16

3

THE COMSTOCK [L]

The underground cavern, shown in Becker’s 1882 mapping, was carved out over a period of five to ten years, but the size of workings at the time of the report by the Mineralogist in 1875 was considerably smaller. While the main shaft was still under construction, explorations were underway at several levels between 1,200 feet and 1,600 feet through drifts being dug from Gould & Curry through Best & Belcher into Consolidated Virginia. Gould & Curry was under the control of William Sharon, an acknowledged adversary of the Mackay-Fair crowd. Gould & Curry had yielded little or no profitable ore since the earliest years of the Comstock boom. It had, though, an extensive tunneling system with airshafts and pumping facilities that allowed for a connection with Consolidated Virginia. Sharon granted permission to use his drift and shaft because, it was alleged, he wanted to teach the Quartet a lesson – as they were unlikely to find any profitable ores, they would not only end up bankrupt but they would also have to pay him in the process.4 However strong his animosities – and he was not known for a generous and forgiving nature – such deals were not uncommon around the Comstock. For Sharon Gould & Curry had generated little income, and this was an opportunity to change that if just briefly.

The discovery of the massive and rich ore deposit that straddled the boundary of Consolidated Virginia and California (but not beyond) resulted after many years of fruitless explorations by the owners of the properties that eventually were combined into Consolidated Virginia and California and of relentless criticism by the local press of the way in which the explorations had been carried out. In the Mineralogist’s 1875 Report he quoted a long passage from the Territorial Enterprise concerning the discoveries at Consolidated Virginia. The newspaper noted that work had been done near the surface “in a line with the Ophir and the outcroppings of the Gould & Curry” with few favorable results. The owners of the properties came to the conclusion mistakenly that they held barren ground along the ledge from which Ophir and Gould & Curry had realized their bonanzas. “Years ago, in these columns, long before there was any Consolidated Virginia Company, we [editors of the Territorial Enterprise] urged these small companies to unite and sink a large prospecting shaft on E street [sic], east of Piper Opera House, but no attention was paid to the suggestion – at least not by the men who owned the ground.”5

By the 1870s, however, the eastward shift in the ore-bearing quartz was more widely accepted among the active miners than was true a few years earlier. The Territorial Enterprise like many other promoters and entrepreneurs believed that what had been found in Consolidated Virginia would extend southward through Gould & Curry and northward into Union Consolidated. That proved to be unfounded. In 1869 four of the properties –Central #2, Kinney, White & Murphy and Sides joined forces to create the original Virginia Consolidated Mining Company. Assessments were issued, work commenced and results were discouraging. In 1871 Mackay, Fair, O’Brien and Flood paid about $50,000 acquire the company’s stock. Both a new shaft and a drift from Gould & Curry through Belcher & Best were pursued vigorously. A thin seam was found in Best & Belcher at about 1,200 feet, and under Fair’s guidance that seam, which was not always easy to follow, led to a vein of ore about seven feet wide with assays of $60 per 4 Smith, The Comstock Lode, 149.5 “Biennial Report of the State Mineralogist...1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 131. According to Eliot Lord the Territorial Enterprise “repeatedly” urged the owners to pursue this action in 1867. See Comstock Mining and Miners, 308.

4

THE COMSTOCK [L]

ton at a point less than 200 feet from Belcher & Best in Consolidated Virginia ground. Without this discovery the company would have had to request additional assessments to keep the work on track. So rich was the initial discovery that company could postpone any further assessments and push ahead with the sinking of the shaft, which was connected to the drift in October 1873. In following the vein Fair affirmed what many had believed, the ledge that contained the ore-bearing quartz had shifted to the east; without the vein, however, it would have been difficult to determine where the shift had occurred. The cut into the bonanza was made at “1167” feet below the surface or at the “1367-foot level” from the surveyor’s point at Gould & Curry. The direction that the drift took from Gould & Curry through Belcher & Best was clearly marked in Becker’s Atlas. The surprising feature about this bonanza was how far away it was from the Lode. The companies had known for some years that the Lode shifted eastward away from Mt Davidson, but the prior bonanzas on the southern end had been in the proximity of the Lode. This vein was further away from the Lode and closer to the hanging wall. They followed the vein, northeastwardly instead of northwestwardly, for several hundred feet, and in so doing they found the vein grew in size although not necessarily in quality. In Lord’s words this “lid, so to speak, of that wonderful ore-casket, termed commonly the Big Bonanza, had been lifted off.” This casket would be several hundred feet deep with the richest ores lying near the bottom of the casket. The trip through the drift to the hoist in the Gould & Curry shaft was now nearly 1,500 feet. It became imperative to finish the Consolidated Virginia Shaft, which was an extension of older shafts, which was to terminate at about 1.200 feet (1,300-foot level), even though that would be short of where the heart of the bonanza lay. This was necessary not only to expedite the transport of ores and workers but also to improve the quality of air. In October, 1873, it reached the extension of the Gould & Curry drift that would serve the upper ore galleries under construction. At time the vein that Fair had been following was as much as 50 feet thick and virtually solid ore of high grade. Newspapers were allowed to follow the progress of the work, and while surviving company documents unfortunately are sparse, newspapers around the Comstock and in San Francisco filed daily reports on the progress of the mine.6 Since it was determined that the vein continued into the adjoining property a second company, California, was created in 1873 from “Old” California plus smaller claims. Consolidated Virginia’s ores began to appear in the assessment rolls in the first half of 1873, but California’s ores did not appear until the first half of 1876. As so often happened in this and other mining camps, as soon as the news of the new bonanza began to circulate, former holders of older claims, now assembled under The Firm, began to file grievances and lawsuits against in order to try to share in the bonanza. Mackay, Fair et al. prevailed against these often bogus legal maneuvers and lost little time in expanding their operations.

By every measure applied to Comstock mining operations the dominance of Consolidated Virginia and California clearly stood out. More than 50 mines, mills and individuals declared ores to be assessed from the third quarter 1875 through 1884 (1885 excluded because data incomplete), and they declared 2.9 million tons of ore (almost 6 6 Lord, Comstock Mining and Miners, 309-311; Smith, The Comstock Lode, 145-158. Some of the information in Lord (and perhaps Smith) was taken from various Consolidated Virginia Annual Reports. Some of these reports may be found in NC99/1/5/1, Special Collections, Library, University of Nevada at Reno.

5

THE COMSTOCK [L]

billion pounds) of which Consolidated Virginia and California accounted for 1.2 million tons or 42 percent. Consolidated Virginia produced slightly more than California: 624,000 tons versus 588,000 tons. The yield per ton underscored the richness of their ore deposits at Consolidated Virginia and at California. The average for all declarations was $44 per ton, but at $82 per ton and $80 per ton respectively Consolidated Virginia and California clearly skewed the average. Without these record yields it was $18 per ton. The Firm’s properties had a yield 4.5 greater than the average of the remaining companies. The bullion value of Consolidated Virginia’s ores was $51 million or 40 percent and California’s ores $47 million or 37 percent.7 Of the total bullion value of $128 million, $30 million or 23 percent came from all the other Comstock operations with ores to declare. Consolidated Virginia and California accounted for $98 million or 77 percent of the total. The magnitude of this bonanza assured the Comstock of a grand status in the history of mining.8

FIGURE 2OUTPUT AND COST TOTALS OF CONSOLIDATED VIRGINIA AND

CALIFORNIA MINING COMPANIES, 1875-1884Tons Total Per-Ton Total Value Total Total Per-Ton

% Value % Cost CostConsolidated Virginia (CVMC) 624,394 21.7 $82.08 $51,252,898 40.1 $18,800,767 $30.11

California (CMC) 587,504 20.4 79.71 46,830,260 36.7 15,866,842 27.01Total (All Companies) 2,879,597 100.0 44.38 127,792,693 100.0 64,278,355 22.32

Total (without CVMC/CMC) 1,667,699 57.9 $17.81 $29,709,535 23.3 $29,610,746 $17.76

On the expense side Consolidated Virginia reported costs of $30 per ton and California $27 per ton. Their total expense for extraction, transportation and reduction (usually not detailed by category) was $34 million. Total costs for all operations were reported to be $64 million, and average cost per ton was calculated to be $22 per ton. Operating costs at Consolidated Virginia and California were obviously higher than the average for all operations. But the difference was in the yield per ton. For each dollar spent at Consolidated Virginia and California the mines realized almost three dollars ($2.90) in bullion. As a group the remaining mines barely broke even: costs of $17.76 per ton for yields of $17.81 per ton. Consolidated Virginia and California were not the only bonanza mines high yields accompanied by higher than normal costs. In three quarters in 1872 for which assessment data exist prior to the 1875 fire Belcher had yields of $60 per ton and costs of $35 per ton for a gross operating profit of $25 per ton. Crown Point had similar yields to but higher costs than Belcher, but even so the spread between revenues and costs was between $10 and $20 per ton in gross operating profits.9 The costliness of developing bonanzas mines must be weighed against the potential profits. Another factor,

7 Because the market value of silver was 20 to 40 cents lower than the assigned value, total values should be discounted by 10 to 15 percent in any given year.8 Data from The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno. Since bullion accounts kept by Consolidated Virginia and California exist for all the years between founding of the mines and their closing, the data in the Assessment Rolls can be checked against the companies’ own records.9 See microfilm in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno. Data on Belcher and Crown Point from Abstracts of Story County Assessment Rolls in the Nevada State Archives.

6

THE COMSTOCK [L]

hard to document, was that The Firm was managed by executives who had a history of spending to achieve their goals. Executives of different personalities or with lower yields might have held back on purchases of capital goods and taken a less aggressive approach, but that was out of character for Mackay, Fair et al. They were not necessarily reckless, but they were proactive.

When the State Mineralogists filed his biennial report in 1875, he was manifestly exuberant about the accomplishments at Consolidated Virginia and California. The condition of the two mines was a model of orderliness and cleanliness. Furthermore the willingness of the owners to invest in new plant and equipment appeared to be unbounded.10 Two years later (1877) the Mineralogist’s exuberance had not waned. His report included a description of the vein being worked - 600 feet high (1,200 feet to 1,700 feet), 100 feet wide (north to south) and at least 700 feet long (west to east toward hanging wall – with an estimated yield of more than $140 million in bullion. Not every square inch was filled with ore, but most of it was. The yield proved to be an exaggeration, but such pronouncements were not uncommon during the height of a bonanza.11 As spectacular as the record was in and of itself, it was portrayed in a way to fuel even bolder expectations than may have been warranted. The expectations did not escape the notice of the stock-market bears. From time to time, despite the exuberance of officials and experts, the bears could sow enough doubt to pummel mining-company stocks. The history of the Comstock was probably the bears’ staunchest ally – no bonanza had ever lived up to its advanced billing, and this bonanza would be no different. Gyrations in stock prices of all active companies became standard fare during bonanza periods. The mid-1870s was no exception. The Mineralogist cited rising prices of Consolidated Virginia and California stocks as evidence of a new era in the Comstock saga. It was true that Consolidated Virginia’s stock had reached $610 per share in December of 1874 after a high of $110 per share in July of 1873 and California’s stock had sold for $510 per share in December of 1874 even though the mine was not yet officially in production. In the early months of 1875 these stocks would reach or exceed $700 per share. At this price the combined value of these companies probably exceeded the worth of their underground treasures. The stock-market bears would have their way as they began to short the stocks, that is, short sellers borrowing stocks at high prices, intending to replace them with stock purchased at lower prices and pocketing the difference as profit. What heavy short-selling did then (as it does now) was to raise doubts about the future viability of the current stock prices. Short sellers could guess wrong, of course, and their need to “cover” their shorts meant that they had to enter the market and buy the stocks, and that would have the effect of raising the prices of the stocks further. In this instance, however, the short sellers succeeded. The stock prices fell over the next two years although with considerable volatility. Even the bears could be trapped at times because stocks, which appeared to be in a downward spiral, would unexpectedly gyrate higher.12 Prices of stocks in adjoining or nearby mines also enjoyed

10 “Biennial Report of the State Mineralogist...1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875,130-133 and 140-141.11 “Biennial Report of the State Mineralogist…1875 and 1876” in Appendix to Journals of Senate and Assembly, 8th Legislative Session, 1877, 120-121.12 Even the owners of the mines would engage in shorting their own company stocks if they wanted to acquire more shares at lower prices. The risk was that they could precipitate a downdraft in the price of the

7

THE COMSTOCK [L]

periods of revival and rejuvenation because of their neighboring bonanza mines. What ultimately came to bear so heavily on the prices of all mining stocks including Consolidated Virginia and California was the failure to replicate their bonanzas anywhere else. By the time the Mineralogist issued his next (and last) report in 1879, the bloom was off the rose. Not only were Consolidated Virginia and California in trouble, but also future prospects for the northern branch had been called into question. After so many escapes in the past it took a while to comprehend that losing money this round was the final installment.13

The Quartet of Mackey, Fair, Flood and O’Brien split their duties as the principals in Consolidated Virginia and California as well as other enterprises (including mines) that they owned. Mackay and Fair ran the operations from Virginia City while Flood and O’Brien managed the finances from San Francisco, which was the home office of these California-incorporated companies. From the company accounts the roles of Fair and to a lesser degree Flood can be fleshed out whereas the roles of Mackay and especially O’Brien remain obscure. None of them served as corporate officers and only Flood had a board seat among the majority stockholders. That Mackay and Fair should direct mining and milling operations made eminent sense since they had been involved in the Comstock since the early 1860s and were among the most knowledgeable and most competent of the Comstock mining men. When Consolidated Virginia was reorganized under The Quartet in 1871, Fair was named superintendent, a position that he held until 1878. In the first two years T. S. Smith and after him (Captain) S. G. Curtis may have been more active in supervising the daily operations than Fair, but once the bonanza was confirmed in 1873 Fair became the man in charge.14 And once California was opened he served as its superintendent as well. Fair signed most of the correspondence contained in scores of letterpress volumes from 1874 through 1878. The handwritten weekly reports (sometimes daily) to an officer of the board were generally between three and six pages in length and were filled with details on internal mining operations. In addition, the correspondence covered purchases of supplies, bids on equipment and general company affairs. The contents of the letters could be as technical as the thickness of the hoisting rope or cable and as solicitous as the state of a worker’s health. J. M. Taylor, the longtime administrator (or clerk) of the Virginia City office, actually wrote the letters as they appeared in the letterpress volumes and may have composed the letters based on information provided by Fair since Taylor’s signature or initials appeared most frequently along side of Fair’s signature. From time to time, especially during Fair’s absence from Virginia City, Mackay signed the correspondence. Smith preferred to describe the relationship as one in which Fair and Mackay shared the management of the mines, although Mackay never officially assumed the title of superintendent. Mackay stuck to what he knew best, mining, “legitimate mining” as opposed to the other mining endeavor,

stock that would dilute their own portfolio or by miscalculating the demand for the stock they would find it necessary to cover their shorts and would end up paying more than they had intended to purchase additional shares. It has been alleged that James Flood held sizable short positions in Consolidated Virginia and California stocks and from time to time lost money to cover his shorts.13 Stock prices at their highs and lows in any given year can be found in Table V from the Appendix in Lord, Comstock Mining and Miners, 432-435.14 There is actually little surviving documentation about their activities prior to 1873. Much of what has been written about them came from newspaper and journal reportage.

8

THE COMSTOCK [L]

speculating in stocks. From various reports he spent his days moving about the mines and mills under his control. Fair was more likely to represent the public face of The Firm. But there was no doubt that these were “hands-on” owners who knew on a daily basis how the business was performing.15 Flood and O’Brien, on the other hand, besides handling certain accounts such as mercury purchases and bullion shipments, gave much attention to the San Francisco Stock Exchange where they would do battle with the bears and speculators who were intent upon doing harm to the company. The Quartet owned the majority of the mining stock, and their financial wellness depended in part on managing the trading of stock. The task fell mainly to Flood, whose success in protecting his or their investments was hardly resounding. He made some missteps that were costly, but on the whole, according to Smith, he was honest and diligent in his business dealings.16

Mackay’s comment about “legitimate mining” was to downplay the importance of stock traders in the actual operations of the mines and mills. On making money Mackay was correct to say that his financial success derived from mining and milling ore and not from buying and selling stocks. And that was true of the Quartet and other minority stockholders for the most part. They made money from the profits and dividends of the mining operations and not from the stock manipulations. There is no denying that traders could control the financial destiny of many mining companies, but those few that actually found rich ore bodies could still make their stockholders wealthy not through stock manipulations but through company dividends.

Both Mackay and Fair had been active in Comstock mining for a decade before the success of Consolidated Virginia and California. Mackay had made a small fortune in the recovery of the Kentuck mine, and Fair had worked at Ophir and Hale & Norcross mines. After a contentious and expensive war by Sharon to gain control of Hale & Norcross, Fair convinced Mackay (and Flood and O’Brien) to begin to buy shares of Hale & Norcross, which Fair believed had profitable ores but was badly managed. Flood and O’Brien purchased enough shares to oust Sharon and his board. Once the Quartet had gained control of Hale & Norcross, they refunded the final assessments ordered under Sharon’s management and began lifting millable ores. Mackay, the wealthiest of the four, owned three-eights of the Hale & Norcross, Flood and O’Brien jointly owned another three-eights and Fair owned two-eights. Flood, O’Brien and Fair had to rely on Mackay and others to help them finance their shares. As Fair had predicted, Hale & Norcross hoisted enough profitable ores between 1869 and 1872 to allow the distribution of dividends worth about $800,000. This was the same ore body from which the Savage Mine, on the northern boundary, had realized several million dollars worth of ore in the late 1860s. It stretched from the 500-foot level to the 1,400-foot level, although the quality of the ore at the lower level proved to be streaky. Fair’s experience at Hale & Norcross persuaded him that the mines to the north of Hale & Norcross, those properties that would eventually become the base for The Firm, could yield profitable ores at 1,000 feet and below. The success at Crown Point and Belcher to the south of Hale & Norcross

15 Many of the most prominent writers such as Eliot Lord, Grant Smith or Dan DeQuille can be consulted for details about their lives and activities. Also James, The Roar and the Silence, examines the lives of Mackay and Fair and the companies that they founded in Chapter 5.16 Smith, The Comstock Lode, 116-117, 178-179, 202-203.

9

THE COMSTOCK [L]

did not dissuade Fair from that view. Indeed their success below 1,000 only reaffirmed his conviction.17

The so-called gentleman’s agreement by which the Quartet operated Hale & Norcross became the basis for their later business ventures. There is no evidence that the principals ever signed a contract with respect to responsibilities and duties. The original Virginia Consolidated Mining Company was organized in 1867 through the incorporation into a single company of several small mining properties of little consequence. The owners included prominent Comstock promoters: The plan was to drop a shaft that would intersect with the Lode in its eastward slant (toward the hanging wall) at the 1,500-foot level. It turned out that this shaft would not have intersected the Lode until 2,000 feet, ground that was barren. At 500 feet they decided to run a drift back toward the Lode, but found no ore and abandoned the shaft. Even if they had continued to drive the shaft to the 1,500-foot level and then run a drift toward the Lode, they would have missed the ore body, which was in the direction toward the hanging wall. The Lode narrowed at 900 feet until its walls touched. Nothing was ever found below that point. What the Mackay-Fair team did, as described earlier, was to explore away from the Lode toward the hanging wall. And in a “rift” created over millennia by steam, water and pressure, more than 700 feet away from the Lode at the 1,200-foot level lay the bonanza. It was not where conventional wisdom would have put it. In the wake of the failure of the first Consolidated Virginia Company the stock had fallen to $1. Under the circumstances the Quartet bought at least three-quarters of the outstanding stock for perhaps $100,000, a fraction of what they had made from Hale & Norcross.18

17 Smith, The Comstock Lode, 146-147; Lord, Comstock Mining and Miners, 308-309.18 Smith, The Comstock Lode, 148-150.

10

THE COMSTOCK [M]

Chapter 13The Biggest Bonanza:

Consolidated Virginia Launched, Relaunched, Peaked & Diminished, California in Bonanza

The local newspaper, Territorial Enterprise, wrote on 13 May 1873 that reduction of ore from Consolidated Virginia began on 12 May 1873.1 In his 1875 Report the Mineralogist gave no specific date but stated that most of the production from 1873 occurred between June and December.2 The company accounts, on the other hand, did not commence until October 1873.3 The first bar of ore (without indicating which metal) from the Mariposa Mill was recorded on 18 October 1873 at a value of $3,228.58. Between 18 October and 3 November (ore mined in October but not processed until November) 40 bars were produced for a total value of $124,962.17: 15 bars worth $42,381.36 were reduced at Mariposa Mill, 19 bars worth $61,317.64 at Bacon and 6 bars worth $18,363.17 at Occidental.4 By December 1873 a fourth mill, Trench, had been added. In November 1873 ore worth $250,758.90 was processed, for an increase of 100 percent over October and in December 1873 ore worth $272,783.78 was processed for an increase 9 percent over November and 118 percent over October. In two and one-half months the mine produced $648,504.85 worth of ore. Almost 15,000 tons of ore were hauled to the mills, and from that amount 11,000 tons were crushed and amalgamated. In terms of crushed ore the mills ranked as follows: Bacon had 34 percent, Occidental 29 percent, Mariposa 28 percent and Trench 10 percent (percentages rounded up). Bacon, Trench and Mariposa had been Quartet properties since the rehabilitation of Hale & Norcross in the early 1870s. Trench and Occidental received ores that yielded about $50 per ton, while at Mariposa they yielded $56 and at Bacon $60 for an overall average of $58.5 Most of the ore in 1873 was extracted from the top of the bonanza at the 1,200-foot level and hoisted through the drift and shaft of Gould & Curry. By the autumn of 1873, Consolidated Virginia’s main shaft had reached 1,200 feet and would soon become the main channel for entering and exiting the mine. In those first three months almost equal quantities of gold and silver were reduced from the ores: $316,476.11 in gold and $332,028.74 in silver. As the work proceeded, the ratio would change in favor of silver, although gold would continue to claim two-fifths or more of the reduced ores. It is worth underscoring here that such precise record-keeping became standard for businesses under the control of The Firm. Bookkeeping procedures changed over time without, for the most part, compromising the quality of the entries. But like all historical documents, The Firm’s accounts are not perfect. Bookkeepers and accountants did not always fill all the blanks in accord with the printed format of the ledger pages. As a result, some information that

1 According to Grant Smith in The Comstock Lode, 152. I did not attempt to verify this citation.2 “Biennial Report of the State Mineralogist…1873 and 1874” Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 130.3 Bullion Records, October 1873, Consolidated Virginia Mining Company, NC99/1/3/1, Special Collections, Library, University of Nevada at Reno.4 Bullion Records, October & November, 1873, Consolidated Virginia Mining Company, NC99/1/3/1, Special Collections, Library, University of Nevada at Reno.5 These calculations on per-ton yields appear in the Bullion Records and in other files kept by the company. They have also been calculated by dividing the value of the bullion by the tonnage of the ore.

1

THE COMSTOCK [M]

would have been useful to know is unavailable. By and large, though, whatever the defects and voids, the overall record is of impressive quality.6

In 1874 the output of Consolidated Virginia Mine reached $5 million with silver accounting for 60 percent of the total. Six mills were needed to process 90,000 tons of crushed ore. Their ranking in terms of ore processed was as follows: Trench with 22 percent, Bacon 21 percent, Occidental 18 percent, Mariposa 16 percent, Sacramento 14 percent and Kelsey 10 percent. Kelsey joined the milling group in March and Sacramento in April 1874. The yields per ton were uniformly similar between $54 and $59 per ton. But they had improved during the year, from lows around $40 per ton to a high in the mid-$60s. Fair (acting as superintendent) described the progress in the mine on almost a daily basis in a series of letters and reports to David Bagley, Secretary of the Company in San Francisco. Without giving a specific date the Consolidated Virginia shaft had reached 1,550 feet during the year. A new crosscut was opened between Consolidated Virginia and California at 1,500 feet. A winze was being sunk from 1,550 feet into the ore body. The work on the winze had been slowed because of the hardness of the quartz and the seepage of water. The winze had reached a point 80 feet below 1,550 feet, and the last 10 feet had an incline (winzes were built on an incline) of 58 degrees, a fairly steep tunnel. A “donkey” engine had been installed to move the ore and rock up to the level where the shaft was. Ore quality at all levels was described in positive terms. In addition, ventilation tunnels were under construction between 1,550 and 1,500 where a drift connected with the Gould & Curry Shaft (to the south). Finally the company had undertaken the construction of a new shaft, known as the C & C Shaft (Consolidated and California) about 1,050 feet east of Consolidated Virginia’s main shaft to provide, it was hoped, better access to the ores of both mines at 1,500 feet and below. By the end of 1874 it had only reached 16 feet. A brief delay had been encountered because an order for 14-foot timbers to enclose the shaft had been countermanded (by telegram) and a new order for 20-foot timbers had been substituted. The new timbers were expected to be in place during the first week of January, 1875.7 Such was the detail of Fair’s correspondence during his long tenure as superintendent of both mining operations.

In 1875 work at Consolidated Virginia and its satellite California proceeded at a vigorous pace and achieved unprecedented results. The ore body, of course, was located in the northern part of Consolidated Virginia and in the southern part of the newly

6 There is continuous run of Bullion Records from 1873 until 1881. They included monthly totals for each mill. The Bullion Records for Consolidated Virginia Mining Company can be found in NC99/1/3/1-5, Special Collections, Library, University of Nevada at Reno. For information on the mill properties see Copy of Letter James Fair to Joel Lightner, Secretary of the Board, Hale & Norcross, 12/03/70, NC99/2/1, Bx 6.7 Copies of letters from James Fair to David Bagley, Secretary of the Board, from 11/28/74 through 12/27/74 from Letterpress Books, Consolidated Virginia Mining Company, NC99/2/3, Bx 6, Special Collections, Library, University of Nevada at Reno. One letter was from Fair to Carson & Tahoe Lumber Company in Carson City, NV (12/25/74), same citation. As noted in an earlier chapter, the distinction between depths measured from the Gould & Curry survey point (used by George Becker) and from the surface of the mine was not always clear in the daily reports or company correspondence. In some cases I referred to Becker’s Surveys in trying to decide what the proper designation should be; in other cases I just had to guess. When I show depths hyphenated with feet I am referring to the survey point; when I use an unhyphenated form I am referring to depth from the surface of the mine.

2

THE COMSTOCK [M]

organized California. California did not begin to register ores officially until the spring of 1876. While separate legal entities, each with its own directors, officers, company accounts, bullion records, workers and supplies, the organizational structure and the managerial style reflected the fact that they had common founders and principals. The letterpress volumes, for example, while differing in details were so similar in format The Quartet had created twins with different names and a few different features but unmistakably identical in their fundamental structure. The boundary that divided them was based on earlier mining claims that had no relationship whatsoever to the configuration of the ore bodies 1,200 to 1,500 feet below ground. In Consolidated Virginia the ore body began at 1,200 feet and dropped rather sharply to 1,500 feet where it flattened out to become California’s ore body, primarily located between 1,500 and 1,650. Becker’s survey illustrated a massive ore body at the 1,636-foot level that extended downward to the 1,773-foot level and from south to north about 800 feet. He wrote that the bonanza was “composed of crushed quartz, including fragments of country rock, and carried a few hard, narrow, vein-like seams of very rich black ores…while nearby the whole mass of ‘sugar quartz’ was impregnated to a moderate extent with argentite [type of silver ore] and gold, the latter probably in a free state.”8 This was not the first ore body to be shared by separate claims. Belcher and Crown Point had shared an ore body, but two different companies owned the respective claims. As was customary on the Comstock, competing but neighboring companies agreed to respect the boundaries and to share tunnels and shafts for ventilation, hoisting and drainage. In the case of Consolidated Virginia and California the principal owners in both companies were Mackay, Fair et al. (who also owned some adjoining mines), and while the corporate structure was distinct, the operational structure was almost seamless.

In January 1875 at 1,500 feet a northern drift from Consolidated Virginia was pushed into California through a porphyry “horse” that was several hundred feet high and thick. (See Figure 1, Section L, The Biggest Bonanza) The underground heat was severe at 1,550 feet, but after the winze between 1,500 and 1,550 feet was completed, the heat dissipated. A winze 80 feet below the 1,550-foot level continued to encounter water, and steam pumps had to be installed. At this stage neither Fair nor Mackay knew that they had reached the bottom of the bonanza at 1,550 to 1,600 and that the quantity of water would increase as the quantity of ore decreased. With several years’ worth of ore to be worked between 1,200 and 1,600 feet, the eventual exhaustion of the ore body was hardly then a matter of concern. At the same time work on the C & C Shaft was continuing. Between 3 January and 10 January the depth had doubled from 45 to 75 feet, and by the middle of February it had reached almost 200. On the surface the structure housing the C & C Shaft (60’ x 68’) had been finished and a hoisting engine had been installed. But apparently this engine was temporary because within a few weeks specifications for new hoisting machinery in the shaft had been drawn up. And a few months later the foundations had been laid for new hoisting and pumping equipment. Nearby a new mill, Consolidation, had been opened and “after 12 hours” of processing ore (3 January 1875) it was performing well. Hectic though the pace may appear, it was in character for Mackay and Fair to keep operations moving ahead on several different fronts with special

8 Becker, Geology of the Comstock Lode and the Washoe District (Washington, DC: Department of the Interior, United State Geological Survey, 1882) 270. Also see Smith, The Comstock Lode, 167.

3

THE COMSTOCK [M]

attention devoted to investment in plant and equipment needed to maintain the progress. This included the purchase of six Brazilian diamonds between three to four carats each for the drills, presumably Burleigh or similar drills, although no price was given.9

In 1875 the output of Consolidated Virginia grew by 70 percent over the previous year to almost $9 million. Silver came in at 55 to 60 percent of the total. Almost 170,000 tons of crushed ore were processed for a yield per ton of $100. That was five times the Comstock average between 1865 and 1885. Over the course of the year eleven different mills were enlisted to reduce Consolidated Virginia ores with eight being the monthly average. In addition to Bacon, Trench, Kelsey, Mariposa, Occidental and Sacramento, the mills now included Brunswick, Consolidated, Devil’s Gate, Hoosier and Morgan. In January the six mills from the previous year plus the recently opened Consolidated processed more than $1 million worth of ore (nearly 12,000 tons of crushed ore). The newest and perhaps the most efficient of the Comstock mills, Consolidated reduced twice (3,500 tons versus 1,700) as much ore as Trench, the leading mill in the previous year. The volume of crushed ore rose to more than 16,000 tons in March, and an eighth mill – Hoosier - was added even as Consolidated was pushed up to more than 6,500 tons that month. Different figures have been given for Consolidated’s capacity, but in no month of 1875 did it process more than 6,900 tons. The demand for milling capacity continued: Devil’s Gate was added in May and Brunswick in October.10

So much bullion flowed from the mine and its mills that the facilities at the U. S. Mint in San Francisco were overwhelmed. In a letter to James Crawford, Superintendent of the Mint at Carson City, on 22 May 1875 Fair asked if Consolidated Virginia could send its bullion there for minting because the San Francisco Mint was then “flooded” with bullion owned by the company.11 Smaller than San Francisco’s mint and having failed to win a larger appropriation from Congress to expand its facilities, Carson City’s mint was also working at full capacity. The approval of a bill, introduced by Nevada Senator J. P. Jones, to allow the minting of a new “20-cent” silver coin required the installation of new dies, a project that was completed by June 1875. (Coin discontinued a year later because public complained it was too much like a quarter.) In 1875 Carson City had one large press and a recently purchased small coining machine, and yet it managed to mint a million dollars more in coins in 1875 than in 1874 ($4.9 versus $3.9). Thus, Fair’s letter arrived at a time when the work had been piling up at Carson City’s mint for months.12 During 1875 (until the October fire) Carson City periodically sent “sealed” bags of coins to Consolidated Virginia. In late summer nearly 50 bars of gold and silver

9 Copies of Letters, James Fair to David Bagley and C. H. Fish, Secretaries of the Board, 01/03/75, 01/10/75, 01/24/75 and 02/07/75, from Letterpress Books, Consolidated Virginia Mining Company, NC99/2/3, Bx 6, Special Collections, Library, University of Nevada at Reno. Copy of Letter to Mess. Nelson & Dobles [?] of San Francisco, 03/01/75, concerning drills from Letterpress Book, Consolidated Virginia Mining Company, NC99/2/3, Bx 6, Special Collections, Library, University of Nevada at Reno.10 Mill data from Bullion Records, 1875, Consolidated Virginia Mining Company, NC99/1/3/1 and NC99/1/3/5, Special Collections, Library, University of Nevada at Reno.11 Copy of Letter from James Fair to J. Crawford, Supt., U. S. Mint, Carson City, 05/22/75, from Letterpress Book, Consolidated Virginia Mining Company, NC99/2/3, Bx 6, Special Collections, Library, University of Nevada at Reno.12 Howard Hickson, Mint Mark “CC”, The Story of the United States Mint at Carson City, Nevada (Carson City, NV: The Nevada State Museum, 1972), 43-45, 95.

4

THE COMSTOCK [M]

were sent from Consolidated Virginia to Carson City with a request for $150,000 in coins, preferably small coins. A few weeks later nine sacks of coins (amount unspecified) arrived at Consolidated Virginia’s offices.13 The urgency for Consolidated Virginia (and California) was that wages were paid monthly in gold and silver coins. At the peak of The Firm’s mines and the mills employed regularly more than a 1,000 workers and hundreds more could be added from their other businesses in and around Virginia City. A monthly payroll of $100,000 was not uncommon. Since workers were paid in coin (as noted earlier), the mints were under pressure to deliver sufficient coins each month to meet The Firm’s payrolls as well as requests from other companies. As stretched as the mint facilities were, Congress refused to appropriate money for expansion on the grounds that such heavy demand might be temporary, as in fact it turned out to be within a couple of years. In the meantime, as long as the bonanzas lasted, th demand for coin was heavy.

Between January and November 1875 Consolidated Virginia produced on average $1.6 million worth of ore and used as many as 10 mills. In November and December the number of mills was cut in half as bullion output fell to between $500,000 and $850,000. The cause of the reduction was a devastating fire that started around 6 AM on 26 October, and engulfed a square mile of Virginia City including the hoisting works of Ophir and Consolidated Virginia. Five days after the fire, on 31 October 1875, Fair wrote Charles Fish, then Secretary of the Consolidated Virginia Mining Company that the fire had destroyed surface structures of Consolidated Virginia, although all the engines, he believed, had been saved. Typical of his “can-do” attitude he predicted that Consolidated Virginia would be back in operation in 60 days.14 Consolidated Mill was largely destroyed, and California Mill, still under construction, was damaged, although the extent was not specified. In fact the surviving correspondence immediately after the fire provided precious few specific details about damages to or losses of The Firm’s property. Within a year new larger mills would be in operation. The fire was helped along because so little rain had fallen during 1875, and the wood in the buildings over the shafts was as dry as a kindling. The fire swept through the center of the city like a tornado. Grant Smith contended that if the fire had entered the shafts the wooden framing used underground would have allowed it to burn and smolder for months if not years and re-entry into the mines certainly would have been delayed greatly and perhaps denied permanently. Mackay and Fair apparently dropped the elevator a few feet in Consolidated Virginia’s main shaft and then covered it with dirt and ore. How this was done in the face of a fast-moving fire without machines so quickly is not detailed. The plan worked to the extent that the interior hoisting equipment was saved from the fire, but other damage occurred and had to be repaired. At Ophir, on the other hand, the fire burned down to the 400-foot level of the shaft.15 Neither the new C&C shaft nor the nearby Gould & Curry shaft was harmed. Two weeks after the fire Fair wrote Fish that the rebuilding of the surface

13 Copies of Letters from James Fair to James Crawford, Supt., U. S. Mint, Carson City, 09/02/75 & 09/03/75, from Letterpress Book, Consolidated Virginia Mining Company, NC99/2/5, Bx 6, Special Collections, Library, University of Nevada at Reno.14 Copy of Letter from James Fair to C. H. Fish, Secretary of the Board, 10/31/75, from Letterpress Book, Consolidated Virginia Mining Company, NC99/2/4, Bx 6, Special Collections, Library, University of Nevada at Reno.15 Smith, The Comstock Lode, 191-194. I could not account for these activities in any of the company’s correspondence that I have seen.

5

THE COMSTOCK [M]

facilities had begun at Consolidated Virginia. C&C escaped the fire, and work continued there: the shaft had been sunk nearly 800 feet, the machine housing was nearly completed and new large engines, recently installed and tested, performed “splendidly”. Ore was being hoisted from the mine through Gould & Curry’s Shaft after the water, which had built up after the fire because of the loss of pumping operations, had been drained to only 4 inches.16 From that point forward few references to the fire appear in company documents. It was almost as if adding up the liabilities was less important than rebuilding the assets. By the Spring, 1876, outgoing correspondence concerned ordinary business affairs: purchases of equipment, rebate checks for shipping on Virginia & Truckee Railroad and requests for bids on supplies. The Consolidated Virginia and California complex was poised for its greatest triumph.

No doubt the fire entailed substantial losses and major disruptions for citizens and business, but since the interiors of the mines escaped damage for the most part, the impact on mining was minimal. Mining along the Comstock resumed fairly quickly and rebuilding around the city began almost immediately. The fact that The Firm owned most of the major operations where the burn-out was concentrated probably help to speed up the recovery. In the minds of Mackay and Fair there was no doubt what had to be done, and as testimony to that conviction Consolidated Virginia was hoisting ore again within weeks, and California would come on line a few months later. Consolidated Virginia’s 1876 output would nearly be double its 1875 output.17

In the last two months of 1875 after the fire crushed ore from Consolidated Virginia to be milled fell to 3,800 tons in November and then increased modestly to 6,500 tons in December. The average for the previous 10 months had been about 15,000 tons per month. By January, 1876, the volume of crushed ore had risen to more than 16,000 tons and in February and March it reached 23,000 and 25,000 tons respectively, the highest recorded during the entire history of Consolidated Virginia.18 These high numbers may have resulted in part because ore from the mine, ready for milling at the time of the fire, had to wait for hoisting and milling facilities to replace what had been lost. Despite record-breaking figures for the first quarter, 1876, tonnage for the whole year fell by 15 percent, from 169,000 crushed tons to 146,000. In the first four months the company averaged about 22,000 crushed tons per month and in the remaining months about 9,000 tons per month. After any backlog of extractable ores had been processed in the first quarter of 1876, the mine’s average monthly production had fallen by more than a third. The worst months were June through September and then again December when the output was noticeably below the average of 9,000 monthly tons and the median of 12,000. The mills needed to reduce the mine’s ores dropped from nine in the first quarter to two in the last quarter. For three months during the year only one mill was needed. The nine mills that processed the mine’s ore in the first quarter included eight of the mills from previous years - Bacon, Brunswick, Trench, Hoosier, Mariposa, Morgan, Occidental

16 Copy of Letter from James Fair to C. H. Fish, Secretary of the Board, 11/07/75, from Letterpress Book, Consolidated Virginia Mining Company, NC99/2/4, Bx 6, Special Collections, Library, University of Nevada at Reno.17 Bullion Records, 1875 & 1876, Consolidated Virginia Mining Company, NC99/1/3/5, Special Collections, Library, University of Nevada at Reno.18 County assessment records tend to confirm what was found in the company’s own bullion records.

6

THE COMSTOCK [M]

and Sacramento – plus California, the company’s newly-opened mill, which had escaped serious damage in the fire. Brunswick, which had joined the group in October just before the fire, became the workhorse of the 1876 milling operations. In the last three months of 1875 its volume of crushed ore jumped from 1,100 tons to 3,800 and in 1876 for 11 months (its association with Consolidated Virginia ended in December 1876) it averaged about 4,500 tons per month. It had greater capacity than the other mills but not as great as California. In the first three months of 1876 Brunswick reduced 4,900, 4,619 and 5,200 tons of crushed ore respectively whereas California milled 1,100, 8,363 and 8,902 tons respectively. Beginning in April California (the mill) was switched from Consolidated Virginia to California (the mine), whose ores officially entered The Firm’s ledgers and Story County’s assessments.19

The ranking of the mills handling Consolidated Virginia ores during 1876 was as follows: Brunswick with 34 percent, Consolidated 14 percent, California 13 percent, Trench 9 percent, Bacon 8 percent, Morgan 7 percent, Mariposa and Sacramento at 4 percent, Kelsey and Occidental at 3 percent (all rounded up). In 1875 six mills received and processed Consolidated Virginia ore in 10 of the 12 months with Bacon reducing ore every month of the year. In 1876 the majority of the 10 mills were assigned to process Consolidated Virginia ore for six or fewer months. Brunswick had the longest tenure with 11 months, and in July and August it was the only mill refining Consolidated Virginia ore. In October Consolidated, which had been destroyed by the fire, resumed milling operations. In November only Brunswick and Consolidated milled ore, and in December only Consolidated milled ore. Yields per ton remained remarkably high for a mine that had been running at near full tilt for two years. Based on dollar value of crushed ore it ranged from $90 per ton for ores reduced at Consolidated (mill) to $141 per ton for ores reduced at California (mill) - both of which received ore from Consolidated Virginia for only one quarter during the year. At Brunswick, which processed more than a third of the crushed ore, the yield was $103 per ton.20 No other Comstock mine was ever as productive as Consolidated Virginia. Indeed the “wet” assays made as the ore was leaving the mine were still running above $150 per ton.21

From 1874 through 1876, as evidence of its success, the company paid out tens of millions in dividends. But, as ores were being hoisted and dividends were being granted, future prospects were always under review. Since bonanza after bonanza on the Comstock eventually faded, Consolidated Virginia was not exempt, especially among the market bears. Notwithstanding Mackay’s sincere conviction that mining, not “stock-jobbing”, was his focus, what he or anyone else connected with the company said or implied was subject to intense scrutiny for any sign that the boom was unraveling. As

19 Bullion Records, 1875 & 1876, Consolidated Virginia Mining Companies, NC99/1/3/5, Special Collections, Library, University of Nevada at Reno.20 Total ore was another measure of per-ton yields recorded in the company ledgers. It was always somewhat higher. For 1876 the average was $120 per ton versus $90 for crushed ore. Crushed ores were also called worked ores, and working the ores removed some of the elements or components that boosted the assays. Almost all the assays taken in the mine and up to the preparation for amalgamation were higher than the assays of the crushed ores. 21 Bullion Records, 1876, Consolidated Virginia Mining Companies, NC99/1/3/5, Special Collections, Library, University of Nevada at Reno.

7

THE COMSTOCK [M]

noted above, the superintendents, mainly Fair but occasionally Mackay in lieu of Fair, and Taylor, the office administrator, in lieu of both Fair and Mackay, sent the corporate officers detailed weekly summaries (from time to time bi-weekly) on the state of the underground. This information was gathered from their own observations plus the daily logs kept by the foremen and shift bosses. In the mine’s annual reports the progress on each level would be summarized with appropriate details about the extensions (in feet) of drifts, winzes, shafts, etc. Who actually wrote the annual reports is not state precisely, but given the rather consistent format and style Taylor’s hand can be assumed. There can be no doubt that the data contained in the weekly reports found their way into the annual reports, in a condensed form, of course. Exaggeration and exuberance were commonplace among mining entrepreneurs. Mackay and Fair were viewed generally as “straight-shooters”, and yet they like their peers may have engaged in less than accurate portrayals of the state of the operations and the prospects for the future. Grant Smith, for one, believed that Fair deliberately falsified information in the annual reports of 1875 and 1876 in order to boost the price of the stock against the bears, which were skeptical on how long the bonanza would last. They would be proven wrong at least in the short run. For 1875, according to Smith, the annual report said that on the 1550-foot level a drift had been driven 320 feet south of the north line and then a winze had been sunk through high-grade ore for 147 feet. Without citing any sources Smith claimed that drift had only reached 160 feet and the winze 75 feet, and further that water had stopped most of the work below 1,550 feet. These remarks about work at 1,550 feet did appear in the annual report, but connecting these remarks with one or more of the weekly reports from which the annual reports were drawn proved unsuccessful. There were numerous references to lateral (east-west) cuts from the north-south drift at 1,550 feet but few to extension of the north-south drift. Many of the weekly reports on work at 1,550 feet in 1875 referred to rich ores in the lateral cuts and referred to some ores plus, heat, bad ventilation and water in work on the connection between 1,550 and 1,600 feet. Smith’s claim may be correct but could not be fully corroborated. In the second case, 1876, Smith accusations were less precise. He said that Fair spoke of rich ores below 1,550 feet and particularly of “great expectations of the 1,650-foot level”. According to the weekly reports in 1876 considerable work was done between 1,550 and 1,750 feet, and in some instances ores from the 1,650-foot level were described favorably. And toward the end of 1876 and in 1877 the volume of ore hoisted from 1,650 feet was higher than any other level. Smith was certainly correct to state that the principals knew that ores below 1,550 or 1,650 feet were petering out.22 What remains unclear is the question: when did the principals realize that the ravine was narrowing and running out of ores?

Even the most experienced miners like John Mackay and James Fair could not always predict accurately what was ahead. There were times, of course, when they preferred to be less than forthcoming, and there were times when they were simply wrong. By the middle 1870s miners had a fairly good understanding of how the Lode was structured. The idea of a continuous vein from north to south, reaching ever more deeply, had long been abandoned. Rather the Lode had pinched out at about 900 or 1,000 feet,

22 Smith, The Comstock Lode, 194-196. Hundreds of pages of copies of letters exist in various Letterpress Books, Consolidated Virginia Mining Company, 1875 and 1876, in NC99/2/3, NC99/2/4, NC99/2/5 and NC99/2/6, Bx 6, Special Collections, Library, University of Nevada at Reno.

8

THE COMSTOCK [M]

and while the Lode and its adjacent ground exhibited much vein matter, the ore bodies below 1,000 feet actually showed up as pockets that were scattered more widely with increasing depth to the east of the Lode. What Mackay and Fair found between 1,200 and 1,600 feet was a block of gold and silver ore with a dent in the middle that was extraordinarily rich. How deep did it go? No one knew although everyone hoped forever. Like their peers Mackay and Fair must have hoped and perhaps expected that as the block of ore moved closer and closer to the hanging wall, which set a boundary on its eastward advance, was simply the top of deeper riches. Its north and south boundaries were marked for the most part, although, as the depths increased, those boundaries could change. There were no indicators from the vein matter or from explorations, mainly lateral tunnels off long drifts, that pocket of ore that constituted the Consolidated and California bonanzas at 1,200 to 1,700 feet extended any further north or south. Cross-cuts west toward Mt Davidson below where the Lode pinched off was another possibility as was crosscuts east into the remaining distance to the hanging wall. The most promising direction was down, and that more or less became the preoccupation as the ores in the bonanza mines petered out.

FIGURE 1VERTICAL VIEW OF CONSOLIDATED VIURGINIA AND C&C SHAFTS

FROM BECKER, ATLAS, SHEET V[BLACK AREA, KNOWN AS A HORSE, SHOWS ORE BODY FOR CONSOIDATED VIRGINIA

AND CALIFORNIA MINING COMPANIES.]

9

THE COMSTOCK [M]

By the end of 1876 problems began to mount as work continued at Consolidated Virginia. In a dispatch to the Secretary of the Board Fair made note that the presidential election, held several days earlier, had “interfered very much with the working of the mine” and hoisting would finally resume on 12 November. All the weekly reports sent by Fair to Havens during November and December 1876 portrayed management as aggressive and optimistic, although setbacks and obstacles tended to dominate much of the reporting. There were the numerous references, some positive and some less so, to progress with the C&C Shaft. It had reached 1,650 feet. A new station (18’x40’x12’) was described as half completed in November and nearly completed with a functioning “bob and tank” pit by the end of the year. Also an ore house atop the shaft, a connection with the Virginia and Truckee Railroad and an ore dump were also finished during the final two months of 1876. In early November a drift from the shaft westward (toward Mt Davidson) had reached 173 feet, and by the end of the year it had reached nearly 600 feet. Work had been slower than anticipated because the drift’s path alternated between hard rock and soft, treacherous ground. No ore was found in route. Extension of the drift and construction of a station were also slowed because of water. At least two inches lay on the floor even as the pumps were operating at between 6 and 6.5 strokes per minute. By the end of December after more effort than anticipated the C&C Shaft had been sunk to 1,700 feet, but the presence of water had temporarily stopped work. Water was only part of the dilemma facing the managers. Poor ventilation not only created bad air but also resulted in intense heat. Because such large quantities of ore were being excavated, tunnels quickly become obstructed with rock and residue. In addition because the ground shifted as the excavations proceeded the timbers in the tunnels buckled and the walls collapsed, and the result was more obstruction. Drifts at 1,400, 1,500 and 1,550 feet were partially retimbered during the final months of 1876. The most important drift for ventilation and excavation was at 1,550 because it provided a passageway from the ore body and the main shaft (Consolidated Virginia) to Gould & Curry’s Shaft. At one point the obstructions were so great and the air so bad in the connecting drift that all hoists through Gould & Curry had to be halted for at least 10 days (and perhaps longer) to clean out the drift. Excavations of Consolidated Virginia ore now extended from 1,200 to 1,700 feet, and at the lowest level air quality was the worst. The floor at 1,700 feet had little natural ventilation, and to compensate for that a new blower was erected at 1,500 feet to circulate the air at 1,700 feet through a “double winze “ and a “large air pipe”. In spite of these efforts intense heat reduced the amount of time workers could remain at the lowest levels. Indeed the heat became so bad that all work had to be suspended at 1,700 feet in mid-December. The construction of additional connecting drifts south to the Gould & Curry Shaft and east to the C&C Shaft became imperative if work at 1,700 feet and below was to progress. While the “ore breasts” on the floors above 1,700 feet continued to be “favorable”, they were less so at 1,700 feet and below. Not only was the work difficult and slow at these new levels, the ore body itself became irregular. The volume of crushed ore rose to 13,400 tons in November from 12,200 tons in October. Two months did not make a trend as volume in December receded to 4,600 tons. Consolidated Virginia had come to a turning point that could have been read as a more troubled future.23

23 Conditions described in various copies of letters from James Fair to A. W. Havens, Secretary of the Board, 11/05/76, 11/12/76, 11/19/76, 11/26/76, 12/03/76, 12/10/76, 12/17/76, 12/24/76 and 12/31/76,

10

THE COMSTOCK [M]

In 1877 the decline in output from Consolidated Virginia was evident to all. Although total output of nearly $14 million would have been a record for most Comstock mining companies, it represented a decline of 17 percent from levels of 1876 and 1875. In the first two month only one mill, Consolidated, received ore from Consolidated Virginia. This continued a pattern observed in the last two month of the previous year. By March Bacon began once again to crush and reduce ores from Consolidated Virginia. In the first quarter, then, slightly more than 18,000 tons were processed for a yield of about $1.5 million. An upswing began in April as three mills were reducing ores from the mine. By the end of the year the number had risen to five mills. For the entire year the total of crushed tons of 153,000 exceeded the previous year by almost 5 percent, even though the more telling statistic was the value of the ore dropped by the aforementioned 17 percent. Unmistakably yields were dropping. Based on yearly averages of crushed ores yields had risen from $99 per ton in 1875 to $114 per ton in 1876 and then fallen to $89 per ton in 1877. They would continue to drop thereafter as the ore body between 1,200 and 1,700 feet from which the bonanza had sprung was exhausted and no new bodies were found. The best month was June, when crushed-ore yields reached $116 per ton, but in July they fell to $107 per ton. For the other 10 months in 1877 they were below $100 per ton. The seven different mills that processed Consolidated Virginia ores were familiar names except for Nevada, which joined the group in November. They were Bacon with 11 percent, California 54 percent, Consolidated 12 percent, Trench 13 percent, Mariposa less than 1 percent, Morgan 7 percent and Nevada 2 percent. California had started up a year earlier and had processed Consolidated Virginia ore for several months until its facilities were assigned to the new California mine. Nearly a year later the California mill was processing ore from both mines. It appears that California got the best ores or could do the best job of milling the ores. The yield per crushed ton was $105. Nevada had the lowest at $46 per ton. The other mills were generally in the $70 to $80 per-ton range. The daily and weekly reports to the company officers tend, especially toward the end of the year, to reflect disappointment at not finding good ores below 1,700 or in other parts of the levels already being exploited. Consolidated Virginia’s time was running short.24

The weekly reports reflect uneven and mixed results for 1877. In January management was still concerned with problems that had arisen during the last two months of 1876. Work at 1,700 and below had been halted and work on the C&C Shaft had been slowed because of the heavy flow of water. At the same time the western drift (from the C&C Shaft toward Mt Davidson) at 1,650 had had penetrated a seam with a thickness of about 15 feet and wet assays from $36 to $214 per ton. The seam pitched about 46 degree to the east, and that raised the inevitable question, it would “pinch out” and cease to exist below that level. There was good news at 1,500 feet where the pocket of ore had been so extensive and rich. A spur of ore about 27 feet wide was discovered to the northeast of the main seam. The two were separated by 10 to 20 feet of very hard rock. There was also good news at 1,200 feet. The connecting drift with the Gould &

Consolidated Virginia Mining Company Letterpress Book, 1 November 1876-31 August 1878, NC99/2/8, Bx 6, Special Collections, Library, University of Nevada at Reno. Water was unpredictable, and after lamenting the presence of water at 1,700 feet in early November Fair then reported (11/17/76) that the floor was clear of water.24 Bullion Records, 1877, Consolidated Virginia Mining Companies, NC99/1/3/5, Special Collections, Library, University of Nevada at Reno.

11

THE COMSTOCK [M]

Curry Shaft had been cleared and retimbered so that the improved ventilation allowed for more efficient operations at the upper levels. The enlargement and repair of the Gould & Curry drift at 1,550 feet had beneficial effects with respect to the flow of air and the dissipation of heat. The issues that the weekly reports discussed in the first few weeks of the new year will be the main themes for the rest of the year. Even though skepticism about sinking the C&C Shaft any deeper was expressed in January 1877 another 100 to 150 feet was added to the shaft by the end of the year. Workers continued to battle strong water flows, hard rock, poor air circulation and intense heat. More importantly, perhaps, the ore seam above had disappeared and did not reappear at the new depths. More crosscuts, drifts, winzes and upraises were under construction throughout the mine but in particular in the lowest levels as the search for ore was a high priority. At the upper levels the outlook remained positive. In a report filed on 19 May 1877 Fair summarized the progress along with the setbacks:

At 1,200 and 1,300 feet hundreds of feet of the drifts that connected to the Gould & Curry Shaft were being retimbered and enlarged in order to improve ventilation. Unstable ground, however, caused frequent cave-ins, which restricted airflow and raised temperatures that slowed the work of extracting the ore.

At 1,400 feet the airflow was satisfactory and the ores was of good quality.At 1,500 feet the drift south to the ore body was being reopened in order to

extract the ore and improve the ventilation.At 1,550 feet where some of the best ores were located the southern drift was

being extended into the ore body with some difficulty because the “very heavy” ground could obstruct the passage of air. A winze from 1,550 feet down to an upraise from 1,650 feet was unfinished because the heat slowed the work.

At 1,650 the ore breasts were quite favorable with drifts being cut to the east and the south through the ore body, although “large rock drills” were required to penetrate the quartz. Because of hard rock and high heat, progress was slow. To improve ventilation a winze was under construction from 1,650 to 1,750 feet.

At 1,750 feet a new station was under construction 20 feet from the C&C Shaft where a new air compressor was be installed.25

The explorations and probes at the lowest levels (1,700 to 2,000 feet) were not on the whole encouraging during 1877. Not only was the work stop-and-go because of difficult conditions, but it also had failed to uncover any extension of the ore body from above. Although the company was still extracting profitable ores, in some cases highly profitable ores, from the established upper galleys, it could not easily ignore the signs that the quality and quantity of ore were diminishing. In February 1877 Fair wrote Havens that the westward drift at 1,650 feet (from the C&C Shaft) had penetrated 108 feet of the ore body, 70 feet of good ore and 38 feet of porphyry and quartz. There was considerably more ore to be mined before the drift reached the western wall but not without some concern. As they worked westward the face of the wall looked less and less favorable with lower and lower assays. What had been good- or high-grade ore may turn into low-

25 Copy of Letter from James Fair to A. W. Havens, Secretary of the Board, 05/19/78, Consolidated Virginia Mining Company Letterpress Book, 1 November 1876-31 August 1878, NC99/2/8, Bx 6, Special Collections, Library, University of Nevada at Reno.

12

THE COMSTOCK [M]

grade ore.26 A month later Fair could report a winze was being built between 1,500 feet and 1,400 feet to exploit a local pocket of profitable ores.27 In May, 1877, despite earlier concerns the western drift at 1,650 feet, now 185 feet in length, was still passing through good ore. For the remainder of 1877 the reports by Fair alternated between opening a few new promising segments and passing through segments of porphyry and quartz of ore yields in the signal digits. Even the yields in the richest galleys had fallen into the $70 to $80 range, still extraordinary by Comstock standard but well off the yields of the year before.28 Even though Consolidated Virginia had produced tens of millions of dollars, the late-stage work was not free. Even though the reports contained encouraging language like “ore breast are fine” and “stopes look good” the magical words “new discovery” or “great bonanza” did not appear, and therefore the cost continued to mount. In addition to references about quality and quality of ore many of the summaries contained extensive references to repairs, maintenance and setbacks as work progressed in the upper and lower levels. The company crushed 5 percent more ore in 1877 than in 1876 but at per-ton yields that were 21 percent lower. The overall bullion return was $14 million in 1877 compared to $17 million the year before. What would be worth knowing is how much of the operational costs, as reported by the company, was dedicated to opening new areas as opposed to maintaining existing areas where ore was actually being removed. Unfortunately the surviving data do not allow such nuanced comparisons. Overall costs as a proportion of the value of the bullion rose from 30 percent in 1876 to 33 percent in 1877.29 By the end of 1877 the principals and the managers must have realized that the prospects were gradually dimming. Excavations and explorations would continue without the much anticipated new discoveries. Success at California during 1877 may have helped to keep the hope for new discoveries at Consolidated Virginia alive. It may well have distracted Consolidated Virginia’s management from taking notice of the signs that had accompanied the termination of earlier bonanzas. But perhaps most importantly, as I will discuss below, a powerful force in keeping the company on track was that by continuing to make money Consolidated Virginia paid dividends and never reverted to assessments.

Consolidated Virginia remained in operation for another three and one-half years with generally declining output until a fire in 1881 closed the mine. The trend was not 26 Copy of Letter from James Fair to A. W. Havens, Secretary of the Board, 02/18/78, Consolidated Virginia Mining Company Letterpress Book, 1 November 1876-31 August 1878, NC99/2/8, Bx 6, Special Collections, Library, University of Nevada at Reno.27 Copy of Letter from James Fair to A. W. Havens, Secretary of the Board, 04/01/78, Consolidated Virginia Mining Company Letterpress Book, 1 November 1876-31 August 1878, NC99/2/8, Bx 6, Special Collections, Library, University of Nevada at Reno.28 Copies of Letter with the following dates – 06/24/77, 09/01/77, 10/06/77, 10/20/77, 12/29/77 – from James Fair to A. W. Havens, Secretary of the Board, contain such descriptions. See Consolidated Virginia Mining Company Letterpress Book, 1 November 1876-31 August 1878, NC99/2/8, Bx 6, Special Collections, Library, University of Nevada at Reno.29 During the eight quarters of 1876 and 1877 the per-ton cost, as reported by the company to the County Assessor, ranged from $25 per ton of crushed ore to $39 per ton except for the third quarter of 1876 when it reached $72 per ton. This was a quarter with the lowest volume of crushed ore at 16,000 tons but a high per-ton yield of $97. Total costs for extraction, transportation and reduction were typical of other quarters at $1.2 million. The cause of skyrocketing per-ton costs lay with the drop in the volume of crushed ore, although no specific condition can be cited for why the volume fell. This may simply have been a quarter in which more underground work was devoted to building the infrastructure and less to extracting the ore.

13

THE COMSTOCK [M]

reversible. Its annual bullion declarations dropped appreciably from nearly $8 million to $1.5 million, and its total tonnage of crushed ore fell from 153,000 in 1877 to 123,000 in 1878, 60,000 in 1879, 55,000 in 1880 and 6,900 in the first three months of 1881 (or an estimated annual figure of 25,000 tons). Rapidly declining yields per crushed ton told the story of the decline in even more direct terms. For 1878 yields averaged $65 per ton. During the course of the year, however, a significant diminution in tons of ores and yields per ton occurred. In the first quarter five to six mills were employed in crushing and processing about 21,000 tons per month with yields between $75 per ton and $85 per ton. By the last quarter one to three mills were needed to crush and process about 4,000 tons per month with bullion yields between $32 and $39 per ton. The California Mill handled the most ore - 47 percent – but after June it was not credited with any ore from Consolidated Virginia. The other mills were Morgan with 17 percent, Trench with 14 percent, Brunswick with 12 percent, Bacon with 5 percent, percent and Nevada with 4 percent. None of the mills had enough reduction business from Consolidated Virginia for the full 12 months. Nevada Mill had the shortest tenure of three months, and Morgan and Trench had the longest of eight months. Fair’s reports at the beginning of the year were optimistic to a degree. Work continued at all levels from 1,200 to 1,850 feet with the best ores from 1,650. But the rock at the lower levels was so hard that management was searching for ways to try to bypass it in order to continue the probe for the ore seam. In addition water slowed progress at all levels. Above 1,500 feet it broke through the walls and flooded several drifts. At the lowest level a malfunctioning pump allowed water to rise quickly almost 80 feet, and underground work had to be halted until the pump was fixed and the water drained. Finally other problems such as intense heat, broken machinery and unprofitable ore added to the frustrations and disappointments experienced in 1878. It would be a mistake to presume that management was ready to abandon Consolidated Virginia even as evidence of crisis mounted. In an almost contrarian approach a report written in late August 1878 described how aggressively the company was committed to further probes and continuing repairs, which are summarized below:

Above 1,000 feet retimbering and enlarging of main shaft underway (although work causing temperatures to rise to 110 degrees).

At 1,200 feet the station was enlarged and retimbered; at least 115 tons of ore were being hoisted from there (intense heat debilitating).

At 1,300 feet the south drift was enlarged and retimbered for a distance of 362 feet.

At 1,400 feet the station was retimbered and the east drift was cleaned out and retimbered all the way to the ore stopes.

At 1,500 feet a southwest drift from a drift connected to C&C Shaft was advanced 70 feet.

At 1,550 feet main air gallery leading to Gould & Curry shaft repaired.At 1,650 enlarging and retimbering connection from Consolidated Virginia Shaft

to C&C Shaft.At 1,750 feet winze #3 sunk 51 feet through good ore.

14

THE COMSTOCK [M]

At 1,850 feet crosscut # 4 extended from main south drift (passing through hard blasting rock); upraise from 1,850 to connect with winze #3 from 1,750; winze from 1,850 down to crosscut #2 on 1,950.

At 1,950 feet crosscut #2 from main south drift has reached 151 feet (passing through porphyry streaked with clay).

At 2,050 feet station for C&C Shaft in place; sinking lower continues; west drift to be added; winze #3 from 1,950 being advanced.

There was a downside to all this activity because it created obstacles to proper ventilation, which was made worse by the fact the hot and humid surface weather had an impact on the underground airflow. As impressive as the work schedule was under less than favorable prospects, the most troubling prospect, expressed more than once by Fair in these weekly reports, was the failure to find any high-grade ores that were easily extracted beyond what had been discovered and exploited. The month-by-month decline in per-ton yields underscored the legitimacy of Fair’s concern. Even such skilled and experienced managers as Mackay and Fair could do little to reverse the downward spiraling fortunes of Consolidated Virginia without a new discovery.30

Work continued underground in 1879 even as the yields dropped relentlessly. Much of the work was concentrated at the lowest levels, especially between 1,750 and 2,150 feet. The C&C Shaft served these lower depths in that the main shaft of Consolidated Virginia ended at about 1,650 feet. W. H. Patton, who succeeded Fair as Superintendent in 1879, wrote Havens in the summer that by extending the south drift at 1,500 feet they had entered a vein formation that had streaks of quartz, potentially a positive sign ore in the area. Considerable work was underway on 1,750 in part because that had been the site of the best ores in the past year or so. Work at the lower levels continued to be slow and uneven because of heavy water, which they were attempting to pump to the newly opened Sutro Tunnel at 1,650. The C&C Shaft had reached between 2,300 and 2,400 feet, but hard rock and frequent flooding, not ores, were what they found. The pumping system was generally able to keep the water levels low, and when they were able to explore and expand the drifts, they discovered mainly vein formations streaked with quartz and clay rather than ore bodies.31 About 60,000 tons of crushed ore were reduced at the mills. In the first four months the ore was milled at Brunswick with 52 percent, Trench 39 percent and Morgan 46 percent. After that only the California Mill handled the ore from Consolidated Virginia. The accounts indicate that Bacon Mill had on hand more than 125,000 tons of ore, but they do not indicate how that ore was disposed of.32 These three mills accounted for 43 percent of the annual total with an average yield of $48 per ton of crushed ore. In the next eight months California Mill

30 For discussion of these problems see copies of weekly reports from James Fair to A. W. Havens for 02/09/78, 03/09/78, 03/16/78, 03/23/78, 08/03/78, 08/24/78, 10/26/78 and 11/16/78, copies of which appear in Consolidated Virginia Mining Company Letterpress Books, 1 November 1876-31 August 1878, NC99/2/8, Bx 6 and 3 August 1878-14 December 1878, NC99/2/11, Bx 7, Special Collections, Library, University of Nevada at Reno.31 Copy of letter from W. H. Patton to A. W. Havens, Secretary of the Board, 06/07/79, Consolidated Virginia Mining Company Letterpress Books, 20 December 1878-August 1886, NC99/2/12, Bx 7, Special Collections, Library, University of Nevada at Reno.32 I have not included it in the yearly totals.

15

THE COMSTOCK [M]

processed the remaining 57 percent with a yield of $38 per ton. Overall the yield per ton was $42, a decline of a third since 1878.

In the final 15 months (1880 through Spring 1881) the yields at Consolidated Virginia dropped further. For 1880 the volume of crushed tons fell to 55,000 and the per-ton yield to $32. And in the first five months of 1881 only 6,800 tons were crushed with a yield of $21 per ton. If the fire had not closed Consolidated Virginia the exhaustion of the profitable ore bodies would have. A report by Superintendent Patton on 14 June 1879 underscored a precarious future for Consolidated Virginia. The following is a summary of his observations:

Less than 900 tons sent for milling in the past week;At 850 feet a drift to link with California in soft ground with water;At 1,500 feet southern drift in vein formation with quartz streaks;At 1,750 feet pipe being laid south through Best & Belcher and Gould & Curry to

Savage in order to connect with Sutro Tunnel, now operating, and north through Ophir and Mexican Union to transport water into Sutro Tunnel;

At 1850 feet a joint westward crosscut with California discontinued and new drift north and south encountered only vein formation;

At 2,150 feet southern drift passing through vein formation with streaks of clay and quartz;

Water at the bottom of the C&C Shaft interfered with drilling, and water must be lifted to 1,650 feet in order to connect to Sutro Tunnel.33

In the remaining years of Consolidated Virginia’s life phrases like vein formation or vein matter streaked with clay and quartz were commonplace in the weekly reports. It is worth noting, however, as the underground explorations continued without any new discoveries to report the mine was still producing ores that exceeded Comstock’s per-ton average. Only in the final months did that average fall to the point where it equaled the Comstock average. It was hard to give up on Consolidated Virginia until the fire ended indecision.

FIGURE 2REFINED ORES FROM CONSOLIDATED VIRGINIA AND CALIFORNIA

MINES BY MILL, 1873-1881Mills CVMC CMC Total % Total %

Ore-Tons % Bullion $ % Yrs Ore-Tons

% Bullion $ % Yrs Ore Bullion $

Bacon 73,916 9.4 $5,870,140 9.2 6 3,916 1.0 $348,684 0.8 1 77,832 5.7 $6,218,824 5.6Brunswick 83,188 10.2 7,690,532 11.8 6 60,032 10.6 5,440,721 11.8 3 143,219 10.4 13,131,25311.8California 260,049 31.8 18,547,411 28.5 6 227,512 40.3 15,708,155 34.1 6 487,561 35.3 34,255,56630.8

Consolidated 97,293 11.9 9,047,676 13.9 4 105,324 18.7 9,667,150 21.0 2 202,617 14.7 18,714,82816.9Devil’s Gate 5,842 0.7 508,164 0.8 1 0 0 0 0 0 5,842 0.4 508,164 0.5

33 Copy of Letter from W. H. Patton to A. W. Havens, Secretary of the Board, 06/14/79, Consolidated Virginia Mining Company Letterpress Books, 20 December 1878-August 1886, NC99/2/12, Bx 7, Special Collections, Library, University of Nevada at Reno. Some of this information showed up in the Annual Report to the stockholders for 1879. See Superintendent’s Report, 31 December 1879, NC99/1/5/1, Special Collections, Library, University of Nevada at Reno.

16

THE COMSTOCK [M]

Empire State 0 0 0 0 0 1,926 0.3 166,550 0.4 1 1,926 0.2 166,550 0.2Hoosier 14,334 1.8 1,664,685 2.6 2 0 0 0 0 0 14,334 1.1 1,664,685 1.5Kelsey 16,440 2.0 1,122,733 1.7 2 0 0 0 0 0 16,440 1.2 1,122,733 1.0

Mariposa 36,149 4.4 3,064,548 4.7 5 10,471 1.9 863,042 1.9 2 46,620 3.4 3,927,590 3.5Mexican 0 0 0 0 0 11,873 2.1 943,523 2.1 1 11,873 0.9 943,523 0.9Morgan 58,844 7.2 4,268,121 6.7 5 49,491 8.8 4,453,803 9.6 3 108,335 7.8 8,721,924 7.9Nevada 7,957 1.0 544,163 0.8 2 7,096 1.3 598,150 1.3 1 15,053 1.1 1,142,312 1.0

Occidental 39,146 4.8 2,900,821 4.5 4 24,635 4.4 2,070,439 4.5 3 63,781 4.6 4,971,259 4.5Rhode Is 0 0 0 0 0 16,865 3.0 1,394,893 3.1 2 16,865 1.2 1,394,893 1.3

Sacramento 32,869 4.0 3,030,951 4.6 3 25,263 4.5 2,418,580 5.3 3 58,132 4.2 5,450 4.9Trench 91,192 11.2 6,789,020 10.4 7 16,825 3.0 1,700,592 3.7 2 108,017 7.8 8,489,612 7.6

Winfield 0 0 0 0 0 2,770 0.5 237,935 0.5 1 2,770 0.2 237,935 0.2Totals 817,218 100 $65,048,966 100 563,996 100 $46,012,215 100 1,381,214 100 $111,061,181 100

Sources: See footnote 5.

The Annual Report to the stockholders of Consolidated Virginia for 1879 shows despite numerous setbacks and troubling signs the mine was making money.34 In 1879 it had receipts of nearly $3 million of which $2.5 came from bullion income. What is most striking about these figures is that the company paid out dividends of $1,350,000 or half of the total receipts. Under these circumstances halting the search for new, rich ore bodies in light of the many problems with the underground operations hardly seemed justified. The simple fact was that the company was making enough money to continue prospecting. From the accounts in the Annual Report it is possible to estimate the cost of running the mine. Recall from the above description that considerable time, money and effort were being devoted to expansion and maintenance while tonnage and yields were on the decline. That combination might be a formula for run-away costs. But, in fact, if reduction and transportation costs of the ore were excluded, the cost of extraction came in at about $10 per ton. If the cost for extracting and hoisting the ore were combined with the cost for extracting and hoisting the rock and residue (about 13,000 tons) the cost per tons would drop to about $8 per ton. The cost of reduction and other activities added another $8 to $10 per ton to the total. The unknown is how much was not spent that might have been if the margins had been greater. It helped that yields per ton came in at $42 that allowed the company to realize gross profit of nearly $20 per ton, even in the final stage of the mine’s life. The company was forced to pare dividends even though it was the only company paying any dividends at all. Not even California paid dividends in 1880.35 Still a moneymaker the pot to explore, renovate and replace was far less at $20 per ton than it had been at twice that level. The end took longer at Consolidated Virginia than it might have at other mines, but shrinking margins eventually spelled termination.

34 The Annual Report contains different sets of accounts, one kept by W. H. Patton in the Virginia City Office and the other by A. W. Havens in the San Francisco Office. The fiscal year for the Virginia City Office ended 31 December 1878, while the fiscal year for San Francisco ended 7 January 1879. Moreover, the manner in which the figures were entered into the journals differed. The accounts are not, therefore, directly comparable.35 Annual Report, 1878, Consolidated Virginia Mining Company, 15-19, 23-24, NC99/1/5/1, Special Collections, Library, University of Nevada at Reno. Mining-cost estimates have been drawn from account known as “Actual Cost of Mining”, p. 17. It is not clear how the cost of mining per ton (both extraction and reduction) was calculated, for their arithmetic could not be duplicated. My estimates of the cost of mining per ton and of the reduction et al. per ton are close to the figures contained in the report.

17

THE COMSTOCK [M]

The California Mining Company, organized in 1873, had a history that shadowed Consolidated Virginia’s history. On Consolidated Virginia’s northern boundary California was an amalgamation of several older, smaller mines: Old California, Kinney, Central and Central #2. The Mineralogist reported in 1875 that little work had been done in these mines prior to their consolidation under Mackay, Fair et al. Ore had been removed from Old California in connection with prospecting on its boundary with Ophir to the north at depths of a few hundred fee, but it “was in bunches and not very rich”, and the work was discontinued. When the discoveries were made in Consolidated Virginia, it was determined that the ore bodies extended north into adjoining claims that became the California Mine. In places the vein was 200 to 400 feet thick and was like a bulge between 1,200 and 1,600 feet. Initially the in-mine assays averaged about $600 per ton and some as high as $8,000 per ton. Based on these selective assays, the mine was predicted to yield up to $100 million dollars worth of ore, twice as much as it actually produced. One reason for the urgency to complete the new C&C Shaft was to provide access to the ores in California, which lacked its own deep shaft. Since milling capacity was at a premium around the Comstock Mackay and Fair advanced the capital to build a new mill (under the ownership of Pacific Mill and Mining, which owned all their mills) called California Pan Mill. Having escaped the October 1875 fire, it opened for operation in January 1876. In volume of crushed ore and dollar value of bullion California was second to Consolidated Virginia (564,000 tons versus 817,000 and $46 million versus $65 million), but in yield of ore per ton California had a very slight edge of $81.53 versus $79.60.36

The first official registrations from California appeared in April 1876. If ore were hoisted from California in the account of Consolidated Virginia prior to the “official” declaration, it was registered as such in Consolidated Virginia’s ledgers. In the first month 7,600 tons of crushed ore from California were processed at California Pan Mill at a yield of $188 per ton worth more than $1.4 million. By summer six mills were processing California ores. By the end of the year, however, the number was down to four. The mill rankings for 1876 were as follows: California 60 percent, Morgan 14 percent, Sacramento and Trench each 8 percent, Occidental 6 percent and Bacon 3 percent. All of these mills received ores from Consolidated Virginia prior to 1876, and several of them would again be enlisted in behalf of Consolidated Virginia after 1876. Over the life of the mine California the mill California reduced about 40 percent of its ore with an average yield of $69 per ton. In the initial month, however, yields from California ores at the various mills ranged from a high of $113 per ton (Sacramento) to a low of $90 to $95 per ton (Bacon, Brunswick, Morgan and Occidental). The average of all the mills for nine months (April-December) in 1876 was $105 per ton, and this was two dollars more per ton that the yield at Consolidated Virginia for the same period.37

In 1877 California’s yields per crushed ton fell to $88 per ton. Twelve mills were called into service to process about 214,000 tons. California Mill reduced less than a 36 “Biennial Report of the State Mineralogist...1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 140. Tonnage and bullion figures from Consolidated Virginia and California accounts: Bullion Records, NC99/1/3/1, NC99/1/3/5, and NC99/1/3/7, Special Collections, Library, University of Nevada at Reno.37 Bullion Records, 1876, NC99/1/3/7, Special Collections, Library, University of Nevada at Reno.

18

THE COMSTOCK [M]

tenth of the total and none at all after March when it was switched from milling California ore to Consolidated Virginia ore. The Consolidated Mill, rebuilt after the fire by October 1876, became the principal recipient – more than one third - of California ores in 1877. Mill rankings for deliveries of ores from California in 1877 were as follows: Consolidated 34 percent, Brunswick with 18 percent, Morgan 10 percent, California 9 percent, Occidental 6 percent, Rhode Island and Sacramento 5 percent, Mariposa (mainly tailings) 4 percent, Trench and Nevada 3 percent, and Empire State and Winfield 1 percent. Trench reported the highest yields at $104 while Occidental the lowest at $78 per ton. Three mills that had not yet shown up on Consolidated Virginia’s list were called into service to handle the volume from California. They were Rhode Island, Empire State and Winfield. They combined for only 7 percent of the total, and there is no evidence that even in later years ores from Consolidated Virginia were ever shipped to them.38

In 1878 the milling situation with respect to California ores began to change. Six mills processed ore during the first quarter, three to four in the second quarter and only one mill in the final two quarters. The tons prepared for processing fell from just under 20,000 in January to 1,200 in December. Total tons crushed fell 40 percent from previous year to 128,000. Consolidated and California shared the honors as the two most active mills: Consolidated reduced 25 percent of the ore during just the first four months and California reduced 29 percent but during the last six months. In a much sharper contrast, however, the yields at the Consolidated Mill were still extraordinarily high at $114 per ton, but at the California Mill they had plummeted to only $49 per ton. The other six mills, some of which were engaged in the milling of California ore for the first time ranged from $73 per ton to $93. The average yield was $79, still high by Comstock standards but down 10 percent from the year before. The best month was March at $112 per ton while the worst month was September at $44 per ton. The yields rebounded by the end of the year. California registered $73 per ton, but it only processed 1,200 tons.39

In the next two and one-half years the slide at California accompanied the slide at Consolidated Virginia. In the spring of 1881 a fire closed down Consolidated Virginia and the milling of its ore stopped in May. California ores continued to be milled through October. Some believed (perhaps hoped is the word) that the Comstock had a future. In fact, the shuttering of the two giants, which had produced in excess of $100 million worth of gold and silver and profits of $70, signaled the end of the Comstock’s mining triumph, not just temporarily but permanently.

It is worth following the developments and prospects as described by James Fair in the many weekly reports he wrote as superintendent of California (as well as Consolidated Virginia). The public assumed that California would be another bonanza, perhaps eclipsing the stunning performance of Consolidated Virginia itself. The initial enthusiasm led some outsiders to observe that California could produce $100 million dollars worth of gold and silver inasmuch as yields of $188 per ton were achieved in April 1876. They dropped fairly rapidly, however, to $161 in May, $128 in June and then settled into a range of $80 to $110 for the rest of the year. In a long report, dated 16 July

38 Bullion Records, 1877, NC99/1/3/7, Special Collections, Library, University of Nevada at Reno.39 Bullion Records, 1878, NC99/1/3/7, Special Collections, Library, University of Nevada at Reno.

19

THE COMSTOCK [M]

1876, to C. P. Gordon, Secretary of California Mining Company, Fair used such terms as “fine” and “excellent” to describe the ore between 1,300 and 1,600 feet. A month later he wrote that the ore stopes at 1,600 feet was “very rich”. And these descriptions continued to appear in his reports for the next several months even though the yields had already fallen. It was more than a year before Fair remarks became more tempered. In 27 October 1877, for example, he reported that the quality of ore at 1,550 feet had fallen to “medium grade”, which had a per-ton yield in the $75 range.40

The extraction of ore in California was not by any means trouble-free. The C&C Shaft, under construction, was intended to be the main vehicle for hoisting California’s ores. As we learned in reports from Consolidated Virginia, water, hard rock and ventilation had to be dealt with daily and could singly or collectively bring work to a standstill. As Fair was praising the quality of the ore in the summer of 1876, he was also acknowledging that water detracted from the hoped-for rapid progress in sinking the shaft. By fall the water had decreased but delays were still hampering the work. Finally the water had diminished enough by October that a station was opened at 1,650 feet to hoist “very rich ores”. Even as the water decreased (for the moment) the rock through which the shaft passed (as noted in earlier weekly dispatches from Consolidated Virginia) became extremely hard, and shovels had been abandoned for Burleigh Drills. In November he reported that the C&C Shaft was running smoothly as far as it was open, but little work was being done below 1,650 because of water. Work resumed on C&C Shaft, but it had only reached 1,800 feet by the summer of 1877 again because of heavy water. The deeper the shaft was sunk, the more essential proper ventilation became. As the C&C Shaft closed in on 1,750 feet a new drift had to be started from a winze at 1,650 feet down to an upraise from 1,750 feet to the Ophir Shaft in order to dissipate the heavy air at these levels. In an ironic twist with a plentitude of water in the C&C Shaft and adjoining connections the company faced a scarcity of water in the Carson River where some of its mills were located. On a report from 6 July 1877 Fair declared that no ore cars would be hoisted from 1,550 feet, the core of California’s ore riches, for the next six days because the low river levels had slowed milling and in the meantime the ore dumps and mill facilities were filled to capacity. (It should also be pointed out this suspension coincided with the 4th of July, which was often celebrated but did not necessarily mean a no-work holiday.) In the fall of 1877 water had stopped most of the work below 1,850 feet in the C&C Shaft, although the shaft operated as designed above that level except for occasional equipment failures. At the same time water in the Carson River had increased to the point that most of the mills were back in business. Of course, it would turn out that very little profitable ore was found below 1,650 or 1,700 feet, even though the company continued to invest time and money in controlling water and ventilation. There were some ominous items to acknowledge in the fall reports. As the network of tunnels grew within the ore bodies and beyond increased efforts had to be devoted to retimbering, enlarging and repairing them. Ore quality during the extensive interior maintenance was only described as “fair” or “good” rather than “fine” or “excellent”. In one of the longest of the 1877 reports – 20 October 1877 – Fair reviewed the work at all levels. The ore

40 For example see copies of letters from James Fair to C. P. Gordon, Secretary of the Board, 16 July 1876, 27 August 1876, 8 October 1876 and 11 March 1877, from Letterpress Book, California Mining Company, 8 July 1876-22 October 1877, NC99/2/7, Bx 7, Special Collections, Library, University of Nevada at Reno.

20

THE COMSTOCK [M]

breast at 1,500 and 1,550 feet were described as looking good, but on the northern end the quality was only fair. The face of the drift that was being pushed east to connect with a northeast drift at 1,600 feet continued to exhibit good ore. At 1,650 feet at least five east-west crosscuts under construction or repair alternated between good ore and vein matter. Excavations below 1,650 (1,750 to 1,850 feet) were extensive – crosscuts, winzes, upraises and chambers – but no ore bodies to report. A week later (27 October 1877) the ore from 1,550 feet was now described as medium grade, and more disturbingly the “ground was pressing badly and this ore had to be taken out immediately.” In a phrase that seldom appeared in Fair’s reports he indicated without qualification that from now on work on this level would prove to be more expensive in the future. By the summer of 1880, a year and a half before the mine closed, the new superintendent, W. H. Patton informed C. P. Gordon that they were extracting only about 1,000 tons a week of fair-grade ore between 800 and 1,700 feet. Even though the C&C Shaft had reached 2,450 feet, it ended up in vein formation that included some quartz but no profitable ores. The saga of California like its companion Consolidated Virginia despite their enormous riches was not unlike that of all Comstock bonanzas. Bonanzas eventually became borrascas.41

41 Information in the above paragraph was drawn from copies of letters from James Fair to C. P. Gordon with the following dates: 07/09/76, 07/16/76, 08/27/76, 10/08/76, 11/26/76, 03/11/77, 05/05/77, 07/02/77 and 10/20/77 from Letterpress Book, California Mining Company, 8 July 1876-22 October 1877, NC99/2/7, Bx 6, and 10/27/77 and 06/17/80 from Letterpress Book, California Mining Company, 24 October 1877-26 April 1881, NC99/2/8, Bx 6, Special Collections, Library, University of Nevada at Reno.

21

THE COMSTOCK [N]

Chapter 14The Biggest Bonanza:

Assays Unlimited, Digging & Hoisting the Underground

Mining companies conducted frequent assays then for the same reasons that they do today – to determine the course of the vein and the quality of the ore.1 With respect to the latter point it was important to the companies to know how much gold and silver that a seam or body of ore contained. On an almost daily basis a company had to decide how to proceed underground - where to dig, what to avoid and how to make the best use of labor and equipment. In the 1877 Annual Report of California Mining Company James Fair, as superintendent, informed stockholders that the Assay Department had been established as a part of the Consolidated Virginia Mining Company in 1875, and during 1877 alone 40,484 assays had been conducted on ores from both mines.2 Company assay records were not concerned with the final assay, a determination made by the United State Mint prior to converting the gold and silver into coins or into bars to be stored.3 Rather assay records functioned as periodic checks in the absence of detailed underground maps. Assays could also be misused - to hype a mining stock, for example, when a company entered the capital market to raise money for projects not justified by the balance sheets. Proper assays could not be done on the fly. They required the equivalent of laboratories with furnaces that cooked the samples at very high temperatures (today furnaces operate at 1,000 degree). Companies like Consolidated Virginia and California built and staffed their laboratories, some of which were actually constructed underground. Assay records reveal that dozens of samples could be drawn from the extraction areas in a 24-hour period. A sample might be drawn from the face of one wall, and then a sample might be drawn from a car loaded with ore from several parts of the face of the wall, and finally a sample might drawn from dozens of cars with ores from throughout the mine. Each reading could be different, and in some cases the readings could be significantly different.

Scores of assay records survive in the archives of Consolidated Virginia and California Mining Companies. While they represented one of the most extensive set of archival records, they were uneven with respect to content and frequency. Consolidated Virginia and California, separate corporations, shared assay facilities. Normally assay-office expenses including wages and supplies appeared in Consolidated Virginia’s accounts whereas the cost of assaying California ores appeared in its own accounts.4

Assay procedures had been in use for centuries, and while modifications and efficiencies had been introduced over time, the basic format was well known and understood. What is described below, by me a non-chemist, was drawn from current publications. A quantity (perhaps no more than an ounce) of ore was weighed and then mixed with lead oxide and

1 My appreciation to Mario Desilets of the Nevada Bureau of Mines and Geology, University of Nevada, Reno, for answering my inquiry concerning the frequency of assays.2 Annual Report, 1877, California Mining Company, p. 20, NC99/1/5/6, Bx 2, Special Collections, Library, University of Nevada at Reno.3 See Hickson, Mint Mark: “CC”, 21-31, for discussion of procedures followed at the Carson City Mint from the time of the arrival of the ingots arrived to the minting of the coins.4 For how costs were allocated see the Annual Reports for each company in NC99/1/5/1-2 and 1/5/6-7, Bx 2, Special Collections, Library, University of Nevada at Reno.

1

THE COMSTOCK [N]

with other chemicals that acted as reducing agents. The mixture was assembled in a crucible and allowed to cook in a small but very hot furnace. The reducing agent changed the oxide back to lead in the form of thousands of droplets that attached themselves to the gold or silver minerals and sank to the bottom of the crucible. The crucible was removed from the furnace and its contents were poured into a mold and allowed to cool. The slag or residue was discarded, and what remained was an alloy of precious minerals and lead. The next step was to place the “lead button” in a cupal that absorbed the lead that was oxidized again in a very hot furnace. The result was something called a “dore bead” which contained all the gold and silver minerals and none of the lead. It was weighed and then was immersed in another chemical like nitric acid that dissolved the silver and left the gold. This was called “the parting”. The gold was weighed and the difference between the weigh of the gold and the dore bead was the weight of the silver. From this process the ratio of gold to silver was computed along with the separate value of the gold and silver according to a predetermined formula. How closely the assayers of Consolidated Virginia or other mining companies followed these procedures remains a matter of speculation in the absence of assay manuals or other such documents. Since assays were taken at all stages, from the interior of the mines through the milling process into the sluices and dumps, the results had high variability. Ore quality was the primary factor, but the wetness or dryness of the ore and the volume of residue contained in the ore could also be factors. Ore in the mines tended to have higher assays than the same ore after it had been crushed and prepared for milling. The lowest assays came from the slimes and tailings. Companies like Consolidated Virginia or California where assays were conducted as normal operating procedures surely understood how to interpret the results. The high readings from inside the mine were perhaps misused from time to time in the public arena, but they served as signposts for the miners and managers in determining a course of action.

The two companies shared assay facilities but did not necessarily keep identical assay records. From the surviving assay documentation the records from California are more detailed than those from Consolidated Virginia. The major difference between the two sets of records is that California’s assays were keyed to specific areas in the mine or stages in the milling process or other surface locations. Unfortunately the California assay entries were often written in abbreviated forms that cannot always be precisely identified or explained. An example would be scores of assays, taken for the week Monday 3 April through Sunday 9 April (1876), shortly after California made its official debut, on the floors or in the galleys of the mine, from cars loaded with ores on the floors and in the mills and at various stages of milling operations. It was common, especially with carloads, to take more than one sample.

Figure 1 shows all the entries at California for 8 April, the date chosen primarily to show the variability of assays. To begin with, at least 20 assays were entered into the assay records beginning with #35 and ending with #55. If other assays were taken, they were not reported. California Mill was the only mill to receive ore from the California Mine during April 1876. At 1,500 feet the main or sill floor had three crosscuts, Nos. 1, 2 and 5, with ore breasts, although the only reference to No. 2 was that one carload of ore was designated as having originated there. A second and a third floor had been cut below

2

THE COMSTOCK [N]

the sill floor in crosscut No. 1, and by the end of the summer the number will have reached 10 floors. By far the highest assay was returned from the northern end of No. 1 crosscut on the sill floor. A ton of ore from that area was said to be worth $922 with $671 worth of silver and $251 worth of gold. The lowest assays within the mine were noted in the No. 5 crosscut south on the sill floor at a value of $26 per ton. The average value of ores from the floor was $324 per ton. Although the total value of the assays from the second floor of crosscut No. 1 were lower than the previously cited figures, management had to be encouraged because the quantity of gold from a batch of ore in the western wing of crosscut No. 1 came in at 64 percent of the total value. On average gold was equal to about a third of the total value. Not unexpectedly by the time the ore had been loaded into cars the values had dropped. The three carloads, one with ore from each crosscut, came in at an average of $181 per ton. At the same time that these tests were made below ground the ore in 255 carloads was assayed above ground. Duplicate assays were done, but the exact procedure was not explained nor described. The first assay yielded $305.10 per ton and the duplicate $267.40 per ton. Nearly 40 percent of the ore was said to be gold. Finally with respect to what was described as tailings, the assays except for pulp fell significantly. It is not clear why pulp was listed on tailings (given the customary meaning of tailings) since the pulp was a mixture of crushed ore and water, flowed into the reduction facilities where it was incorporated with quicksilver and other chemicals to separate the minerals from the ore. It is assumed that the pulp was a reference to the ore undergoing reduction rather than the ore escaping it. The pulp had assays of $197.50 per ton, 42 percent ($84.40) of gold and 58 percent ($113.10) silver. It should be recalled that the yield from California ore in the first month averaged $188 per ton, not far from the yield on the pulp from a single day. Sulphurets (also known as sulphates) were the slimes and tailings that were carried away in the sluices to nearby dumps and pools. The assays in these categories were among the lowest. A range of assays as the ore passed from the interior galleys to the waste dumps was not by any means unexpected.5 As Grant Smith explained, “The ore as it left the mine was roughly sampled and weighed or estimated, which became the mine’s valuation, with 10 percent or more of moisture included, while the assays made at the mill were of battery samples, dried.” He further noted that the average recovery at California was 74 percent (compared to Consolidated Virginia’s 73.5 percent). These ratios were close to the Comstock average of a 30-percent difference between “wet” (battery) and “dry” (refinery) assays.6

Indeed, company accounts, especially those kept by The Firm, showed the average monthly “wet” assay (100 percent) and the average monthly “dry” assay (70 percent), but if the final dry assay were higher or lower than 70 percent of the wet assay, the difference was described in the ledgers as a surplus or a loss. Consolidated Virginia and California almost always calculated the 100-percent and the 70-percent valuations as well the excesses or losses at each mill for each month. What mattered in the end was how much bullion could be squeezed from the ore. The ores extracted and processed were so rich

5 See Report of Assays, 3 April-10 April & 1-6 August 1876, California Mining Company, NC99/1/2/1, Bx 5, Special Collections, Library, University of Nevada at Reno. Any of the Bullion Records between 1876 and 1881, California Mining Company, can be consulted for examples of 100/70 percent figures. NC99/1/3/7, After Bx 1, Special Collections, Library, University of Nevada at Reno. 6 Smith, The Comstock Lode, 255. Smith provided no source, but his ratios are close, although somewhat lower, compared to the ratios that I calculated from the monthly mill accounts. Seldom did losses show up, i. e., less than 70 percent, even in the declining years.

3

THE COMSTOCK [N]

that the conventional “wet” and “dry” assay ratios did not apply to Consolidated Virginia and California. In earlier bonanzas this was probably true as well - that the 70-percent benchmark was generally exceeded.

FIGURE 1

ASSAY SAMPLES, CALIFORNIA ORE, 8 APRIL 1876No. Description of Sample Value Per Ton Calculated %

1,500 Feet Gold Silver Total Total Gold35 Calif Mill 255 Cars 7th $116.55 $188.55 $305.10 $305.10 38.20%36 duplicate $106.50 $160.90 $267.40 $267.40 39.83%

Mine37 Sill Floor E $281.35 $450.00 $736.35 $731.35 38.21%38 Sill Floor NW No 1 $64.30 $133.20 $197.50 $197.50 32.56%39 Sill Floor W No 1 $48.20 $88.00 $136.20 $136.20 35.39%40 Sill Floor N No 1 $251.15 $671.20 $922.35 $922.35 27.23%41 3rd Floor No 1 $112.55 $243.85 $356.40 $356.40 31.58%42 2nd Floor W No 1 $84.40 $47.75 $132.15 $132.15 63.87%43 2nd Floor N No 1 $36.15 $98.05 $134.20 $134.20 26.94%44 2nd Floor NW No 1 $176.85 $346.90 $523.75 $523.75 33.77%45 Car Sample No 1 $40.20 $88.00 $128.20 $128.20 31.36%46 Car Sample No 2 $88.40 $108.10 $196.50 $196.50 44.99%47 Sill Floor S No 5 $8.00 $17.60 $25.60 $25.60 31.25%48 Sill Floor N No 5 $24.10 $47.75 $71.85 $71.85 33.54%49 Car Sample No 5 $64.30 $153.35 $217.65 $217.65 29.54%

Tailings50 Calif Mill Pulp 8th $84.40 $113.10 $197.50 $197.50 42.73%51 Calif Mill Sulphurates 8th $8.00 $42.75 $50.75 $50.75 15.76%52 Calif Mill Night NS 8th $1.00 $7.50 $8.50 $8.50 11.76%53 Calif Mill Night SS 8th $1.35 $10.05 $11.40 $11.40 11.84%54 Calif Mill Day NS 8th $1.00 $8.80 $9.80 $9.80 10.20%55 Calif Mill Day SS 8th $0.50 $8.80 $9.30 $9.30 5.38%

Totals $1,599.25 $3,034.20 $4,638.45 $4,633.45% 34.48% 65.41% 99.89%

Abbreviations: 7th next to cars is batch number for cars tested; 8th next to California Mill entries is batch number for those types of assays; N, E, S, W & NW designate north, east, south, west & northwest, locations on floors where ore was extracted or piled at time of assays; No 1, No 2 & No 5 refer to tunnels where ore or car samples were taken; NS refers to north sluice and SS to south sluice at California Mill. Entry # 37 has an addition error.Sources: See footnote 6.

Even though California’s assay records gave more details about locations, Consolidated Virginia’s assays offered more details about the contents of the ores. A short ton of ore, of course, weighed 2,000 pounds, but from that ton only a few ounces of gold and silver were normally drawn. The more metal the richer the ton of ore. In many instances a ton of ore could be streaked with gold and silver and yield virtually nothing. The assay records of Consolidated Virginia included not just the value in dollars and cents of the gold and silver but also their weight in ounces per ton. On 1 April 1877, 24 samples from unspecified locations were assayed. (I chose this date, not at random, but because the assay dataset was manageable.) On most days scores of tests were made on

4

THE COMSTOCK [N]

ores from Consolidated Virginia, and on some days nearly a hundred tests would be made. The number of assays was directly related to the number of tons of ore delivered to and prepared at the mill(s). The first question to ask, therefore, is whether the less voluminous ore yields in dollars and cents for this one day fit what has been computed as an average for the month. The April average per ton yield was $90 per ton, down from $94 per ton in March. The 1 April average was $82 per ton, somewhat below the two monthly averages and yet not so sharply divergent as to make further analysis irrelevant. It would appear that the per-ton yield on 1 April generally reflected the state of the mine in the spring of 1877. The second observation is that these 24 tons of ore from which samples were drawn yielded nearly 20 ounces of gold (4 percent) and 476 ounces of silver (95 percent) for a total of 495 ounces. Since gold was 16 times more valuable than silver by the standard formula gold accounted for $32 (39 percent) of the $82 per-ton yield and silver for $50 (61 percent). The more gold, of course, the richer the per-ton yields. Finally, the amount of gold and silver, based on the assays, indicated that some of the one-ton batches had little or no value and some had extraordinarily high value. Samples 1-2, 4-6, 9-13 and 9-13 came in at less than $20 per ton (combined gold and silver) or lower than the so-called Comstock break-even point. But the remaining samples made up for the low assays, from $26 per ton to $461. This was the magic of a Comstock bonanza, and why assays were important. Even though on average each ton yielded less than an ounce of gold (.81), more than 40 percent had at least one ounce and as much as 4 ounces. A frequency-distribution table (below) shows the distribution of gold (by ounces) among the samples, and notably 38 percent had between one and two ounces of gold. Silver fell within a range of one ounce per ton to 113 ounces per ton. Sample 21 was the richest of them all with 117 ounces of gold and silver worth $461 ($177 for gold and $284). It is worth underlining that these assays were taken from an ore body that had been worked for approximately four years since the company made its first official declaration. A bit long in the tooth, one might conclude, and yet Consolidated Virginia could still make money.7

FIGURE 2GOLD DISTRIBUTION Oz # %0.99 14 58%1.99 9 38%2.99 0 0%3.99 0 0%4.99 1 4%

24 100%

7 Ore Assay, Assay Office of the Consolidated Virginia Mining Company, 1 April 1877, NC99/1/2/2, Bx 5, Special Collections, Library, University of Nevada at Reno. Twelve additional samples were taken. Ten of them were identified as located at Mariposa Mill (primarily for tailings) or at surface facilities such as slimes or wastes. Two of the samples were identified as paid for by John Mackay. Except for Mackay’s samples at $127 and $143 per ton the per-ton values ranged between $3 and $50. Why Mackay was credited with two of the 12 samples was not explained.

5

THE COMSTOCK [N]

FIGURE 3ASSAY SAMPLES, WEIGHTS AND VALUES, CONSOLIDATED VIRGINIA

ORE, 1 APRIL 1877Sample # Weight (ozs) Value ($) Gold

Gold Silver Total Gold ($40+/oz) Silver ($2.50/oz) Total Total ($/oz)(calculated) (calculated) (calculated)

1 0.100 3 3.100 $4.00 $7.55 $11.55 $11.55 $40.002 0.100 3 3.100 $4.00 $7.55 $11.55 $11.55 $40.003 0.150 8 8.150 $6.00 $20.10 $26.10 $26.10 $40.004 0.050 2 2.050 $2.00 $5.00 $7.00 $7.00 $40.005 0.075 4 4.075 $3.00 $10.05 $13.05 $13.05 $40.006 0.025 1 1.025 $1.00 $2.50 $3.50 $3.50 $40.007 0.750 17 17.750 $30.15 $42.65 $72.80 $72.80 $40.208 1.600 20 21.600 $64.30 $50.20 $114.50 $114.50 $40.199 0.025 1 1.025 $1.00 $2.50 $3.50 $3.50 $40.0010 0.025 1 1.025 $1.00 $2.50 $3.50 $3.50 $40.0011 0.025 1 1.025 $1.00 $2.50 $3.50 $3.50 $40.0012 0.025 1 1.025 $1.00 $2.50 $3.50 $3.50 $40.0013 0.050 2 2.050 $2.00 $5.00 $7.00 $7.00 $40.0014 1.000 22 23.000 $40.20 $55.20 $95.40 $95.40 $40.2015 1.950 64 65.950 $74.35 $160.65 $235.00 $235.00 $38.1316 1.300 27 28.300 $52.25 $67.75 $120.00 $120.00 $40.1917 1.625 31 32.625 $65.30 $77.80 $143.10 $143.10 $40.1818 1.400 42 43.400 $56.25 $105.40 $161.65 $161.65 $40.1819 1.200 14 15.200 $48.20 $35.15 $83.35 $83.35 $40.1720 1.200 23 24.200 $48.20 $57.75 $105.95 $105.95 $40.1721 4.400 113 117.400 $176.85 $283.65 $460.50 $460.50 $40.1922 0.800 22 22.800 $32.15 $55.20 $87.35 $87.35 $40.1923 0.500 25 25.500 $20.10 $62.75 $82.85 $82.85 $40.2024 1.000 29 30.000 $40.20 $72.80 $113.00 $113.00 $40.20

Totals 19.375 476 495.375 $774.50 $1,194.70 $1,969.20 $1,969.20Average 0.807 19.8 20.64 $32.27 $49.78 $82.05 $82.05 $40.02

Sources: See footnote 7. Each sample=one ton.

Whether other companies were as disciplined as The Firm in conducting assays or could afford to be that disciplined cannot be determined on the basis of current archival records. Nor can it be shown how the companies used the assay data. Given the volume of assays conducted daily The Firm must have had as much first-hand information about the quality and character of its ore bodies as any company on the Comstock. The weekly reports seldom contained specific assay references, although they often reverted to descriptive adjectives such as “good”, “fine”, “favorable” and even “excellent” to describe the ore. From an historical perspective, however, assay data are valuable because they demonstrate so clearly the variation in the mineral content of an ore body that was by now well known but not always acknowledged. It is easy to assume from much that has been written that every batch or carload of ore was rich in gold and silver, and yet the assays revealed how unrealistic and mistaken such assumptions were. Experienced miners surely understood this phenomenon, and as the high assays in the underground workings began to disappear and low assays began to predominate (as was the case for both Consolidated Virginia and California in 1877 and 1878), they should

6

THE COMSTOCK [N]

have adjusted their strategies and forecasts, although they may have been reluctant to do so. One interesting observation from California’s assay records is that during 1876 the assays from the floors between 1,600 and 1,700 feet never reached the values of the assays from the floors between 1,500 and 1,600 feet. To be sure, assays from the lower floors yielded values that were still well above Comstock averages but not as high as the $100-per-ton-plus range of the upper floors. To cite one example, on 1 August 9 samples taken from the sill or main floors plus floors 8 through 10 of the No. 1 crosscut at 1,500 feet came in at $202 per ton and 14 samples taken from the sill floor plus 2 through 8 of No. 5 crosscut at 1,550 feet at $69 per ton. The difference was significant because while both were higher than the assays of $39 per ton from the main crosscut at 1,600 feet, they pointed to a downward trend in assay value as the depth increased. Even if trends could be identified, they did not always hold up. Assays reduced some of the guessing but not all of it.8 As the mines expanded and assays fell, companies must have known they were gambling on an outcome different from what the assays pointed to. Assays served as pointers, not predictors.

FIGURE 4ORES CARS BEING UNLOADED FROM SHAFT, SAVAGE MINE

In its most basic form mining was an earth-moving business. By the time of the 1880 Census, which compiled information on the length of tunnels, drifts, crosscuts, shafts, inclines and winzes, the Comstock underground network was estimated to be nearly one million feet or 185 miles in length. Imagine a tunnel 10 feet by 10 feet 1 million feet long. The volume of soil, rock, clay and ore that had to be removed to create this tunnel would be 100 million cubic feet.9 But the underground network of 8 Report of Assays, 1 August-6 August 1876, California Mining Company, NC99/1/2/1, Bx 5, Special Collections, Library, University of Nevada at Reno.9 1880 Census available On-Line at www.census.gov/prod/www/abs/decennial/1880.html, United States Census Bureau. Statistics and Technology of the Precious Metals, vol. 13, 124-125, Table XVI.

7

THE COMSTOCK [N]

approximately 1 million feet in length was far more complex than represented by the image of a single tunnel. The 1880 Census also reported on the average size of the network’s components:10

Drifts 6’ x 7’Single Winzes 6’ x 7’

Double Winzes 12’ x 7’Shafts 5.5’ x 15’

Specific Shafts:Foreman 8.5’ x 28’

Combination 8.5’ x 28’Yellow Jacket 9.5’ x 23’

Orbiston 8.5 x 23’Old Shafts 8’ x 20’

This list surely did not exhaust all the possibilities of how spaces were created underground, but it underscored the diversity of spatial arrangements within mining complexes. All the shafts listed in the 1880 Census totaled 56,000 feet in length and averaged about 9 feet by 23 feet. The total cubic feet would be in excess of 12,000,000. The weight of so much debris would depend on the components – stone was heavier than dirt – but it too was measured in millions of pounds. Between 1860 and 1885 from 7 to 8 million tons of ore - about 300,000 per year – was crushed and processed in Comstock mills. The tons of debris removed to extract and lift the ore were surely several times greater than the ore itself.

As productive as Consolidated Virginia and California were, the underground network that they had carved out was not as large as some others. The most extensive underground network (by length) belonged to Chollar Potosi (approximately 65,000 feet) and next two were Overman/Caledonia and Yellow Jacket in Gold Hill (between 58,000 and 59,000 feet). Overman and Caledonia mines had never ranked among the major producers, and Yellow Jacket had fallen from the ranking producers in the early 1870s. Consolidated Virginia and California (along with C&C Shaft) combined for about 66,000 feet, 13 miles or 7 percent of the total. Ore had to be hoisted and some non-ore also had to be hoisted, but both ore and non-ore could be stored, the former temporarily, in abandoned tunnels, stations or galleries. Weekly reports acknowledged the problem of debris piling up in passageways used to ventilate the interiors or to transport the ores. Crumbling walls and collapsing ceilings also contributed to the debris. It was a continuous battle, even at operations as efficient as The Firm’s, managing both the unhoisted ore and the residue, especially the latter which never ended even in the richest parts of the ore bodies. Even when stored underground, the residue was constantly being moved from old to new storage areas and if the storage areas became impediments, it had to be lifted. In short, although daily and weekly reports noted the problems that arose from underground clutter, carload and hoisting data appeared with less regularity in the

10 1880 Census available On-Line at www.census.gov/prod/www/abs/decennial/1880.html, United States Census Bureau. Statistics and Technology of the Precious Metals, vol. 13, 125.

8

THE COMSTOCK [N]

accounts. Little direct evidence on how much debris was removed, where it was stored or how often it was relocated can be pulled from the companies’ records. But in creating this underground village of tunnels, galleys and shafts in all their variations must have consumed more time and effort than the act of extracting and removing the ore.

FIGURE 5ILLUSTRATIONS OF ORE CARS

[CARS FABRICATED ON-SITE WITH TIMBERS FROMNEARBY FORESTS. METAL PARTS FORGED LOCALLY OR IMPORTED FROM OTHER LOCALES

By the late nineteenth century mechanization played an increasingly larger role in underground mining, and that included earth-moving activities. In Spanish American mines the workers were the transporters, and some could perform near incredible feats of hauling in sacks strapped to their backs a hundred or more pounds of ore up rope ladders several hundred feet to the surface.11 On the Comstock few workers if any hauled ores to the surface or around the interior on their backs. Rather machines and conveyances performed the tasks of moving and hoisting. In his 1873 Report the State Mineralogist offered a description of how ors were removed from the interior of the mine:

The ore, as it is worked out or broken down by the miners in the stope, is thrown down to the track station below, either falling upon the floor of the drift or into a receiver or bin, whence it is loaded into the drift car and carried to the shaft. There the car, containing its load, either of ore or waste rock, is placed upon the cage or platform in the shaft and raised to the surface, where it is run from the cage on to another track, and so

11 Peter Bakewell, “Mining in Colonial Spanish America,” in Leslie Bethell, ed., The Cambridge History of Latin America, The Colonial Period, 2 vols. (Cambridge: Cambridge University Press, 1984), 130-131.

9

THE COMSTOCK [N]

conveyed to the appropriate ore bin or waste dump, according to its character, and thus delivered of its load without any intermediate handling. The car in general use in the Comstock Mines is made of wood, and has a capacity of one thousand six hundred or one thousand eight hundred pounds.12

Spared the arduous task of hauling the ore, late-nineteenth-century workers still performed equally arduous tasks of digging out the ores and loading up the cars that were lifted to the surface or transferred within the mine. Scores of picks, sledges, shovels, handles and drills (hand rather than mechanical) appeared in property inventories appended to company annual financial statements.13 Some of the drilling had been mechanized by the mid-1870s with the introduction of diamond bits and air compressors, but much of the work of constructing a tunnel or mining a stope or loading a car was accomplished with picks, sledges and shovels.

Consolidated Virginia kept daily hoist records that were specially described as conveyance of “pay ore”. Even though rock and waste hoists were also included, pay ore was the main product in the hoist records. These records usually had two sets of figures: ore that was hoisted from the mine and ore that was delivered to the mill. Hoisted ore was also referred to as extracted ore. The terms were used interchangeably. The records showed in tons and pounds the volume hoisted from the level to the surface each day of the month. For the month of June, 1874, for example, about 8,300 tons of ore were hoisted along with 750 tons of rock. A year later 16,068 tons of ore were hoisted but only 108 tons of rock. Considerably more ore was hoisted than rock or other components, and for some days no rock was hoisted at all or not recorded as being hoisted.14 The origination of the rock was not noted. Was it associated with the ore being hoisted or was it from another operation within the mine? The rock hoists were almost incidental to the ore hoists. Any attempt to determine a ratio between ore and rock hoists from the few dual entries found in the hoist records would be of little value. Far more non-ore hoists would have to be recorded to account for all the debris that had to be removed to reach the ore bodies.

Consolidated Virginia was the mine of choice to visit because it was assumed (correctly) to be the most mechanized and best managed of the Comstock operations. Dan DeQuille, the Territorial Enterprise’s relentless and renowned scrivener, justified his choice to inspect Consolidated Virginia for precisely these reasons: “all the latest and most approved machinery and…all operations are conducted in systematic and scientific manner.”15 Although specific are missing, like the data of the visit, DeQuille presumably 12 “Biennial Report of the State Mineralogist...1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 125.13 See for example the Annual Report for the Year 1875 (issued 1876), Consolidated Virginia Mining Company, NC99/1/5/1 and Annual Report, 1876 (1877), California Mining Company, NC99/1/5/6, Special Collections, Library, University of Nevada at Reno. Listed under Inventory of Property in both cases.14 Ore Book, June 1874, Consolidated Virginia Mining Company, NC99/1/3/3, After Bx 1, Special Collections, Library, University of Nevada at Reno. Several accounts refer to the ore as “pay ore” since the term ore can have several meanings. Some ore could have streaks of gold and silver and yet be of such little value that it was discarded.15 DeQuille, The Big Bonanza, 221.

10

THE COMSTOCK [N]

visited the hoisting works at Consolidated Virginia’s main shaft (not to be confused with the C & C Shaft and Hoisting Works under construction). The Virginia Shaft (as it was known) was badly damaged if not destroyed in the fire of October 1875, and although a new hoisting works was ready within months it seems unlikely that DeQuille was describing the new building since his book The Big Bonanza was published in 1876.16 In any event the pre-fire hoisting works of Consolidated Virginia was reputed to be the best equipped and the most efficient at the time, and from DeQuille’s description it was indeed a building to behold. The main building was of “great size” to which was attached “several large wings”. In this complex of buildings were a boiler room (with its recognizable “tall, black smoke-stacks”), a blacksmith’s shop, a carpenter’s shop, a machine shop and of course the principal chamber with the hoists. “Almost the first object that attracts our attention upon entering the place [main room] is the mouth of the main shaft.” The reason – “great volumes of steam” curling and hissing out of the mouth. Upon closer inspection one observes an opening of about 5 feet wide by 20 feet long, which was divided into 4 compartments: 3 cages for carrying workers and ores and a fourth known as the pump compartment. The machines that ran the cages ands the pumps were located around the room with attendant engineers. For visitors, apparently, watching workers descend or ascend through the steam was a cause of ‘“palpitations of the heart’” Spooky to say the least: “Nothing can induce some persons to venture into the steaming shaft after they have taken one good look at it….”17 The business at hand, of course, was to move workers back and forth from the surface of the mine and to hoist as much ore as was efficiently possible.

The focus of the hoisting documents is on the ores. I have created a profile of ore-hoist data for each June from 1874 through 1879. To tally and analyze all the hoist figures would be an enormous undertaking (even with a computer), and while it might yield some interesting daily or monthly trends it probably would not add much more than can be observed from a more limited dataset. During six Junes from 1874 to 1879 approximately 58,000 tons of ore were hoisted. (Figures more or less agreed with crushed ore totals at the mills.) A second set of figures – ore delivered or shipped to the mill – could differ from the hoisted figures by as little as a few tons or as much as several hundred tons. The June pattern of ore hoists followed the overall trend of ore production at Consolidated Virginia. June tonnage rose in 1875 over 1874, fell back in 1876, rose again in 1877 and declined sharply in 1878 and 1879. The June with the most tons hoisted – 16,000 or 28 percent- was 1875 and with the least tons – 3,500 or 6 percent - 1879. Consolidated Virginia had access to three different shafts – Consolidated (Virginia), C&C and Gould & Curry. The records indicated that a few hundred tons were lifted through Gould & Curry, but the rest was lifted through Consolidated and C&C. Although the records noted how much was lifted through Gould & Curry, they did not distinguish between the two principal shafts. The Consolidated Virginia Shaft by location

16 The Big Bonanza did contain a final chapter (marked 73, pp. 426-436) on the “great fire” in which DeQuille noted that the Consolidated Virginia hoisting works was destroyed but made no mention of the new hoisting works. Mackay and Fair began construction immediately, and new hoisting works was in operation by the Spring, 1876. DeQuille’s book was published in 1876, and it seems unlikely that there was enough time to tour a finished building and include that tour in the book. Whichever building he was describing it was still impressive.17 DeQuille, The Big Bonanza, 222-223.

11

THE COMSTOCK [N]

and connectors was the workhorse, no doubt, but being older and located in less stable ground it was in constant need of repair. Periodically it went out of service, and in May 1878 it was closed for the rest of that year to be retimbered. The C&C Shaft was deeper and faster but like Gould & Curry was connected to the stations that served the ore galleries through long drifts. Stations for loading ores into hoisting cages were located at every 100 feet between 1,200 and 1,500 feet and (beginning at 1,550) at every 100 feet between 1,550 and 1,950. At 1,550 a station in Consolidated Virginia was connected to a drift from Gould & Curry and to C&C. All the stations below 1.550 eventually had access to C&C. During the six Junes about 1 percent of the hoisted ore was loaded through stations at 1,200 and 1,850 feet and only a tenth of a percent came from the station at 1,950 feet. Between 5 and 7 percent was loaded at 1,400 and 1,750 respectively. Two-thirds of the ores were loaded at station 1,500, 1,550 and 1,650. The station at 1,500 accounted 26 percent, followed by 1,650 with 23 percent and 1,550 with 19 percent. The ranking of the stations changed from year to year as extractions underground changed course. In June 1874 ore was hoisted only from 1,300 and 1,400 in almost equal proportion, and a year later ore was lifted from 1,400, 1,500 and 1,550 with more than three-fifths from 1,500, one third from 1,400 and the remainder from 1,550. In 1876 while stations at 1,400 and 1,500 contributed 16 and 22 percent respectively, the action had clearly shifted to 1,550 with 62 percent of the total. The station at 1,650 came into its own in 1877 with two-thirds of the hoists, but 1,550 continued strong with the remaining one third. Before 1877 most of the ore above 1,550 was probably hoisted through the Virginia shaft because it was closer to the ore body. After 1877, however, as new drifts were opened between the ore bodies and the C&C, the new shaft was preferred. And, of course, in 1878 the main shaft was closed for most of the year so that C&C made almost all the hoists. Gould & Curry was marginal at best because it was a long trip of about 1,500 feet from the mine to the shaft. In 1878 ore was hoisted from four stations. Extractions resumed at 1,200 with 7 percent and had reached 1,850 with 8 percent. Two other deep stations – 1,650 and 1,750 – accounted for 58 percent and 35 percent respectively, although total hoists had fallen to 8,200. In the final June (1879) total hoists came in at the lowest figure (3,800) since 1874 with 98 percent from 1,500 and the remaining 2 percent at 1,950. No new ore bodies were found at 2,000 and below, and the existing ore body, as enormous as it was, had reached its edge.18

During the six Junes profiled above nearly 58,000 tons of ore were hoisted from all stations between 1,200 and 1,950 feet. By a simple calculation the average daily hoist amounted to 320 tons (58,000 tons/180 days). Some daily hoists in the most active June, 1875, came in between 700 and 800 tons. Hoist figures from Eliot Lord by way of the Territorial Enterprise covered three different dates: 461 tons on 19 March 1875 (which Lord called a “notable exhibit”), 908 tons on 16 March 1876 and (a whopping) 1,034 tons on 26 November 187719 Although the assignment of the specific shaft was vague, the first two figures appeared to be hoists through the main shaft of Consolidated Virginia. The

18 Ore Books, June, 1874-79, Consolidated Virginia Mining Company, NC99/1/3/3, After Bx 1, Special Collections, Library, University of Nevada at Reno.19 Ore Book, June, 1875, Consolidated Virginia Mining Company, NC99/1/3/3, After Bx 1, Special Collections, Library, University of Nevada at Reno; Lord, Comstock Mining and Miners, 312 with citations from Dan DeQuille, The Big Bonanza…, 324, and two issues of Territorial Enterprise, 16 March 1876 and 28 November 1877.

12

THE COMSTOCK [N]

final figure of 1,034 could not be related explicitly to any shaft. Of these three daily hoists the first figure, reported by DeQuille, was above the aforementioned daily average but hardly controversial. The second and third figures were more than double the first and greatly surpassed the average from the hoist records. From the June hoist records the year 1875 was the highest of the six Junes: on a daily basis (to compare with Eliot’s figures) the company hoisted between 600 and 700 tons during seven days, between 500 and 600 toms over 16 days and under 500 tons for seven days. (Note: the company hoisted every day of the month.) No other June in the profile matched this hoisting schedule. One should pause to consider what was involved here with ore being hoisted from several different levels and perhaps in several different shafts. The average for June, 1875, was 536 tons per day. How many trips would be required to lift that volume of ore over 24 hours? About 22 tons had to be lifted each hour an average distance of about 1,500 feet. Since, according to Consolidated Virginia’s own records, each car carried from 1,600 to 1,800 pounds, about 26 cars would have to be lifted every hour from the interior to the surface. If one car (actually 1.08 cars) were lifted in each hoist then 2.5 minutes would be allowed to place the car in the cage, hoist the cage to the surface, remove the car from the cage and drop the cage. That was hardly possible. The key was the number of cages, each with a single car, which could be lifted at once. A double or triple compartment shaft, each with its own cage or a deck of two or three cages in each compartment would multiply greatly the number of cars to load, lift and unload cars in one hour. (In the shafts with double- or triple-decker cages and more than one compartment, it was possible for one compartment to ascend while the other compartment was descending, and they could load and unload simultaneously.) In these multi-compartment shafts with multi-deck cages 700 to 800 cars and perhaps even 900 to 1,000 could be lifted in a day so long as equipment breakdowns and traffic snarls did not delay the operations. More than likely an average lift of 500 cars per day over an extended period would be considered highly efficient and successful, although both the anecdotal and archival record indicated that average-day number could be trumped.

There is no question that C&C Shaft was a large, powerful and efficient system that could have shattered previous hoist records. Lord, ever fascinated by the application of technology to mining, compiled C&C Shaft data, some of which may have been drawn from the 1880 Census. The main hoisting engine in the newly constructed C&C Shaft was described as a “double cylinder, horizontal, direct-acting, with brake fly-wheels” 2,000 horsepower engine. The 1880 Census described it as a “double cylinder, 26-inch diameter by 6-foot stroke, direct acting” of 2,200 horsepower.20 (In an 1881 report the C&C Shaft hoisting engine was said to have 2,680 horses while the Yellow Jacket engine was slightly larger at 2,941 horses.) It could whisk a three-decker, iron cage (4,000 pounds) with three cars (1,200 pounds each) loaded with 4,800 pounds (1,600 pounds each) of ore or waste for a total of 12,400 pounds with “perfect ease” while lowering a companion cage at the same time. (It also had a third compartment for auxiliary operations.) If raising and lowering triple-decker cages could be accomplished in 20 1880 Census On-Line at www.census.gov/prod/www/abs/decennial/1880.html, United States Census Bureau. Statistics and Technology of the Precious Metals, vol. 13, 130, Table 18. Both Lord and the 1880 Census specify triple-decker cage, although in an earlier description of the shaft operations Fair used the term double-decker cage. It is possible that a third deck was added or that somehow three cars could be loaded in an essentially double-decker cage.

13

THE COMSTOCK [N]

minutes, one could project, by re-doing the arithmetic a scenario like 6 hoists with 18 cars per hour and a 9 and 10 minutes turn-around. If the arithmetic reflected the actual circumstances, than lifting up to a thousand tons per day, as Lord averred (although I could not confirm with the successive June data), was feasible. One has to assume that not only did the machinery work efficiently and continuously under very tight scheduling, but (as Eliot himself suggested) the work force also performed with efficiency and diligence.21 The average daily tonnage of 320 hoisted during the six Junes from 1874 through 1879 works out to a more manageable number of four hoists per hour (in a triple-decker cage).

It is inconceivable that deep underground mining necessary to exploit the riches of the Comstock could ever have achieved even modest success without the new technologies in the form of bigger motors, stronger materials and better mechanics. Moving workers, supplies and ores a third of a mile in a matter of minutes could not have happened without the technological benefits that grew out of the so-called industrial revolution. Under such heavy and constant use, however, the components of the systems were subject to considerable “worn and tear.” At an operation as large as Consolidated Virginia hundreds of cars were needed to move ore (or waste) to the surface. Over the course of a year dozens if not scores of cars were damaged or destroyed. Cars were fabricated on site because the technology was fairly straightforward and simple. Consolidated Virginia bought wheels and axles of certain specifications from iron and steel fabricators. The carriages were made from timbers purchased locally, the same timbers used to frame the interior of the mine. Apparently management paid close attention to how well suppliers handled their orders. In one order for 12 sets of wheels and axles Fair reminded the supplier, Prescott Scott & Company: “Please have them made correctly this time!” as an earlier batch did not meet specifications.22 Perhaps more important to the hoisting operation was the cable that pulled the cage to the surface or dropped it to the interior. Not only did the cable have to be strong enough to handle five to six tons, but it also had to be laced properly to pass smoothly through the pulleys and coil onto or uncoil from the drums easily. Wire cables or “wire ropes”, as they were called, predominated in Nevada mining as well as in Story County mines. The flat variety was more common than the round or the combination of flat and round varieties. They came in various sizes and dimensions, all of which were duly recorded in the 1880 Census.23 Cables could be purchased from domestic and foreign suppliers. In one purchase from Hazard Manufacturing, San Francisco, Fair acknowledged the arrival of the wire rope in good time and good condition. He complained, however, that the cost at 29 cents a pound plus the freight made the purchase more expensive than he had anticipated. He urged Hazard to find a more economical way to deliver such a heavy item

21 Ore Book, June, 1875, Consolidated Virginia Mining Company, NC99/1/3/3, After Bx 1, Special Collections, Library, University of Nevada at Reno; Lord, Comstock Mining and Miners, 347-348 plus footnote 1, p. 347. 1880 Census On-Line at www.census.gov/prod/www/abs/decennial/1880.html, United States Census Bureau. Statistics and Technology of the Precious Metals, vol. 13, 136.22 Copy of Letter from James Fair to Prescott Scott & Co, 11/13/75, Letterpress Book, Consolidated Virginia Mining Company, 1 September 1875-27 January 1876, NC99/2/5, Bx 6, Special Collections, Library, University of Nevada at Reno. 23 1880 Census On-Line at www.census.gov/prod/www/abs/decennial/1880.html, United States Census Bureau. Statistics and Technology of the Precious Metals, vol. 13, 135-137, Table 22.

14

THE COMSTOCK [N]

in order to lower the total cost. Three months later Mackay complained in a letter to Hazard that the rope did not work properly because it was incorrectly laced. The wire, he wrote, was “much inferior to any I ever saw [with] cracks and breaks.” He declared their product unsatisfactory. By the end of 1876 Fair was negotiating with an English company, Henry W. Hammond, to supply wire rope. He specified that it was to be 5 inches by ½ and 2,200 feet long. He wrote that “The quality and manufacture is [sic] the most important item”, and then he added that the company must find an economical way to ship the product from England to the western United States.24 Fair did not disclose the price under consideration, and whether the purchase was ever consummated Surely the freight alone would have made the cable per pound more costly than a domestic brand, although the higher cost might well have been offset by better performance and longer life. Despite frequent complaints about suppliers’ high prices Mackay and Fair were known to be willing to sacrifice price for quality. In the case of wire rope a defective product imperiled the lives of the workers who rode the cages daily and jeopardized the efficiency of the operation.

While the above referred to cable 5 inches by ½, a common size for Comstock shafts, the cable in the dual-compartment, triple-decker-cage C&C Shaft used a heavier flat steel cable – 7 inches by 5/8th although the third or pump compartment had a standard 5 inches by ½ cable. Another Mackay and Fair property, Union Shaft, also used the 7 inch cable for its three-decker cage. The largest cable belonged to the “new” Yellow Jacket Shaft. It was 8 by 5/8th and lifted a double-decker cage, each of which carried two cars side by side for a total of about 16,000 pounds. While the hoisting system required an expensive plant, in particular a reinforced foundation to hold the engine, pulleys, gears and the hoisting frame, the size and the strength of the cable became a metaphor for applications that could speed up the operations. In the case of the Comstock steel cables had replace hemp ropes found in the earliest shafts, and the size of the cable quadrupled in a decade. Hoisting hundreds of tons of ore or rock as well as hundreds of workers could not have taken place without stronger cages, bigger engines and of course larger cables. The average life of a standard cable was said to be about two years. In the C&C Shaft, according to the census agents, it had a lifetime of 18 months. Was the shorter lifetime of the hoisting cable at C&C a direct result of the heavy daily hoisting schedule discussed above? The tears and splits in the cable wire often occurred in the “sheaves” or pulleys built at each station so the cage could be securely latched for loading and unloading. In C&C the sheaves were reported to be 45 feet high and 11 feet in diameter. Cables could be mended, but the task required the replacing of large sections – 75 to 100 feet – of the cable. If Mackay and Fair were paying about 30 cent per foot for the five-inch cable, and, say, twice that for a seven inch cable then replacement could run between $50,000 and $100,000 for cable from 2,000 to 3,000 feet in length. Given the output of their mines the outlay for new cable was probably not viewed as a major expense. It may

24 Copy of Letter from James Fair to Hazard Manufacturing Co., 12/03/75 and from John Mackay to Hazard Manufacturing Company, 03/26/76, Letterpress Book, Consolidated Virginia Mining Company, 1 September 1875-27 January 1876, NC99/2/5, Bx 6, Special Collections, Library, University of Nevada at Reno; Copy of Letter from James Fair to Henry W. Hammond, 12/23/76, Letterpress Book, Consolidated Virginia Mining Company, 1 November1876-31 August 1878, NC99/2/8, Bx 6, Special Collections, Library, University of Nevada at Reno.

15

THE COMSTOCK [N]

have been a different story at Yellow Jacket’s new shaft because the attempt to recover that mine never achieved profitability.25

25 The 1880 Census contained information on hoisting cables for all the major mines and shafts on the Comstock. 1880 Census On-Line at www.census.gov/prod/www/abs/decennial/1880.html, United States Census Bureau. Statistics and Technology of the Precious Metals, vol. 13, 136-138.

16

THE COMSTOCK [0]

Chapter 15The Biggest Bonanza:

Labor Component, C&C Joint Shaft, Squire Dewey & Financial Chicanery

As noted earlier, Eliot Lord, a staunch laissez-faire advocate who disliked iron-clad agreements governing wages and hours and opposed unionization, held the Comstock laborer in high esteem. The reason was that he like so many others had to acknowledge that Comstock workers as a group surpassed all expectations. In short, they were generally productive under the most trying conditions. Machines hoisted the ores, but workers performed the task that made the hoists possible. In an earlier chapter I discussed wages, hours and working conditions in general terms, but in this chapter I want to expand on the role of the worker by examining worker-related documentation from the archives of Consolidated Virginia, California and ancillary companies. In addition to detailed statistics on daily, monthly and quarterly payrolls over several years I can also draw from the records a portrait of how the regimen of work was organized and managed within the mines and mills. Even though The Firm invested heavily in technology, its operations could not function without hundreds and at times thousands of laborers above and below ground. To study the details of work patterns and employment practices over several years even at the largest and richest of the mining companies will help to clarify how the Comstock achieved the performance that it did.

Because The Firm had created its mining and milling behemoth through a series independent corporations wage and salary data must be assembled from several different sets of payrolls and ledgers. And, as is often the case with an array of historical numeric datasets for a given inquiry, finding patterns in numeric data from different sources can be challenging. Despite these challenges very solid information on wages and salaries paid to various occupational categories can be assembled and analyzed. Wage and salary data were not kept from public view. Public documents such as the State Mineralogist’s reports and the 1880 Census compiled information on wages and salaries as well as working conditions. Wage and salary data were summarized in the companies’ Annual Reports. Since many daily wages were set during contract negotiations with various unions, they became a part of the public record mainly through local newspapers. Company records add more details about compensation profiles and work regimens than was available through published accounts.

Since The Firm controlled the largest combine of businesses ever assembled on the Comstock and had a reputation for efficiency, its labor component is a matter of interest. In 1875, when Consolidated Virginia had its most productive year (in spite of the October fire), the value of its bullion was about $17 million. The company spent about $3 million dollars to operate the mine and extract the ore. Of that total $800,000 or 27 percent was paid out in wages and salaries. (Compare to $14 million paid out for reduction and dividends.) Three years later in 1878 when bullion yields had fallen in half to $8 million, mining costs (excluding reduction and dividend expenses) came in at about $2.5 million with wages and salaries at about $650,00 or 26 percent. And a year after that, as bullion yields continued to fall to $2.5 million, operational expenditures (minus dividend and reduction expenses) also fell to $1.1 million with wages and salaries just

1

THE COMSTOCK [0]

under $300,000 or 27 percent. The profile at California was only slightly different from Consolidated Virginia. Data from four of five years between 1876 and 1880 (1879 is missing) indicate that wages and salaries comprised from 23 to 31 percent of the mine’s operating costs. In short, employee compensation in these mines whether production was rising or falling fell in a range between 25 and 30 percent of total operating costs. Another angle for analyzing compensation is to compute the percentage in wages and salaries not of total operating costs but of total bullion yields. When yields were in the vicinity of $100 per ton the wage-and-salary bill absorbed 3 to 4 percent of the total value, and when yields began to drop below $50 per ton and then $40 per ton that bill absorbed 10 to 20 percent of the total value. While compensation as a percentage of total operating expenses was more or less range-bound, compensation as a percentage of total bullion value rose as yields fell. Even though many more hundreds of workers were needed during the boom years than during the lean years, the total compensation outlay in percentage terms was modest. As the work force dwindled in size, however, employment compensation took on much greater significance.1

Despite the usefulness of these public disclosures on wages and salaries the payroll ledgers kept by the individual mining companies add many more details to compensation profiles. Although these archives are extensive, they contain far less data prior to 1876 than after. That affects the analysis of Consolidated Virginia more than California because the latter did not officially begin producing ore until 1876. Because of the size of the post-1876 payroll archives I have selected samples rather than trying to incorporate and analyze all of the archival material.2 I will begin with a profile of the labor force at Consolidated Virginia based on payroll data from January, 1876. Two factors should be kept in mind with respect to the January data. Rehabilitation of the mine after the fire of the previous October was still underway, and yet the delivery of nearly 20,000 tons of ore to the mills was among the highest of any month in the history of the mine. Based upon the number of vouchers issued to workers, the company had a mine payroll (not including mills or ancillary operations) of 547 employees. On the first day of the month (New Year’s Day) 437 workers were on the job aboveground and below. During the month 100 more workers had been added to the payroll. The figure of 547 represented the number employed for one or more days. Some employees were paid off after only a few days, but the majority logged at least 28 days of work. Such counts can be made from the payrolls by day or month over a five-year period.3

The size of Consolidated Virginia’s work force in January (and in the two subsequent months) was larger than normal because of the reconstruction on the surface and in the shaft. Reconstruction absorbed about a fifth of the work force. There were, for example, 19 bricklayers and 96 carpenters (including assistants) on the payroll, far more than would ever be needed for strictly underground work. The full list of occupations

1 Annual Reports for Consolidated Virginia and California Mining Companies are located in NC99/1/5/1 and NC99/1/5/6-7, Bx 2, Special Collections, Library, University of Nevada at Reno.2 The data are so voluminous that one could follow the work regimen on a daily basis over several years. Such an approach would be appropriate for a detailed labor history.3 Time Book (Duplicate), January-February, 1876, Consolidated Virginia Mining Company, NC99/3/4, Bx 9, Special Collections, Library, University of Nevada at Reno. Original accounts covered one month, and duplicates two months. They contained the same data. I have used the duplicate as a matter of convenience.

2

THE COMSTOCK [0]

along with wages and salaries numbered more than 50. The largest category remained miners (the infamous $4-day workers) with 45 percent. Next came the carpenters with 18 percent and then laborers with 10 percent. Nine of the occupations paid salaries instead of wages. The highest paid employee was the assayer whose salary was set at $500 per month or nearly $17 per day. Few jobs were as important as the assayer’s, for it required a mastery of basic chemistry and testing techniques. No job paid less than $3.50 per day, nearly a fifth of the jobs falling in that category. Some jobs compensated workers at different scales. For example, 16 timbermen had been hired with three receiving $4.50 per day and the remaining 13 received $4.00 per day. It could not be determined if skill accounted for the difference. A single diamond driller on the company’s payroll earned $7.00 per day for 13 days and $5.00 per day for 16 days. Of the four brakemen one was paid $4.50 per day, one $4.00 per day and the remaining two $3.50 per day. In some instances, where varying scales existed, the highest wage was reserved for “bosses” such as the head carpenter and lower wages were paid to his underlings. Those who received salaries instead of wages, besides the assayer, were: assistant assayer ($250) head carpenter ($200) cupeller ($175), foremen ($200), melters ($175), melter’s assistants ($150) and mine engineer ($200). It is worth noting that $150 per month (for melter’s assistant) was only $5 per day, the equivalent of a machinist, timekeeper or for that matter the clerk to the melter. Perhaps those who were paid monthly salaries had greater flexibility in choosing their hours, but, if so, it could not be discerned from the accounts themselves. Among the wage earners the highest paid at $7 per day were the head bricklayer, the carter (who apparently provided his own horse) and the diamond driller for at least some days. The vast majority of the workers on this list earned about $4 per day. Many of the other underground workers such as car-men, bulk-headers, riggers, pick-boys and station-tenders were paid the same wage ($4.00 per day) as miners because they had essentially underground jobs. On the other hand, at the lowest daily wage ($3.50) were clerks, woodmen, oilers, lamp-boys and cleaners, whose work were not as skilled and could be above and below ground. If one were to divide January’s total payroll by the number of employees and then by a 30-day month, the average remuneration per day would be slightly above $3 00, a figure that was lower than any of the actual wages or salaries. The reason for this stemmed from the notation above - not all of the 547 employees worked a full month.4

Employment levels changed from month to month. Figure 2 was drawn up from both payroll and mill data for January, 1876, through June, 1878. The company’s payroll data included the total number of vouchers issued to the work force each month and the total outlay to cover those vouchers; mill data, as a proxy for extracted and hoisted ore, showed how much ore before crushing was delivered to the mills. In the 30 months for which we have figures 10,134 vouchers were issued with a total outlay of $1,059,368. In the same period 422,147 tons of ore were delivered to the mills. The labor cost to extract that volume of ore was $2.51 per ton. Each worker (not just miners) roughly produced 42 tons each month or 1.39 tons per day in a 30-day month. It must be stressed that these

4 Time Book (Duplicate), January-February, 1876, Consolidated Virginia Mining Company, NC99/3/4, Bx 9, Special Collections, Library, University of Nevada at Reno.

3

THE COMSTOCK [0]

figures are not derived from the dollar value of the bullion but from the volume of extracted ore.5

FIGURE 1LABOR COSTS, CONSOLIDATED VIRGINIA MINING COMPANY,

JANUARY 1876-JUNE 1878[1] [2] [3] [4] [5] [6] [7] [8] [9]

Jan 1876 547 $50,026 19,891 $2.52 1.21Feb 546 $58,999 26,061 -0.18% 17.94% 31.02% $2.26 1.59Mar 556 $60,848 26,984 1.83% 3.13% 3.54% $2.25 1.62Apr 455 $48,702 17,354 -18.17% -19.96% -35.69% $2.81 1.27May 402 $43,416 12,230 -11.65% -10.85% -29.53% $3.55 1.01Jun 359 $33,422 7,539 -10.70% -23.02% -38.36% $4.43 0.70Jul 365 $36,281 4,597 1.67% 8.55% -39.02% $7.89 0.42

Aug 250 $25,157 3,545 -31.51% -30.66% -22.88% $7.10 0.47Sep 299 $32,333 6,976 19.60% 28.52% 96.78% $4.63 0.78Oct 394 $42,921 12,608 31.77% 32.75% 80.73% $3.40 1.07Nov 467 $21,312 13,505 18.53% ** 7.11% ** 0.96Dec 367 $41,436 4,765 -21.41% ** -64.72% $8.70 0.43

Jan 1877 244 $26,739 6,348 -33.51% -35.47% 33.22% $4.21 0.87Feb 244 $25,406 5,908 0.00% -4.99% -6.93% $4.30 0.81Mar 243 $27,808 7,051 -0.41% 9.45% 19.35% $3.94 0.97Apr 217 $24,703 12,945 -10.70% -11.17% 83.59% $1.91 1.99May 249 $28,003 13,979 14.75% 13.36% 7.99% $2.00 1.87Jun 257 $27,570 14,744 3.21% -1.55% 5.47% $1.87 1.91Jul 255 $27,550 13,698 -0.78% -0.07% -7.09% $2.01 1.79

Aug 283 $30,830 14,358 10.98% 11.91% 4.82% $2.15 1.69Sep 315 $34,916 15,032 11.31% 13.25% 4.69% $2.32 1.59Oct 275 $31,380 18,487 -12.70% -10.13% 22.98% $1.70 2.24Nov 275 $31,144 21,248 0.00% -0.75% 14.93% $1.47 2.58Dec 302 $34,389 19,467 9.82% 10.42% -8.38% $1.77 2.15

Jan 1878 287 $33,536 22,066 -4.97% -2.48% 13.35% $1.52 2.56Feb 281 $30,758 22,421 -2.09% -8.28% 1.61% $1.37 2.66Mar 287 $29,331 19,502 2.14% -4.64% -13.02% $1.50 2.27Apr 274 $31,161 20,245 -4.53% 6.24% 3.81% $1.54 2.46May 448 $46,295 11,799 63.50% 48.57% -41.72% $3.92 0.88Jun 391 $42,996 6,794 -12.72% -7.13% -42.42% $6.33 0.58

Total 10134 $1,059,368 422,147 $2.51 1.39Legend: [1] Month; [2] # of Vouchers; [3] Total Labor Costs; [4] Total Tons; [5] % Change Voucher; [6] % Change Costs; [7] % Change Tons; [8] Cost Per Ton; [9] Worker Output Tons Per Day.Notes: Data for total compensation in November 1876 are incomplete. Percentages changes for November and December 1876 not calculated. Also cost per ton in November 1876 not calculated. Worker output per day based on assumption that each worked 30 days per month. Output figures would be somewhat higher if based on actual days worked. It is assumed that the number of vouchers issued was generally equal to actual number working.Sources: See footnote 5.

5 Payroll data in Figure 1 and discussed in text assembled from the Time Books (Duplicates), January 1876-June 1878, Consolidated Virginia Mining Company, NC99/3/1-70, Bxs 9, 10 & 11, and ore data from Bullion Records, 1876-1878, Consolidated Virginia Mining Company, MC99/1/3/5, After Bx 1, Special Collections, Library, University of Nevada at Reno.

4

THE COMSTOCK [0]

FIGURE 2COMPARISON OF PAY VOUCHERS AND ORE TONS, MONTHLY,

CONSOLIDATED VIRGINIA MINING COMPANY

0

5,000

10,000

15,000

20,000

25,000

30,000

0

100

200

300

400

500

600

Vouchers

Tons

Sources: See footnote 5.

The size of the work force, one would assume, was directly linked to the output of the mine. As underground activity increased, more workers were added to the payroll, and conversely as it contracted, workers were trimmed from the payroll. But the correlation between numbers of employees and tonnage for the 30 months is relatively weak at 33 percent. In Figure 2 graph shows that employment and production generally moved in the same direction, but the association began to fall apart in the spring of 1877. In fact between January 1876 and March 1877 the relationship was nearly perfect at 90 percent. In the final 15 months, however, it came in at a negative reading of –17 percent. By April 1876 the upswing in production and employment had peaked, and for the next five months both indicators dropped sharply. In August production fell below 5,000 tons, the lowest since February 1874, and employment fell to 250. This was followed by an upturn in both production and employment through November, as production tripled and employment doubled. Both fell in December (production once again dropping below 5,000 tons). The shrinkage in employment opportunities at Consolidated Virginia that began during the second quarter provoked James Fair to advise those who wrote the company about employment to avoid the Comstock, for it was “overcrowded with young men out of employment.”6 The employment of so many construction workers in the first quarter did not appear to distort the correlation because underground and surface workers were also needed to move out the ore that had piled up during the quarter after the fire. About the same time that the reconstruction was finished and those workers were released, the ore in storage as well as the extractable ore in the galleries themselves was waning with an attendant reduction in the labor force. The association between production and employment levels fit the expected pattern for two years.

6 Copy of Letter from James Fair to Arthur W. Scott, 12 July 1876, Letterpress Book, 24 May-17 August 1876, Consolidated Virginia Mining Company, NC99/2/6, Bx 6, Special Collections, Library, University of Nevada at Reno.

5

THE COMSTOCK [0]

In early 1877 the two variables began a divergence that continued through the first half of 1878. Production will climb gradually until it exceeded 20,000 tons in the spring of 1878, while employment will remain static at between 200 and 300 workers. In the last two months, May and June 1878, before the employment series came to an end, the lack of convergence between the two indicators was at its sharpest point. Employment jumped to between 400 and 500, but production plummeted to just above 5,000 tons. In the absence of any company explanation for the divergence, the most likely reason for maintaining such a large work force inside a mine whose ore reserves were diminishing was repair and exploration, both of which were necessary, even though costly, in times of falling output so long as management did not believe that the bonanza had ended (and that was certainly the case in 1877 and 1878). Despite less than positive indicators explorations below 1,700 feet intensified with the hope of relocating the quartz fissure that held the riches between 1,200 and 1,700 feet. The explorations proved to be fruitless, and eventually the level of employment had to reflect this condition. While payroll records for the second half of 1878 were not found, monthly figures on tons of ore delivered to the mills bounced around between 5,000 and 8,000 before skidding to about 2,000 in December 1878. It would be reasonable to assume a reduction in payrolls, but given the rise in employment the previous months it remains an assumption. Over the next two years, however, payrolls clearly shrunk. In the last 12 months before April 1881, when a fire closed the mine, the average monthly employment was fewer than 150 workers. Miners came to constitute 85 to 90 percent of all the personnel. In addition to miners the payroll included foremen, shifts bosses, assayers and their assistants, a reduction not only in numbers but skills. Miners’ daily wages remained at $4 per day but nearly all the other wages and salaries had been reduced. The assayer formerly paid $500 per month was now paid $300, and the foremen who previously earned $200 per month now received $125 (just slightly above the miner’s per diem wage). The payroll now included other company employees such as accountant at $250 per month. By this time, the remaining principals (Fair had departed and O’Brien had died) and stockholders must have known that Consolidated Virginia’s had reached the end of its long run, although explorations through the C&C Shaft at 3,000 feet and below continued.7

Comstock workers, especially those underground, had gained a reputation locally as extraordinarily productive under trying conditions. With data from Consolidated Virginia (and California) it is possible to make some tentative estimates about worker productivity. It cannot be assumed that the findings for The Firm’s mines apply across the Comstock. Much depended, of course, on the ore bodies and how the mining companies managed them. By the same token The Firm’s mines were among the premier operations, and if productivity could be advanced significantly, these operations should be leading the way. The period under consideration included the 30 months between January 1876 and June 1878. In the period Consolidated Virginia issued 10,134 monthly vouchers for a monthly median of 293. Total monthly tonnage was 422,147 with a median of 13,839. That reduces to 47 tons per voucher holder, although, to repeat an earlier point, some voucher holders did not work a full month. On a daily basis (without taking into account days worked) each voucher holder accounted for approximately a ton

7 Weekly Reports, Report of Operations, 14 May 1880-1 April 1882, Consolidated Virginia Mining Company, NC99/1/1/4, Bx 3, Special Collections, Library, University of Nevada at Reno.

6

THE COMSTOCK [0]

and a half of ore. Daily productivity was volatile.8 In fact there was a wide range from less than half a ton (for example, July-August 1876) to more than two and a half tons (late 1877, early 1878). Not surprisingly when the output per day per worker fell the cost of labor per ton rose, and conversely when it rose the cost fell. In purely human terms, however, handling from two to three tons of ore per day required an effort that few of us could aspire to, especially when mechanization will still in its infancy. As large as Consolidated Virginia’s payroll was relative to other companies, one may reasonably ask, why was it not bigger? Between October 1877 and April 1878 output per day per worker ranged from a low of 2.15 tons to a high of 2.66 with a median of 2.46 tons per day per worker. During the seven months approximately 280 workers handled 20,000 tons month after month. From a statistical standpoint workers were extracting, loading and hoisting more ore during the decline in production than during the expansion.9

FIGURE 3COMPARISON OF LABOR COSTS PER TON EXTRACTED ORE AND

OUTPUT PER WORKER, JANUARY, 1876-JUNE, 1878

0.00

0.50

1.00

1.50

2.00

2.50

3.00

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00 Cost per Ton

Output per Worker

Sources: See footnote 5.

For the remainder of 1876 as output moved back and forth in a range between 3,500 and 17,000 tons both cost and output per worker suffered materially. Labor costs per ton reached as high as $8.70 in December, and output fell below one ton per worker. (November’s per-ton costs, as shown, are inaccurate because total labor costs were inaccurately reported.) This occurred even as the size of the labor force was shrinking. Starting in January 1877 improvements in both cost per ton and output per worker became readily apparent. And they continued into 1878. But unlike the first quarter, when

8 The calculation is not perfect: monthly tonnage divided by monthly voucher holders divided by 30 (assumed days worked each month).9 The average and median figures are very close.

7

THE COMSTOCK [0]

ore production and mine employment were on the rise, the post-January trends embraced rising extractions with stable payrolls. The result of these diverging trends was that the outlay for labor per ton fell as low as $1.37 and output per worker rose as high as 2.66 tons in February 1879. Most notably, when production was hovering around 20,000 to 22,000 tons from December 1877 through February 1878, volume comparable to the first quarter of 1876, there were a third fewer workers on the payroll than during the first quarter (even if the surface workers are not counted).

Is it possible to check these figures from other sources? Yes, it is possible. Part of the daily operational record kept by Consolidated Virginia was a tally of workers at each location or station (by shift) along with carloads of ore or waste.10 Again, because these documents were so voluminous, I chose to analyze a few samples: the first day of the month in each new quarter. On the first day (New Year’s Day) of January 1876 over all three shifts about 460 workers had reported to work.11 The recorded tonnage was 365 tons. For that day tons per workers came in at .79, not a particularly robust figure. But half of the workers were identified as located on the surface or at 500 feet where a new assay office was being built. Some surface employees were always necessary to operate the cages, unload the cars, etc., but normally the number was more like 20 to 30 rather than in excess of 100. The assay-office project was a special item. To arrive at a productivity figure for those more directly involved in the handling of the ore only employees below 500 feet were counted. That number was about 225 for an output per ton per worker of 1.60 tons. That falls more closely in line with some figures cited above. On the first day of the next quarter (April 1876) the number of construction workers had diminished sharply, and most of the employees were engaged in extracting and moving ore. There were 437 employees with 335 of them working below 500 feet. They handled 749 tons of ore or 1.71 tons per person (all workers) and 2.24 tons per person (underground workers). Of the six first-of-the-month days for all the quarters 1 April 1876 posted the highest output per worker (surface and underground or solely underground). The range over the six data points was from .71 for the total payroll and .93 for the underground payroll to 1.71 for total and 2.24 for underground. The mean and median calculations over these six data points were similar to the mean and median calculation over the 30-month payroll-tonnage productivity data cited above.

The capacity for work was greater than these daily averages for the entire mine indicate. The Daily Reports included the number of workmen assigned at each level during each shift, and from these entries it is possible to examine more discretely worker output. On 1 January 1876 (cited above) over 24 hours 225 workers were assigned, as follows, between 1,000 and 1,550: at 1,000 feet, 3 workers; at 1,200 feet, 2; at 1,300 feet, 4; at 1,400, 3; at 1,500 feet, 144; and at 1,550 feet, 69. Ore extractions were confined to 1,500 feet (252 tons) and 1,550 feet (113 tons) for a total of 365 tons. The extractions per shift were noted for 1,500 feet but not for 1,550 feet. At 1,500 feet 72 workers were assigned to the first shift, but no cars were loaded and no ore was shipped. During the second shift, however, with 44 men on duty 210 cars were loaded with 189 tons of ore.

10 Daily Reports, 1 January 1876-13 May 1877, Consolidated Virginia Mining Company, NC99/1/1/2, Bx 3, Special Collections, Library, University of Nevada at Reno.11 The total in the Daily Report was 454, but because of an arithmetic error the total should be 461.

8

THE COMSTOCK [0]

Each worker on average loaded more than 4 tons and 4 cars over eight-hour periods. The third shift at 1,500 feet had lower but nonetheless impressive numbers: 28 workers loaded 70 cars or 2.5 cars and 2.25 tons per worker. Was it possible for a worker to move as much as 18 pounds of ore each minute of the shift? Without mechanical loading equipment it seems unlikely. Indeed the performance of the workers at 1,500 on 1 January 1876 based on what was recorded in the Daily Report should be viewed with skepticism. If the calculations are accurate, then the performance was surely an aberration; if the calculations are in error, then the results can be disregarded (always a risk in analysis of historical data). The output per worker on other levels and on other days was never as high as these figures. For example on 1 January 1877 at 1,550 223 workers were assigned to three shifts, and they loaded 230 cars or slightly more than one car per worker and 207 tons or slightly under one ton per worker. Worker productivity on those levels where ore was being extracted had a wide range for the six data points. At 1,400 feet data on workers (by shift), tonnage and carloads survived for the first day of the third and fourth quarters, 1876, and for the first day of the second quarter, 1877. Each worker on average loaded .78 carloads and .71 tons per day. At 1,500 feet for the first day of the first, second and third quarters, 1876, 416 employees loaded 980 cars or 2.36 cars per worker and 882 tons or 2.12 tons per worker. Obviously the figures at 1,500 were notably higher, and reasons why can only be guessed at. Perhaps less time was spent working the face of the ore walls because previous shifts had accumulated ore that had to be hoisted. And the extractions on 1,400 could have been more difficult and the accumulated ore smaller. From the daily or weekly reports by the superintendents working conditions could vary on a single floor and among several floors. At 1,550 feet with data from these first days of the month in all six quarters 791 workers produced 1,016 tons or 1.28 tons per worker, which might be regarded as a normal day’s work. (Carload data were incomplete.)12 The range in worker productivity level by level and day by bay should not be surprising in light of all the variables from human to managerial that came into play in these underground operations but an explanation remains difficult to pinpoint. The human variable – the sheer ability of a worker to perform at levels suggested by productivity calculations remains the most elusive. But also the state of the interior of the mine and the way in which management organized the workday or the degree to which it supplied the worker with the modern tools would affect productivity levels. Of all the Comstock operations Consolidated Virginia (as well as California) was probably the leader in technological and mechanical applications. A more systematic analysis of the Daily Reports would certainly refine the productivity figures and possibly reveal somewhat different patterns from those in my small sample. The extraordinarily high productivity levels on certain days should not distract attention from the pattern that the various employment records reveal: namely given the recorded levels of employment and output at Consolidated Virginia worker productivity on average (one to two tons) was a noteworthy and remarkable feat.

California’s payroll and productivity data conformed to and differed from the findings for Consolidated Virginia. In the fiscal year 1877 California’s most productive

12 Daily Reports, 1 January, 1 April, 1 July, 1 October 1876 and 1 January and 1 March 1877 (substituted for April 1877, which could not be found), Consolidated Virginia Mining Company, NC99/1/1/2, Bx 3, Special Collections, Library, University of Nevada at Reno.

9

THE COMSTOCK [0]

year with nearly $19 million in bullion, the Annual Report to the company stockholders stated that more than $788,000 was paid in wages and salaries to operate the mine (mill labor was a separate item). Total mining costs were set at $4.3 million or 23 percent of the bullion value. The wage and salary bill amounted to 18 percent of the total mining costs and to 4 percent of the total bullion value. In that same Annual Report the company published more details about worker remuneration. A chart showed the hours worked and the wages paid in ten classifications. Daily wage rates for eight classifications ranged from $3 to $7. The remaining two classifications were specified as monthly rates at $250 and $200. Based on a 30-day month the daily rates of these two classifications would be $8.33 and $6.67 respectively for such occupations as foremen, assayers, and other administrative or managerial tasks. The labor force put in a total of 191,554 workdays that resulted in an average daily wages (total wages divided by total days) of $4.055. Among those paid a daily rate 92 percent earned $4 per day, the union-mandated compensation for the underground mine workers. The next largest daily remuneration at 5 percent was $5 per day. Most of the work force - approximately 500 – received daily wages between $3.50 and $5.00.13 If a worker stayed the full year (365 days) and was paid the average daily wage, as shown in the chart, his annual remuneration would be nearly $1,500. (Medical benefits, etc., as discussed earlier, wee determined on a case-by-case formula with the unions and local charities picking up the bulk of the tab.) Since about 219,000 tons were extracted in 1877 and 192,000 days were worked, the output per worker per day roughly was about 0.9 tons. For those who actually extracted the ores from the stopes the output per worker per day was more like 1.25 tons. The productivity calculations shown on Figure 4 below are not significantly different from those for Consolidated Virginia. The range was from .56 tons per worker to 2.77 tons per worker, but most of the calculations hovered around 1 to 1.5 tons per worker.

California was not a carbon copy of Consolidated Virginia. While California and Consolidated Virginia shared an ore body, the configuration and location of the facing walls required different strategies, and that affected employment assignments and productivity levels. It must be emphasized again that the time-lines are different: in 1876 when California began production Consolidated Virginia had already been operating for three years and was at the peak of its production. Not surprisingly, therefore, as Consolidated Virginia’s payroll shrunk in 1876, California’s grew. In fact, as noted in a previous section on labor tenure, many Consolidated Virginia workers transferred to California in 1876. During its 29 months (one month less than Consolidated Virginia) from February 1876 through June 1878 California spent $1.2 million in wages and salaries and delivered 432,185 tons. The monthly mean and (median) for payroll vouchers issued was 373 (384); for compensation $40,000 ($42,000) and for tonnage 16,000. Labor costs were $2.67 ($2.68) per ton per month, and worker output per day was 1.33 (1.37) tons. In April the labor force grew by more than three fold in April 1876 from 35 in February and 33 in March to 142. In August 535 laborers would be on board at California. Total monthly labor costs had risen from several thousand dollars to tens of thousands of dollars. For the next dozen months the work force averaged about 380 workers, and in the final quarter of 1877 (October–December) the monthly payroll

13 Annual Report, 1877, California Mining Company, NC99/1/5/6, Bx 2, Special Collections, Library, University of Nevada at Reno, 32-33.

10

THE COMSTOCK [0]

climbed to 532, 548 and finally 563, the highest for the entire period, before turning down in January, 1878. For the remaining months (until June 1878) the work force stayed below 500 except for the month of May when the payroll had 507 workers. The California data unlike the Consolidated Virginia data concern the rise of the mine to its zenith rather than the decline of the mine from its peak. The correlation between monthly vouchers and monthly tons at 65 percent proved to be strongly positive, an indication that as output rose so too did employment and conversely when output fell employment fell. Any comparison with Consolidated Virginia for analytical purposes would be misleading because each occupied a different point in the production cycle. The proper comparative framework would include Consolidated Virginia data from 1874-1875, but the needed payroll data are still missing.

California’s production cycle was somewhat cleaner than Consolidated Virginia’s for analytical purposes. The correlation between production and employment is much stronger at California than at Consolidated Virginia. California’s employment database covered the full production cycle, and calculations reflect the beginning, the middle and the end whereas Consolidated Virginia’s dataset covers the middle and the end. In addition, the fire had no impact on production and employment at California; moreover, large-scale repairs that could swell the labor-force at Consolidated Virginia and distort the calculations were generally avoided at California, certainly during its bonanza period. How Consolidated Virginia’s figures would have looked if payroll data existed for the entire production cycle is unknown. Nevertheless output per work at the two mines was similar, but based on calculating from the datasets and nothing more California workers fell slightly behind Consolidated Virginia workers, 1.31 tons versus 1.39. Finding a perfect number is neither the aim nor a possibility. It may be best to think of an average between 1.25 tons per worker and 1.40 tons. At California daily output per worker reached 2.77 tons in December 1976 when the payroll was at one of its lowest levels and total output was just slightly above 15,000 tons. It fell to 0.56 tons per worker in the final month, June, 1878, when the work force was nearly a third above its average but tonnage had dropped to half its average. In the daily records that I consulted the output per worker in some shifts output reached or exceeded 3 tons per workers; but it never matched the highest at Consolidated Virginia.14

FIGURE 4LABOR COSTS, CALIFORNIA MINING COMPANY,

FEBRUARY 1876-JUNE 1878[1] [2] [3] [4] [5] [6] [7] [8] [9]Feb 1876 35 $3,748Mar 33 $3,496 -5.71% -6.72%Apr 142 $15,391 7,594 330.30% 340.24% $2.03 1.78May 148 $12,426 9,986 4.23% -19.26% 31.50% $1.24 2.25

14 Payroll data were assembled from the Time Books (Duplicates), January 1876-June 1878, Consolidated Virginia Mining Company, NC99/3/1-70, Bxs 9, 10 & 11, and ore data were assembled from Bullion Records, 1876-1878, Consolidated Virginia Mining Company, MC99/1/3/5, After Bx 1, Special Collections, Library, University of Nevada at Reno. For output per ton per worker per day see Daily Report, 19 June 1877, California Mining Company, 19 March 1876-July 22 1877, NC99/1/1/1, Bx 3., Special Collections, Library, University of Nevada at Reno.

11

THE COMSTOCK [0]

Jun 142 $15,391 11,541 -4.05% 23.86% 15.57% $1.33 2.71Jul 463 $49,128 18,723 226.06% 219.20% 62.24% $2.62 1.35

Aug 535 $61,180 19,190 15.55% 24.53% 2.49% $3.19 1.20Sep 474 $50,109 15,753 -11.40% -18.10% -17.91% $3.18 1.11Oct 434 $50,031 14,028 -8.44% -0.16% -10.95% $3.57 1.08Nov 305 $34,454 15,527 -29.72% -31.13% 10.68% $2.22 1.70Dec 183 $21,154 15,200 -40.00% -38.60% -2.11% $1.39 2.77

Jan 1877 360 $41,478 15,375 96.72% 96.08% 1.15% $2.70 1.42Feb 361 $38,897 14,576 0.28% -6.22% -5.20% $2.67 1.35Mar 372 $42,320 15,257 3.05% 8.80% 4.67% $2.77 1.37Apr 384 $41,563 14,449 3.23% -1.79% -5.30% $2.88 1.25May 336 $26,413 16,568 -12.50% -36.45% 14.66% $1.59 1.64Jun 384 $41,619 18,950 14.29% 57.57% 14.38% $2.20 1.64Jul 458 $49,535 19,456 19.27% 19.02% 2.67% $2.55 1.42

Aug 478 $54,743 18,679 4.37% 10.51% -3.99% $2.93 1.30Sep 466 $50,117 20,081 -2.51% -8.45% 7.51% $2.50 1.44Oct 532 $58,961 21,421 14.16% 17.65% 6.67% $2.75 1.34Nov 548 $57,546 19,807 3.01% -2.40% -7.54% $2.91 1.20Dec 563 $52,671 19,097 2.74% -8.47% -3.58% $2.76 1.13

Jan 1878 541 $63,661 19,547 -3.91% 20.86% 2.36% $3.26 1.20Feb 401 $42,277 17,687 -25.88% -33.59% -9.52% $2.39 1.47Mar 379 $42,718 16,096 -5.49% 1.04% -8.99% $2.65 1.42Apr 355 $39,862 16,217 -6.33% -6.69% 0.75% $2.46 1.52May 507 $52,080 13,200 42.82% 30.65% -18.61% $3.95 0.87Jun 483 $46,211 8,181 -4.73% -11.27% -38.02% $5.65 0.56

Total 10,802 $1,159,176 432,185 $2.68Mean 373 $39,972 16,007 1.33

Legend: [1] Month; [2] # of Vouchers; [3] Total Labor Costs; [4] Total Tons; [5] % Change Voucher; [6] % Change Costs; [7] % Change Tons; [8] Cost Per Ton; [9] Worker Output Tons Per Day.Sources: See footnote 14.

The calculation of the coefficient of variation (measure of volatility in a series) indicates that monthly production levels at Consolidated Virginia were twice as volatile as they were at California (48 percent versus 22 percent). Monthly employment levels, on the other hand, were more volatile at California than at Consolidated Virginia by about a third (41 percent versus 29 percent). It is not immediately clear what accounted for the differences. Labor costs per ton were slightly higher at California ($2.68 per ton) during its triumphant years compared to Consolidated Virginia ($2.51 per ton) in its twilight years. What can be observed under the numbers is that when tonnage at Consolidated Virginia dropped off beginning in the middle of 1876 and remained low into the middle of 1877 the level of employment stabilized in the middle to high 200’s, and when production began to climb in late 1877 and into early 1878 employment levels did not change significantly. At California the change in the level of production induced (after some delay on the downside) a change in the level of employment. Thus the volatility in monthly labor costs per ton at Consolidated Virginia was almost three times greater (87 percent) than at California (33 percent), even though Consolidated Virginia’s employment levels had less variability. In those months during the second half of 1877 when Consolidated Virginia was producing more but not hiring more, the worker productivity reached its highest level of the 30 months and notably outpaced California.

12

THE COMSTOCK [0]

The question arises for which there is no definitive answer: did Consolidated Virginia achieve such notable productivity levels because fewer workers were hired and more work was required? There is of course a dark side to rising productivity levels in an era when the rules and regulations governing the work place were minimal. The fact that workers at both Consolidated Virginia and California and perhaps other mines performed admirably did not mean that the work regimen was admirable.15

FIGURE 5 COMPARISON OF PAY VOUCHERS AND ORE TONS, MONTHLY,

CALIFORNIA MINING COMPANY

0

5,000

10,000

15,000

20,000

25,000

0

100

200

300

400

500

600

Vouchers

Tons

Sources: See footnote 14.

Most of the extraction of ore in California came from 1,500 through 1,550 to 1,600. Almost no ore was extracted above 1,400, very little from between 1,400 and 1,500 feet and a modest amount below 1,600. There was considerable activity at depths below 1,600 feet, and the C&C Shaft, one of several hoisting operations, pushed pass 1,600 and as far as 2,150 feet by the end of 1878 with little to show for the expense of opening these new depths. The Superintendent’s Annual Report admitted that the cost of maintaining “dead works” to open and explore these greater depths was high in light of the lack of return in refinable ores. Moreover the costs increased because the closing of the main shaft of Consolidated Virginia for repairs degraded the quality of air in

15 There was no evidence in the Mackay and Fair archives that managers imposed daily quotas and minimal performance standards on the work force. Let me stress that calculations of productivity figures, in this case dividing tons extracted by workers employed, provide a quantitative gauge of worker performance but not a qualitative standard. The stamina and skill of the Comstock worker seemed almost intuitive if these figures are to be accepted, but other research avenues used by labor and demographic historians need to be pursued to demonstrate their validity. For each worker to have lifted, shoveled, drilled or transferred in some other way a ton or more of ore on a daily basis without modern conveyors and loaders in cramped and dusty spaces should certainly be admired.

13

THE COMSTOCK [0]

California, required the most expensive “dead works” and the employment of more workers since in the poor ventilation individuals could not work full shifts. The rising labor costs that showed up in the California payroll data toward the end probably involved more money committed to dead works than before. Despite the optimism of the Annual Report and the intersection of the C&C Shaft with the Lode at about 2,200 feet, the lower depths lack of profitable ores posed problems that required costly solutions. California like Consolidated Virginia limped along until the fire of 1881, and some limited activity after that. In both mines the declining productivity levels signaled that the future of the operations at 1,400 to 1,700 feet was far from assured.16

The C&C Shaft – a joint undertaking by Consolidated Virginia and California – had an important role in developing the underground network. The construction of the C&C Shaft and the connecting tunnels to the ore bodies was a joint undertaking of Consolidated Virginia and California Mining Companies. Each company kept separate accounts for expenses including payrolls in the construction of the shaft. The construction costs, as reported in the companies’ Annual Reports, were identical, however, because those costs were split fifty-fifty. In addition, though, the mining companies paid for the operation of the shaft, and those figures could differ on the basis of how much ore each company hoisted through the shaft. Finally, since tunneling had to be built from the shaft to the mining areas, the mining company where the work was being done bore the expense of those projects. While the accounts, as they appeared in the stockholders’ annual reports, may have met prevailing accounting standards, they did not always provide sufficient detail to allow close analysis of the financing behind the construction and the operation of the shaft.17

C & C construction began in late 1874 when Consolidated Virginia had entered its most productive period and California had recently been incorporated. From the outset this was a high-priority project to be moved along as quickly as possible. By 1 January 1875 the shaft had been sunk 45 feet and the structure on the surface to house hoisting equipment had been completed.18 Work on the shaft was pursued vigorously and aggressively in order to open an access to the ore bodies at 1,500 feet and below. Work continued for a decade, even after the mines themselves had been shuttered in 1881. By 1883 the shaft had been sunk more than 2,500 feet, and construction and operation costs were paid out of assessments against stockholders of the companies that had taken over the shaft and the mines. Prior to that the financing of the shaft’s construction and operation was derived from direct contributions of about $2 millions from the Consolidated Virginia and California and from operating revenues of about $1.2 million earned mainly from hoisting Consolidated Virginia and California ores. Each company treated its contribution as a continuing expense, and even after the shaft began generating

16 Annual Report, 1877, California Mining Company, NC99/1/5/6, Bx 2, Special Collections, Library, University of Nevada at Reno.17 Compare for example the joint shaft accounts in the Annual Reports, 1878, Consolidated Virginia Mining Company, 43, NC99/1/5/1, Bx 2, and California Mining Company, 29, NC99/1/5/6, Bx 2, Special Collections, Library, University of Nevada at Reno.18 Copy of Letter from James Fair to David Bagley, Secretary, 01/03/75, from Letterpress Book, 11 November 1874-31 August 1875, Consolidated Virginia Mining Company, NC99/2/3, Bx 6, Special Collections, Library, University of Nevada at Reno.

14

THE COMSTOCK [0]

receipts (by charging the companies to hoist their ores) the contributions were required to cover mainly construction expenses. The shaft was not incorporated as a separate company, had no directors or stockholders and reported no profits (or losses). The Firm owned the pot of ground where C&C was built. It lay east of the ore bodies and was not supposed to intersect the Lode until the 2,000-foot level. (The Lode had pinched out at about 1,000 feet but was expected to reappear at 2,000 feet or below under the ground that contained the current bonanzas.) Drifts from 1,000 to 2,000 feet long had to be dug from the shaft to the location of the ore bodies, and under the arrangement the individual company paid for the construction and maintenance of the drifts. If the shaft did intercept the Lode at 2,000, the presumption was that this would provide direct access to new bodies associated with the Lode, as had been the case for the first thousand feet. The Lode was found (actually deeper than 2,000 feet) but not the ore bodies. These great depths, however, required expensive “dead works” for the control of ventilation and water and ultimately proved too costly to be pursued. In the 1878 Stockholders’ Report, when the C&C Shaft had arrived at 2,150 feet, W. H. Patton, Superintendent at Consolidated Virginia, noted that ores, normally used to pay for these explorations and expansions, were simply absent. “The quality of ore extracted being so much less than taken out in the previous year, it was so much the less able to bear the increased burden of expense imposed on it.”19

Despite ample accounting documentation for the construction and operation of the C&C Shaft, the data are not easy to disentangle. The reason is that part of the expense was covered building the shaft and another part operating, repairing and connecting the shaft. In one set of accounts the expenses covered by the companies’ contributions (as opposed to operating income) appear to be mainly from the purchase of supplies and the employment of labor required for sinking the shaft. The Annual Reports always made a distinction between contributions, which were the same for both companies, and income, which could be different. The Annual Reports, however, may not provide a complete record of the companies’ finances. In the case of California the first annual report was not published until 1876, although it had been under construction since 1874 and had contributed to the C&C project from 1875. A document for the period December 1874 through February 1879, reported that the monthly costs for building the shaft were to be covered by the companies’ contributions. For December 1874 the first month of construction, only Consolidated Virginia made a contribution. From there to the last entry in February 1879 the two companies split the monthly construction costs. Even after February 1879 the shared contributions continued into the early 1880s. Since California technically had no income during 1875, its contribution was probably made from the working capital that the stockholders (mainly Mackay, Fair et al.) had raised to incorporate the mine. No operational income from C&C appeared in the Annual Reports until 1877. An income entry coincided with the completion of a drift of nearly 700 feet between the shaft and the ore body at 1,650 feet that allowed hoisting through the shaft to began. Fair’s comments to his stockholders on 17 January 1877 was: “All the appurtenances to this shaft, such as the main building, an extensive machine shop, the ore house, the hoisting and pumping machinery, the pumps, the pump bobs, water tanks, etc.,

19 Annual Report, 1878, Consolidated Virginia Mining Company, 35, NC99/1/5/1, Bx 2, Special Collections, Library, University of Nevada at Reno.

15

THE COMSTOCK [0]

are complete in every respect.” The system was designed to accommodate the expected heavy volume of ore to be extracted from both mines. “The surface station of this shaft and the stations in the shaft have been made double, one immediately above another, and two cages, called a double-decker, are employed for hoisting ore, so attached one above the other as to exactly meet these divisions of the stations; both cages being loaded in the mine and unloaded at the surface at the same time.”20 The cost, according to Fair, was $820,000, a figure that was slightly below the $855,000 derived from documents related to C&C financing.21

In the first month (December 1874) of construction the costs amounted to a pittance - only $8,240. Over the next 50 months the companies would pay out more than $625,000 or on average $12,500 per month. During the second quarter, 1875, costs jumped from an average of $9,000 per month (previous four months) to $46,000 (April 1875). Two of the most costly months were October and November 1875 when the outlays were $54,000 and $58,000 respectively. On the basis of the extant records (through February 1879) these were the highest of monthly outlays. In the months surrounding October and November monthly costs were also high in the range of $45,000 and $50,000. The fire of October 1875 did not impose new expenditures to repair or rebuild because C&C’s surface structures were not in the fire’s path. Two weeks after the fire James Fair reported that the machine shop (noted above) was almost complete and the engines were running splendidly.22 Other factors explain why monthly expenses were so high between July 1875 and January 1876. In May 1875 the foundation for hoisting and pumping engines was laid, and by the end of June it had been finished. Toward the end of September the new pumps had been installed and started. Other machinery (not specified) had been installed by early October. In a letter to Goddard and Company Fair complained that the joints were so poor that they had to be refitted. The expense for this, he advised, would be charged to the manufacturer, and the manufacturer, he further advised, should send representatives to Virginia City to observe firsthand how much time and money was required to make the repairs.23 Once the surface facilities were in place, as these letters suggest that they were by the fall of 1875, the remaining work was underground.

20 Even though the 1880 Census reported triple-deckers cages at C&C, the addition of a third cage did appear in the documentation that I read. On-Line at www.census.gov/prod/www/abs/decennial/1880.html, United States Census Bureau. Statistics and Technology of the Precious Metals, vol. 13, 136.21 The monthly expenses may be found in the Journal, C&C Shaft, January 1874-February 1879, NC99/5/3, After Bx 13, Special Collections, Library, University of Nevada at Reno, and Fair’s comments appear in the Annual Report, 1876, California Mining Company, 11-12, NC99/1/5/6, Bx 2, Special Collections, Library, University of Nevada at Reno.22 Copy of Letter from James Fair to C. H. Fish, Secretary of the Board, 11/07/75, from Letterpress Books, 28 March-15 November 1875, Consolidated Virginia Mining Company, NC99/2/4, Bx 6, Special Collections, Library, University of Nevada at Reno.23 Copies of Letters from James Fair to C. H. Fish 05/23/75, 06/27/75 and 09/26/75 from Letterpress Books, 28 March-15 November 1875, Consolidated Virginia Mining Company, NC99/2/4, Bx 6, and Copy of Letter from James Fair to Goddard & Company, 10/11/75, from Letterpress Books, 1 September 1875-27 June 1876, Consolidated Virginia Mining Company, NC99/2/6, Bx 6, Special Collections, Library, University of Nevada at Reno.

16

THE COMSTOCK [0]

The direct contributions (which will not match up with the costs discussed above) by Consolidated Virginia and California Mining Companies to the C&C Shaft from December 1874 through February 1879 totaled $1.3. The pattern of monthly contributions was sharply upward in 1875 and then irregularly downward over the next several years. The monthly outlays were highest in 1875 at an average of $36,000 per month, dropped slightly in 1876 to $35,000 and then sharply in 1877 and 1878 to $19,000 and $15,000 per month and finally to in 1879 to $8,300 per month.24 In 1880 and 1881 the outlays continued at $100,000 per year, even though Consolidated Virginia shut down in the spring of 1881 and California had very limited operations. The shaft became the vehicle in the search for new ore bodies, but having reached almost 2,500 feet without any discoveries and relying on stockholder assessments rather than bullion yields to cover costs C&C curtailed finally further explorations in 1883. Over the decade direct contributions by the companies as a percentage of total-bullion yields were probably no more than 1.5 percent, a significant amount, perhaps, with respect to an outlay for a single mining project but much less so in terms of what was ultimately mined. For Mackay, Fair et al. once the richness of the ore body had been determined, there was never much doubt that a new shaft to expedite the movement of ores, personnel and supplies should be built.

The accounting data in connection with the operation of the C&C Shaft pose some analytical issues. Beginning in the 1877 Annual Reports the section on C&C’s accounting became more complex. In addition to itemizing the companies’ direct contributions and the property and inventory held in behalf of C&C, it showed charges against Consolidated Virginia and California for hoisting, sales and purchases of supplies and labor costs. While the companies continued their annual combined contributions of one to two hundred thousand dollars the operational side of C&C involved even larger transactions. Not all the C&C figures and entries, as they appear in the annual reports, can be explained or reconciled. The precise financial arrangements between the two mining companies and C&C will remain incomplete unless other documentation will appear. From an analytical standpoint the main problem is that the information, as presented in C&C annual statements, did not divulge enough about the origins of the figures or how they were assigned to various accounting categories. Generally what the statements showed was cash balances at the start and the end of each year, the companies’ contributions as well as their hoisting costs, purchase and sale of supplies and expense of labor. In a variation of this general format the supplies would be itemized company-by-company. Finally the C&C annual statement often included an inventory of property, real and mechanical, and supplies on hand.25

By the end of 1876 Consolidated Virginia and California had contributed more than $850,000 to the construction of the shaft, which had reached 1,600 feet. Drifts were

24 Journal, C&C Shaft, January 1874-February 1879, NC99/5/3, After Bx 13; Annual Report, 1879, Consolidated Virginia Mining Company, 20, NC99/1/5/1, Bx 2, Special Collections, Library, University of Nevada at Reno.25 Commentary in text based on analysis of annual reports: Consolidated Virginia Mining Company, 1878 (43-44), and 1879 (18, 20-21) in NC99/1/5/1, Bx 2, and California Mining Company, 1877 (34-36), 1878 (29-30) in NC99/1/5/6, Bx 2, and 1880 (24-26) in NC99/1/5/7, Bx 2, Special Collections, Library, University of Nevada at Reno.

17

THE COMSTOCK [0]

under construction from the shaft to the ore-bearing areas. According to the 1876 inventory the real estate was valued at $25,000 and the “Hoisting Works, Pumps and Machinery” at $300,000 for a total of $325,000. Supplies were valued at nearly $70,000 boosting the total to $395,000. More than $50,000 of the supplies consisted of 2 million feet of timber (at 2.5 cents per linear foot?), and the remainder were sundry items such as coal, oil, powder, iron, sledges, picks and handles.26 By the end of 1877 the inventory had fallen to $375,000 even though the “Hoisting Works…” etc. had risen to $320,000. The volume of timber on hand had been reduced to several hundred thousand feet with a value of only $8,000. The C&C annual statement (called “Balance Sheet”) indicated that the cost to build and operate the shaft in 1877 was nearly $673,000. About 81 percent ($547,000) was spent on the consumption of supplies and the remuneration of workers. In fact, though, C&C charged Consolidated Virginia and California $82,000 and $21,000 respectively for hoisting and $269,000 for labor and sales of supplies (supplies not specified) so that the unreimbursed costs were $301,000 of which $262,000 consisted of contributions from the companies.27

The first year in which hoisting receipts appeared in the annual statement was 1877. Given that more than 370,000 tons of ore were raised by the companies and their total hoisting bill was in excess of $400,000, it may be surprising that only a quarter of it was raised through the new shaft. It was not a matter of depth, for the shaft had been dropped below 1,850 feet so that it paralleled all the important ore-bearing regions of both mines. What limited its use was access from the shaft into areas where ore was being mined. C&C had been located where it was in anticipation of intersecting the Lode at 2,000 feet or slightly below, or at least that was how the formation of the Lode was understood to be. In order to tap the anticipated riches at the greater depths hundreds of feet would separate the shaft from the ore body at 1,500 to 1,700 feet. Under receipts C&C received payments for “Labor and Sales of Supplies” from Consolidated Virginia and California. These were payments to build the tunneling from the C&C to the stopes. Other shafts were also in use. At California 105,724 tons were extracted at 1,600 feet and then hoisted by way of the Ophir Shaft. Even the “older” main shaft of Consolidated Virginia was also being extended 100 feet to 1,650 feet because of its proximity to the ore bodies.28 It was possible that cutting the tunnels from the shaft to the ore bodies was time-consuming and expensive than dropping the shaft. It is speculation, but C&C’s role from the outset may have been conditioned by what was assumed to be at the intersection of the Lode and below. That was a mindset shaped in part by experience - rich new ore bodies had been discovered at greater depths – and by local doctrine – the Lode had endless treasure.

In the following year of 1878 as the shaft and its connecting drifts had been extended hoisting revenues rose by almost half to a total of $148,000. Direct

26 The 1876 C&C documentation only included an inventory. See 1876 Annual Report, California Mining Company, 15 in NC99/1/5/6, Bx 2, Special Collections, Library, University of Nevada at Reno.27 There were two sets of numbers: assets and liabilities equaled $636,268.48, but receipts and expenses equaled $672,694.89. The difference was traced to receipts and expenses where $40,000 more in supplies were consumed than purchased (thus, the decline in inventory) and to cash on hand, which was ignored.28 Annual Report, 1877, California Mining Company, 11, NC99/1/5/6, Bx 2, Special Collections, Library, University of Nevada at Reno.

18

THE COMSTOCK [0]

contributions of $180,000 exceeded hoisting revenues by more than $30,000, but the sale of supplies (presumably for the underground network) greatly exceeded them by $230,000. C&C paid out $576,000 for supplies that included $136,000 for wood, $155,000 for timber and $285,000 for sundries. In addition it paid out $128,000 in wages and salaries. The total outlays were $704,000 of which fees and sales covered $528,000 or 75 percent. The balance was made up through contributions. The two companies had a total hoisting bill of $241,000 (down 40 percent from the previous year, a sign of the future) of which more than half was paid to C&C. Based on hoisting fees I estimate that nearly 80 percent of Consolidated Virginia’s ores moved through C&C and something less than half of California’s ores. The reason why so much of Consolidated Virginia’s ores were shipped through C&C was that its own main shaft was closed down for repairs on 1 May 1878 and remained closed for most of the year. Such was acknowledged in the annual Superintendent’s Report: “The work of hoisting from this level [1650 feet] has not been interfered with by the closing of the main…shaft, as there is a direct communication between this level and the C. and C. Shaft.” Consolidated Virginia had in addition to C&C access to Gould & Curry’s Shaft through a longtime southern drift and to Ophir’s Shaft through a new northern drift. California continued to reply more on the Ophir than C&C with several new non- C&C-connecting drifts being completed to enlarge that network.29

The Annual Statement of the C&C Shaft for 1879 features several significant (but not surprising) changes after 1878. Hoisting fees declined in response to reductions in output of ore, and direct contributions rose to help to cover continuing costs to sink the shaft. Overall the operations at C&C amounted to $482,000 or a third lower than the year before. The 1879 financial report was more detailed than its predecessor. Supplies charged to mining companies were down substantially: from $154,000 to $54,000 (-64 percent) at Consolidated Virginia and $62,000 from $147,000 (-58 percent) at California. General sales of supplies (buyers unknown) also fell from $75,000 to $19,000 (-75 percent). The purchase of supplies obviously declined as well from $576,000 to $316,000 (-45 percent). For the first time the annual statement itemized the supplies purchased and sold. Among the purchases were eight categories: wood, timber, ice, powder, caps and fuses, candles, miscellaneous iron and miscellaneous articles, and among the sales seven categories – the same list as the purchases except for wood. It is presumed that that the sales of supplies to (or the payments for supplies by) the mining companies were related to the construction of the underground network of tunnels and rooms that served the particular needs of the individual mining companies. If the sales of supplies to the companies were subtracted from the purchases of supplies the difference of $200,000 was virtually identical to the total contributions made by the companies. Wood purchases were the largest at $138,000 or 44 percent, and since neither company purchased any wood from C&C, this was probably an item that was purchased for the boilers that powered the engines that lifted or dropped the cages. The second largest category was timber: C&C purchased more than $78,000 worth of timber and sold nearly $70,000 worth of timber to the two parent companies. Certainly some timber was used in the

29 See the Superintendents’ Reports in the Annual Reports, 1878, Consolidated Virginia Mining Company, 28-33, NC99/1/5/1, Bx 2 and California Mining Company, 8-14, NC99/1/5/6, Bx 2, Special Collections, Library, University of Nevada at Reno.

19

THE COMSTOCK [0]

construction of the shaft itself, but how (or why) it was allocated between the C&C and the parent companies remains unclear. The third and fourth largest categories of purchases were iron and general merchandise at $31,000 and $24,000 respectively, but only 5 percent ($1,500) of the iron and 10 percent of the sundries were sold to Consolidated Virginia and California. The bulk (36 percent) of the iron was sold to other (unspecified) companies. Of the $9,000 spent on ice, an essential article for underground workers, 98 percent of it was sold to the two mining companies. Similarly with powder, capes and fuses and candles more than 90 percent of what was purchased was sold to the mining companies. The 1879 Annual Statement included items not specifically noted in prior annual statements. For example, there were entries for a “Joint Pipe Account” showing purchases of more than $22,000 and receipts of more than $16,000, although the origin of the receipts was not given. Other outlays were for freight, water, surveys and taxes, and other receipts were from rebates granted by the Virginia and Truckee Railroad (a common practice) and from fees for “Compressed Air and Pumping” (source unspecified).30

The most detailed Annual Statement of the C&C Shaft was presented as a part of the annual reports to the stockholders of Consolidated Virginia and California in 1880. In providing some context I would note that total output of the two mines had fallen a fifth from 120,000 tons in 1879 to 94,000 tons in 1880. The business of the C&C Shaft, however, fell modestly from $482,000 to $442,000 or 8 percent. Both Consolidated Virginia and California made direct contributions totaling $199,000 (as opposed to $200,000 in 1879) and paid hoisting fees of $103,000 (compared to $115,000 in 1879). Contributions and hoists accounted for 68 percent of C&C’s budget. Of the remaining 32 percent ($141,000) $101,000 was derived from sales of supplies (timber, ice, iron, etc.) to Consolidated Virginia and California with the former 61 percent of the total. In this statement sales to other mining companies (also owned or controlled by Mackay, Fair et al.) were spelled out in greater detail. Supplies and services worth about $30,000 were sold to nearly a dozen other companies with mines or shafts, most of which were in the vicinity of Consolidated Virginia and California and owned or controlled by Mackay, Fair, et al. Supplies constituted the largest transaction of about $17,000, and the next largest transaction was pumping for which the Sierra Nevada, Mexican and Union Shaft Company paid $7,200, Ophir Mining Company paid $1,100 and Sierra Nevada Mining Company paid $4,400 for a total of $12,700. Mines and shafts to the north of C&C paid to use of C&C pumping facilities as explorations had shifted from California’s claim to the Ophir and Sierra Nevada claims. Without earlier notations of a joint pipe account, its appearance here was unexplained. Not unexpectedly the purchase of supplies in 1880 fell to $282,000 from $316,000 in the previous year. As C&C’s business declined, the role of the direct contributions by the parent companies assumed greater importance: in 1878 the contributions accounted for 25 percent of the total operating revenue, in 1879 42 percent and in 1880 45 percent. By 1882 so far as I could determine the only income for C&C was from direct contributions, which totaled $199,000 and were paid for out of assessments of $400,000 (not all of which was collected) against the stockholders. It was

30 Annual Statement, Consolidated Virginia and California Joint Shaft, in the Annual Report, 1879, Consolidated Virginia Mining Company, 20-21, NC99/1/5/1, Bx 2, Special Collections, Library, University of Nevada at Reno.

20

THE COMSTOCK [0]

reported that the shaft was being maintained and repaired, as needed; the equipment was in “excellent” operating order; and work on the shaft and the area served by it between 2,500 and 2,700 feet continued. Despite favorable comments such as “strength of the formation” of the Lode at the lower levels and improvements to ventilation through links between C&C and the Joint Union Shaft, the end was at hand. Operating and expanding the shaft through assessment without any visible return could not be justified.31

Absent from the preceding discussion of C&C’s finances was the cost of the labor force. In 1876 it was $133,215, in 1877 it was $125,278, in 1878 $128,180, in 1879 $115,871 and in 1880 $142,398. C&C Shaft payroll data can be assembled from two sources. The C&C Annual Statements reported yearly payroll outlays from 1877 through 1780.32 It turned out that the these payroll data were drawn from the “Time Books”, which both sponsoring companies kept on wages paid and hour worked by the labor force above and below ground at the mines and at the C&C Shaft. Monthly Time Books, as noted earlier, covered the period from February 1876 through June 1878.33 Even though the C&C Shaft project began in December 1874 and the companies began sharing costs in 1875, no payroll data prior to February 1876 has yet turned up. In that month and for the remainder of 1876 it contained columns of figures for workers at the Consolidated Virginia and California Mines, the C&C Shaft and the Utah Mine and Shaft (several properties north of California).34 Beginning in January 1877 two additional classifications appeared in the Time Book: payrolls for workers at “C&C – Consolidated Virginia” and at “C&C California”. This separation between general C&C payroll expenses and company-specific C&C payroll expenses remained the case through June 1878, at which point the Time Book archives ceased. Lacking a specific description of what C&C-related work the companies paid for, I have assumed that the work involved the chambers that had to be built around the shaft and the tunnels from the shaft to the ore-bearing regions. The strongest implicit evidence for this interpretation is that the payrolls directly charged to the sponsoring did not appear in the Time Books until the shaft had reached 1,550 feet. At this depth the first drift from the C&C Shaft was started. On its own the C&C shaft required a steady, sizable work force of about 105 on average each month between February 1876 and June 1878. Their total wages amounted to more than

31 Annual Statement, Consolidated Virginia and California Joint Shaft, in the Annual Report, 1879, California Mining Company, 24-26, NC99/1/5/7, Bx 2, and “Financial Status of C. & C. Shaft” as part of Annual Statement, 1882, California Mining Company, 16, NC99/1/5/7, Bx 2, Special Collections, Library, University of Nevada at Reno. The problem in analyzing the C&C financial statement is how many of the purchases (expenses) and sales (revenues) involved Mackay and Fair companies. Were these transaction legitimately priced, or were they bookkeeping entries with little or no relevance to the market?32 In 1877 and 1878 payroll appeared on the “Balance Sheet” as both a credit and a debit. In 1879 and 1880, because the “Annual Statement” replaced the “Balance Sheet” the payroll appeared as an expense in several different places. 33 In the one year 1877 where the figure in the C&C Annual Statement can be compared to the figure in the Time Book the totals are very close but not identical. They are not identical because the C&C totals for one month – May 1877 – are missing from the Time Book. Without May the annual total from the Time Book is $113,617. The Annual Statement reported wages and salaries of $125,278. The difference is $11,661. The average monthly payout in each series was about $10,500. If the average were used for the missing month in the Time Book series the totals would be within $1,000 of each other. Malfeasance did not to play any role in the recording of figures in two different accounts. 34 No ore was reported from Utah, and since it was connected to California through drifts that passed through the intervening mines, the shaft may have been used for ventilation, transport, etc.

21

THE COMSTOCK [0]

$321,000 or $11,075 per month. In 1876 an average of 110 monthly wage vouchers were issued; that figure fell to 94 in 1877; and it rose to 101 in the first six months of 1878. Approximately 10 percent of the more than 30,000 monthly wage vouchers recorded in the Consolidated Virginia and California Time Books between February 1876 and June 1878 were issued for C&C Shaft laborers. During the 18 months from January 1877 through June 1878, when the Time Books have entries for both the C&C Shaft construction and the related C&C-Shaft construction, the latter paid for directly by the sponsoring companies, the payroll for related work was four times greater than the payroll for the shaft work - $683,000 versus $178,000. Consolidated Virginia’s payroll for C&C-related work totaled $371,001 and California’s $312,032. More than a fifth of the monthly wage vouchers issued between February 1876 and June 1878 were for shaft-related work. Nearly a third of the monthly wage vouchers between January 1877 and June 1878 were for shaft-related work. The average at Consolidated Virginia was 185 per month and at California 155 per month. In the second half of 1877 Consolidated Virginia’s numbers ranged from 257 to 305 per month with the latter number being recorded in September 1877. But California actually registered the highest numbers with 338 in February and 340 in March 1878. It is worth underscoring that in those two months California’s work force in C&C-related construction was almost as large as its work force in the mine itself (401 and 379 respectively). Although the wage bill for the shaft and related construction was a small percentage of the more than one hundred million dollars worth of bullion extracted from the mines, it remained a multi-million dollar undertaking that did not in fact achieve its ultimate goal of unleashing another bonanza at even greater depths than the extractions were taking place.35

The daily-wage profile for work on the C&C Shaft and ancillary projects can be assembled from the Time Book data and related sources. In 1877 when the C&C payroll was over $125,000. The labor force worked 28,887 days so that the average daily wage was $4.34. In that same year at the California Mine the work force put in almost 192,000 days with an average daily wage of $4.06. As a group the C&C workers earned on a daily basis slightly more than California workers. The daily pay scale ranged from $6.50 to $3 with one employee being paid $250 per monthly or between $8.20 and $8.30. Slightly less than half of the workers earned $4 per day, the standard underground wage. About a fifth of the workers were paid at $5 per day (usually artisans such as head carpenters) and nearly another fifth were paid at $3.50 per day (semi-skilled laborers for example.) A fraction of a percent received the highest daily wage of $6.50 or the lowest of $3. This profile in terms of daily wage rates and distribution of workers did not differ significantly from the earlier discussion of profiles of Comstock wages and occupations. A somewhat different profile of the daily average wage emerges if the total number of monthly vouchers issued for work in 1877 at Consolidated Virginia, California, C&C-Consolidated Virginia, C&C-California and C&C (stand-alone) are analyzed and compared. The following calculations are estimates; since I do not know the number of days worked in each wage category, I have simply divided the total number of monthly vouchers into the total annual compensation to arrive at an average monthly

35 Data on the Time Books (actually bimonthly accounts which duplicate of the monthly accounts) are found in the following archives: NC99/3/1, 4, 7, 11, 16, 20, 26, Bx 9, NC99/3/31, 36, 42, 48, 51, Bx 10, NC99/3/57-59, 62-63, 65, 68-70, Bx 11, Special Collections, Library, University of Nevada at Reno.

22

THE COMSTOCK [0]

compensation figure, and then I have divided that figure by 30, the approximate number of days worked each month, to arrive at an average daily figure. With 13,868 monthly vouchers and total annual compensation of $1,515,000 million, the monthly average per worker (voucher) was $109 or $3.64 per day. Even though the total vouchers and wages for workers under C&C-Consolidated Virginia and C&C-California differed, the average daily wage rounded out to an identical $3.73, the highest of the five groups.36 Next came the regular Consolidated Virginia labor force at $3.70 per day, the regular C&C Shaft labor force at $3.67 per day and finally regular California labor force at $3.53. These are gross numbers, and while they all fall within a range of $3.50 to $3.75 for an average daily wage, the regular California work crew earned less per day as a group than its peers including those who were building the drifts from the California Mine to the C&C Shaft. This showed up as well with the California wage profiles based on the actual days worked as reported to the stockholders. With the California Mine’s labor force three times larger than the C&C-related crew it probably included a greater number of workers, especially on the surface, whose wages fell toward the lower end of the pay scale. In the end, though, pay scales for the various mining operations with separate payrolls were remarkably similar.37

In a curious way C&C’s role in hoisting Consolidated Virginia and California ores was smaller than may have been anticipated – the underground network proved to be challenging and diverting – and its other role became larger - especially as the bonanzas began to fade. Thus, C&C could never became financially self-sustaining (through hoisting revenues), if that was ever intended, and it continued to require subsidies. By the time the tunneling from the shaft to the stopes was completed ore hoists in general were rapidly declining. The money that continued to be appropriated was a down payment on discovering new bonanzas rather than servicing existing ones. It was equally curious the way in which the cost was allocated and how revenue was earned. Buying supplies that were sold back to the companies that subsidized C&C arouses suspicion, but without more price data – what they paid and sold the items for – the suspicions cannot be pursued. C&C never was organized to pay dividends. Given the Nevada tax structure, the subsidizing companies by paying more than C&C did for items that were probably being used to expand the underground might have been able to increase reported costs when bullion assessments were calculated. But it was hardly worth the effort. It remains a curiosity, and it may be nothing more than a convenience for C&C to make bulk purchases of supplies needed in both the construction of the shaft and the links and allowing the subsidizing companies to reimburse C&C on the basis of what they used specifically in building the links that passed through their ground. Chicanery, if any, is hard to document.

36 The figures four places to the right of the period were $3.72905 and $3.72752 respectively.37 The 1877 data from Annual Report, California Mining Company, 35, NC99/1/5/6, Bx 2, and Time Books (Duplicates), NC99/3/31, 36, 42, 48, 51, Bx 10, and NC99/3/57-59, Bx 11, Special Collections, Library, University of Nevada at Reno.

23

THE COMSTOCK [0]

FIGURE 6EMPLOYEE VOUCHERS DISTRIBUTED FOR WORK ON C&C SHAFT AND

RELATED FACILTITIES, JANUARY 1878-JUNE 1879

0

50

100

150

200

250

300

350

400

CVMC

CMC

C&C

Sources: See footnotes 35, 37.

Chicanery, however, was the weapon often employed by outsiders against firms that hit the jackpot. The Firm was not exempt. The fact that it made so much money elevated it as target, not because of manifest evidence of misdeeds but rather because of the insinuation that making that much money required malfeasance. Mackay and Fair had earlier separated mining and milling operations, and they followed the same course with Consolidated Virginia, California and other mines. In 1874 Pacific Mill and Mining Company was incorporated as a California company. The trustees of the new company were Mackay, Fair, O’Brien and Flood and probably included longtime associates and investors Edward Barron and Solomon Heydenfeldt (a lawyer) from San Francisco.38

Pacific was assembled through the purchase of existing mills and the construction of new mills. To separate the finances of mining from milling was a strategy that William Sharon introduced to the Comstock in the 1860s, and it became standard practice for mining companies to divest themselves of milling operations. Before the bonanza at Consolidated Virginia began in the early 1870s Mackay, Fair et al. had purchased and operated mills independently of their earlier mines. And some of these mills were then transferred to the new company. The strategy was straightforward in that the milling company charged the mines, which retained the ownership of the ore, a per-ton rate to crush and process the ore. Based on mining records that showed how much ore was sent to each mill month by month from 1874 through 1881 Consolidated Virginia and California contracted with at least 18 mills to refine ore although several also refined tailings, a somewhat different process from the initial refining. Pacific did not own all the mills that processed the bonanza mines’ ores, but it owned (or controlled) as many as a dozen of them. From time to time because of the heavy flow of ore other nearby custom mills were enlisted.38 Smith, The Comstock Lode, 117, 148, 237. No documentation directly relating to the incorporation of Pacific has not been found.

24

THE COMSTOCK [0]

Whether or not mining companies themselves should own and operate the mills was a topic of debate among Comstock investors and speculators, and in the case of The Firm became the subject of a lawsuit. Charles Fish, President of Consolidated Virginia in 1878, and later George Wallace, President of California in 1880, in almost identical language (a ghost writer perhaps!) addressed the issue of the divestiture of the milling operations from the mining operations. The rationale could be summarized under two principles. First, since the two mining companies lacked any milling facilities of their own, they would have had to invest heavily in the purchase or construction of mills with a commensurate reduction in dividends for stockholders. By contracting with Pacific Mill and Mining Company (which owned mills but no mines so far as could be determined), the companies could avoid huge capital outlays and maintain high dividend payments. Second, even though the principals of the two mining companies owned Pacific Mill and Mining Company, they had worked to lower milling costs in their own mills, and that had the effect of driving down milling costs across the region. There was nothing unique about this rationale, for Sharon had taken basically the same position a decade earlier.39

Lawsuits against Mackay, Fair et al. and their various companies had grown into a cottage industry. In 1878 alone, according to the President’s Report, eight new suits over claims, asking for more than $100,000,000, had been filed and at least six of them had been tried and dismissed. The most troubling suit was inaugurated on 19 January 1878 against the principals of Consolidated Virginia on behalf of several unidentified stockholders who alleged fraud and urged the Board to take action against the principals. After much legal wrangling that consumed several months in which Squire Dewey emerged as the major disgruntled stockholder, a complaint (not yet a suit) with Dewey as plaintiff was delivered on 29 March 1878 to a notary public against the principals, officers and trustees of Consolidated Virginia and against Pacific Mill and Mining, Pacific Wood, Lumber and Flume, Virginia and Gold Hill Water and Nevada Bank of San Francisco, all controlled by Mackay and Fair. It asked for more than $35 million, and while the milling question was the core of the suit, questions involving other business transactions by Consolidated Virginia and the related companies were also raised. On 9 May 1878 John Burke, a recent buyer of 100 shares of stock and in lieu of Dewey, filed in the 12th District Court of California a suit based upon the foregoing Dewey complaint.40 The suit was apparently dismissed in federal court, but the dissidents continued their legal challenges. In August 1880 Dewey alleged misconduct and fraud in an almost identical suit filed in the Superior Court of San Francisco.41 The Court apparently ruled that while the company and its principals, officers and trustees had not engaged in actual or willful fraud a violation had occurred because of the way in which the company’s lawyer and trustee, Heydenfeldt undertook certain transactions. An award of $1 million was granted to stockholders with claims, but all the parties, tired of years of

39 From the President’s Report in the Annual Report, 1878 [9 January 1879], Consolidated Virginia Mining Company, 19-23, NC99/1/5/1, Bx 2, and these pages were repeated verbatim in the President’s Report in the Annual Report, 1880 [19 January 1881], California Mining Company, 6-9, NC99/1/5/7, Bx 2, Special Collections, Library, University of Nevada at Reno.40 From the President’s Report in the Annual Report, 1878 [9 January 1879], Consolidated Virginia Mining Company, 17-19, NC99/1/5/1, Bx 2, Special Collections, Library, University of Nevada at Reno.41 From the President’s Report inn the Annual Report, 1880 [19 January 1881], California Mining Company, 6, NC99/1/5/7, Bx 2, Special Collections, Library, University of Nevada at Reno.

25

THE COMSTOCK [0]

litigation, agreed to a private and undisclosed settlement that was probably less than the award.42 While the charges originated around the creation and operation of a separate milling company to the detriment of the stockholders, the final decision turned on a questionable transfer of property in the creation of Consolidated Virginia.

The original claim against Consolidated Virginia by Squire Dewey and his associates concerned losses to stockholders because the principals of the company had split mining from milling functions and had pocketed the profits from mills that might have been paid to mining company stockholders. Were their claims legitimate? How much money did the founders of Pacific Mill and Mining Company earn and how much did the stockholders of Consolidated Virginia Mining Company lose? These questions cannot be answered definitively, but sufficient documentation has survived to allow a modest inquiry. The extent to which the Board of Directors of Consolidated Virginia ever discussed the arrangement is not known except that when the officers commented on the arrangement in the annual stockholders’ reports they did so favorably. From the standpoint of Dewey et al., however, by assigning ores to Pacific Mill and Mining Consolidated Virginia had “entered into an extravagant and corrupt contract with a Milling Company [Pacific] organized in the State of Nevada, whereby it agreed that said Milling Company should reduce the ores…at a large profit and after reduction should retain the residues or tailings and ‘slimes’ as its own property.”43 In detailing their response to the suit the officers of Consolidated Virginia provided some statistics. Since the founders of Pacific Mill and Mining subscribed the capital necessary to buy or build the mills, the officers calculated that at the very outset they avoided an assessment of $3 per share against 108,000 outstanding shares ($324,000) simply to construct Consolidated, a new mill started in 1874. Consolidated Virginia produced about $5 million worth of bullion that year. Without more detailed cost data the capacity of the company to absorb the expense of the mill cannot be evaluated. In the first quarter 1874 the company reported that costs to expand the mine and extract the ore were running at about 50 percent of the bullion income.44 To focus on whether or not Consolidated Virginia could have afforded to the build the mill from its own resources may miss the more pressing issue that the mine needed mills to handle the 100,000 tons of ore that it hoisted in 1874. The year began with three to four mills under contract and ended with five to six mills. The founders of Consolidated Virginia at the time of its incorporation owned five (Bacon, French, Mariposa, Occidental and Sacramento) of the six mills with ownership of Kelsey Mill still unverifiable. Had the company directly purchased these mills and also launched the construction of a new mill its immediate capital costs would have grown significantly and may well have necessitated greater assessments than noted above, although the impact of these actions on company finances is difficult in retrospect to determine. In addition to these initial capital costs, however, Consolidated Virginia would still have had to pay milling charges, which under contract with the stand-alone

42 See Smith, The Comstock Lode, 218-222, for a description of these events. Unfortunately, he was not always clear on which case was being considered.43 From the President’s Report in the Annual Report, 1878 [9 January 1879], Consolidated Virginia Mining Company, 9, NC99/1/5/1, Bx 2, Special Collections, Library, University of Nevada at Reno.44 One Abstract Statement prepared by Story County’s assessor has survived for the first quarter in the Nevada State Archives.

26

THE COMSTOCK [0]

milling company, came in at about $1.3 million or $13 per ton. Pacific’s per-ton rate was not out of line with what other milling operations charged in 1874.

These responses from Consolidated Virginia’s Board did not necessary undermine Dewey’s complaint (in hindsight). In his view the company could have begun with a prudent business plan to acquire and build mills in response to need by using the mine’s profits. Once the milling capacity was achieved the stockholders could have enjoyed the profits from both mining and milling operations instead of milling profits being siphoned off to the principals. Furthermore company ownership of the mills might have pushed down refining costs even lower and faster than was the case after Sharon had broken the monopoly of the custom millers. After the custom millers’ alleged financial stranglehold had ended, the argument for creating and maintaining separate mill facilities no longer carried much weight. The thrust of the complaint was simple: why allow principals of mining companies to set up independent milling companies of which they were the principal owners in order to monopolize milling profits when mining companies could own and operate the milling facilities and mining stockholders would benefit from both mining and milling profits? The financial imperative for separate milling companies had become moot. Consolidated Virginia’s officers (and California’s too) in the Annual Reports presented a financial defense concerning the divorce of mining from milling. It was a negative defense because it considered not the value-added to the mining companies during goods times but the value-subtracted during bad times. The companies would be strapped with a financial burden because idle mills required continuing investment for maintenance and repair without producing any income, and if the companies tried but failed to sell them, they would more than likely have to abandon them and write off the investment as a loss. “And no property”, declared the 1878 Annual Report, “depreciates with such rapidity as an idle quartz mill.” Indeed at the time Pacific Mill and Mining and not Consolidated Virginia (or California) was under the gun in the wake of contracting Comstock mining sector. “When the milling facilities…were found inadequate the Pacific Mill and Mining Company erected mills [beginning in 1874] at their own expense to meet the temporary demand. Mark the result! The mills used to crush the ore taken from the mine stand idle to-day [sic]. Even the new Con. Virginia mill, as it was called, and which was built at an expense of $500,000, is idle, and, therefore, not only profitless but a source of expense.” Then the report reinforced this analysis by citing the financial failure of combined mining and milling operations at Gould & Curry and Savage Mining Companies. Not only did these companies lose money on their milling properties as ore production declined, but they also saw their mining properties depreciate as investors refused to cover the milling losses. Finally, Consolidated Virginia and California both gained from their relationship with Pacific because milling rates dropped from $13 per ton to $9 per ton and operational proficiencies allowed Pacific to return 73 percent of the mine assay value compared to 65 percent by other millers. Consolidated Virginia’s directors had rejected the proposal in 1876 to buy and operate the mills and would not entertain a new motion to that effect at the Board Meeting in January 1879.45 The fact that Pacific was carrying the financial burden of unproductive mills even though Pacific and Consolidated Virginia had the

45 From the President’s Report in the Annual Report, 1878 [9 January 1879], Consolidated Virginia Mining Company, 21-23, NC99/1/5/1, Bx 2, Special Collections, Library, University of Nevada at Reno.

27

THE COMSTOCK [0]

same principal owners mattered less because Pacific’s financial losses did not carry over unto Consolidated Virginia’s balance sheet. Business was sliding for both companies, but for the stockholders of Consolidated Virginia, a circle that unlike Pacific extended beyond the founders and their closest associates, the mining operations continued to yield dividends, which might have been significantly reduced if the company had milling losses to cover. It was almost irrelevant that the two companies were in fact under the control of the same principals. In essence, this intertwining business relationship drove investors like Squire Dewey to a rage because the above premise may have made sense in the downturn, but it made money – lots of money – for the founders during the upturn.

Both Sharon’s Union Mill and Mining Company and Mackay & Fair’s Pacific Mill and Mining Company became monopolistic, or perhaps more accurately oligopolistic, offshoots of the major mining companies that they served. Whatever control over rates enjoyed by the early custom millers was bound to be temporary. A few millers had the knowledge needed to refine Comstock ores, and once that knowledge entered the public domain their grip of the milling price structure was loosened. It is doubtful that Sharon, Mackay and Fair or any other milling combine was motivated to create a more competitive milling business. Sharon was certainly correct in his assumption that by combining mills to achieve greater efficiencies and lower costs he could also make more money for himself and his associates so long as the bonanza mines for which they were reducing ores were productive. It is not known from the available evidence how much milling business if any Union or Pacific undertook for other mining companies. The harsh fact was that as ore bodies were exhausted and not replaced the milling business had no future. Independent millers did not completely disappear, but they operated in the shadow of the milling combines, which set the rates, controlled the flow of ore and by their very existence dampened competition. What other millers observed was how Consolidated Virginia and California mines paid increasingly lower rates to its milling partner under the ownership of Mackay, Fair et al. Pacific Mill and Mining pushed per-ton rates from $13 to $12 in October 1876, to $11 in February 1877, to $10 in April of 1877 and to $9 in January 1878.46 In 16 months the per-ton cost fell 31 percent. Whether or not these rates were justified by proficiencies at Pacific’s mills, they reduced the costs to the mining companies and raised the profits from which the stockholders were paid their dividends. Dewey’s complaints notwithstanding the stockholders of Consolidated Virginia and California distributed more than $70 million in dividends. Did it much matter how Pacific or any other ancillary Mackay, Fair business performed? The hard reality was that milling was about making money, just as mining was.

FIGURE 7REFINING COSTS, CONSOLIDATED VIRGINIA (CVMC) AND CALIFORNIA

(CMC) MINING COMPANIES, 1874-1878Year CVMC CMC

Average Cost Total Tons Total Costs Average Cost Total Tons Total Costs1873 $13.00 14,864 $193,232.00

46 Schedules of rates over time can be verified in the Bullion Records kept by both Consolidated Virginia and California Mining Companies, 1873-1881, NC99/1/3/1, NC99/1/3/5, and NC99/1/3/7, After Bx 1, Special Collections, Library, University of Nevada at Reno.

28

THE COMSTOCK [0]

1874 $13.00 90,134 $1,171,742.001875 $13.00 168,694 $2,193,022.001876 $12.50 145,466 $1,818,325.00 $12.80 127,542 $1,632,537.601877 $10.20 153,166 $1,562,293.20 $10.40 213,715 $2,222,636.001878 $9.00 123,272 $1,109,448.00 $9.60 128,436 $1,232,985.60Total 695,596 $8,048,062 469,693 $5,088,159

Total Tons 1,165,289Total Costs $13,136,221.40

Average Cost $11.27Sources: See footnote 46.

The Dewey-Burke suit claimed that Pacific Mill and Mining owners had made about $26 million that would have accrued to the stockholders of the mining companies if the companies had owned and operated the mills. How did they arrive at this figure, and was it legitimate? In the four years before the suit was filed, Consolidated Virginia and California delivered ore totaling 1.25 million tons to the mills, most but not all of which were owned by Pacific Mill and Mining. As noted above, milling rates at Pacific and at mills under contract dropped from $13 per ton in 1873 to $9 per ton in 1878. Based on the monthly entries of the milling rates the average for nearly 1.2 million tons of (crushed) ore for all mills was $11.37 for a total of more than $13 million. Dewey’s reimbursement claim alone was twice what the companies actually paid to Pacific. Dewey’s claim made specific reference to the loss of income from tailings because customarily tailings income belonged to the mill and not the mine. Pacific actually owned tailings mills, and the tailings were not entered in the mining companies’ monthly ledgers. Where the tailings showed up was in the County’s quarterly assessments under the name of the mill that processed them. The bulk of the ore claimed by Consolidated Virginia and California was amalgamated with the costs duly and regularly recorded, but some ore was lost in the milling. As the moisture-laden ores moved from the stamps where they had been crushed to the amalgamation pans, the water was allowed to drain off into troughs that carried the water and any residue into storage areas. The residues contained ores that could be milled again. Very few mining companies (if any) owned tailings mills. Mining companies had little interest in milling their tailings, and they were more inclined to sell their tailings to millers who specialized in such business. County assessments had to be paid on all ores including tailings, and generally the mining companies paid the taxes on the amalgamated ores whether or not they owned the refining mills, and the tailings mills paid the taxes on the ores that they had acquired and processed. Pacific Mill and Mining actually operated two tailings mills - Omega and Mariposa. Omega was strictly for tailings, and its output did not appear in any of the companies’ monthly mill accounts. Mariposa, on the other hand, handled both processing functions, and any ores that it amalgamated for Consolidated Virginia and California appeared in the monthly accounts. In fact Mackay & Fair built Omega to process the tailings from Consolidated Virginia and California. They may also have solicited business from other mining companies. From 1877 to 1885 Omega reported for taxes about 200,000 tons worth about $1.5 million. What amount of the $1.5 million was derived from Consolidated Virginia and California ores cannot be ascertained from the extant archives. They may have in fact bought tailings from other mills. I could find no

29

THE COMSTOCK [0]

records on the finances of their tailings mills, especially how much they paid for tailings including those from their own reduction mills. Even if one assumes that the two bonanza mines contributed a large part of the tailings receipts that accrued solely to Pacific and its owners and then combines that estimate, say $1 to $2 million dollars, with the recorded refining costs on amalgamated ores, one has a total far less than the damages claimed by Dewey et al. in their lawsuit. Clearly, as other writers have suggested, Dewey like his ally, The San Francisco Chronicle, had more sinister motivations. Dewey had originally sought an amount in excess of $50,000 to settle what he considered a dishonest transaction by one of The Quartet, James Flood. When Consolidated Virginia refused to pay, the ante was raised by several tens of millions and the reputation of The Quartet was under attack. That The Quartet knew how to make money cannot be doubted. In the minds of their critics the ill-gotten gains were not so much from the ore bodies themselves – all acknowledged the skill of the founders in exploiting them – but from the ancillary businesses that the founders created in support of their mining operations.

30

THE COMSTOCK [P]

Chapter 16The Biggest Bonanza:

Refining As Financial Bonanza, Other Mineral Mercury, Founders’ Cash Flow

Pacific Mill and Mining made money for its principal and the small circle of investors. There is not much debate that it was organized to serve the refining needs of Consolidated Virginia and California Mining Companies, and when these mines reached the end of the road (as had Comstock mining in general) the milling business collapsed. By the middle of the 1880s, when Comstock production had fallen to a fraction of its 1870 levels, many of Pacific properties had been sold or abandoned. In the years between the creation of Pacific (1874) and the demise of Consolidated Virginia and California Mining (1881) milling operations enjoyed substantial profits even as milling rates dropped. It helped, of course, that Pacific was the exclusive refiner for the largest and richest mines in the history of the Comstock. In addition, though, these were Mackay and Fair properties that like the mines that they served were well managed. Mackey and Fair, even before they had joined forces with Flood and O’Brien, had acquired several mills in the late 1860s to process ores from their Kentuck and Hale & Norcross mines. They were not novices in the milling business when they organized Pacific. The dozen or so mills that can be verified as being under the Pacific umbrella included the mills Mackay and Fair bought in the 1860s plus mills purchased or built in the 1870s. Eighteen mills processed ores from Consolidated Virginia and California, and the ownership by Pacific of at least 12 of these mills can be firmly documented. They were Bacon, Brunswick, California, Consolidated, Empire State, Hoosier State, Mariposa, Morgan, Occidental, Omega, Sacramento and Trench. The ownership of six other mills - Devil’s Gate, Kelsey, Mexican, Nevada, Rhode Island and Winfield – could not be so firmly documented. It could not be determined if Pacific owned all or part of these six mills, leased them or simply signed milling contracts with them on a per-need basis. Mill ownership can be difficult to trace because mills were sold, renamed and even dismantled and rebuilt. All of the mills can be identified on recent survey maps created by Nevada agencies responsible for the cleanup of toxic-waste sites. They stretched from Virginia City south (along what is now Highway 341) to the Carson River and then to Carson City and east through Six Mile Cañon toward Sutro.1

The Bacon Mill was probably the first milling property that any of The Quartet acquired. In the 1866 state survey C. L. Lowe and James Fair were listed as the mill’s owners. Lowe was also the principal owner of Hale & Norcross. More than likely ore from Hale & Norcross was processed at Bacon, since the mine apparently did not own any mills. Not only did Fair own part of Bacon, but he also worked for Lowe at Hale & Norcross for a few months in 1867. His departure occurred under somewhat cloudy

1 See above footnote for sources on how much ore the mining companies shipped monthly to each mill. The mill survey has been published on-line at Bureau of Corrective Actions, Superfund Branch, Nevada Division of Environmental Protection – http://ndep.nv.gov/BCA/CarsonRiver/milm_opt.jpg. Handwriting in manuscripts can be challenging. According to this map Bacon and Trench mills were located on the same property. The map also shows a mill named French and another named Frenches. When I first came across lists of mills in manuscripts I could not be sure I was reading a capital F or a capital T, French or Trench. For a while I thought Trench was French, but then upon consulting this map I decided that the Pacific-owned mill was Trench next to Bacon.

1

THE COMSTOCK [P]

circumstances, but he remained an owner of Bacon and perhaps became the sole proprietor. In 1868 when Mackay and Fair acquired Hale & Norcross Mackey may also have acquired part-ownership in Bacon. Although the details are scant, Bacon, it would appear, continued to be operated as a separate entity from the mine. In 1872 after the disposal of Hale & Norcross and before the founding of Consolidated Virginia Fair addressed a long letter to Flood and O’Brien concerning various financial matters. He noted that Bacon’s improvements had cost $8,490.25 in addition to the cost of the mill, which he did not specify. Bacon was in continuous operation until its dismantlement in 1883. Other mills cited in Fair’s letter (without specific dates) were Trench and Mariposa. Trench, Bacon’s neighbor, was apparently bought in 1870 at a cost of $49,670.50. Improvements added another $21,574.27 for a total investment of $71,244.77. Trench did not appear on the 1866 survey, and its prior owner(s) cannot be identified. Mariposa’s owner, on the other hand, was simply identified as McCurdy in the 1866 survey, and while it was purchased for only $11,557.00, in 1870, it needed $16,518.01 worth of repairs. A third mill, Marysville, was mentioned in the letter, but according to Fair it should not be listed as a property because no money had exchanged hands. The implication was that the transaction was never completed. In any event it never showed up the monthly milling accounts for Consolidated Virginia and California. What can be said was that Marysville was owned in 1866 by O’Neale, Rule & Glazier, was located in Gold Hill near other mining properties that Mackey and Fair acquired and was officially sited on Nevada’s recently completed superfund survey.2

In the early 1870s Mackay and Fair along with Flood and O’Brien were actively purchasing more milling properties. Since they had not yet founded Pacific Mill and Mining, they may have acquired and operated the mills as separate entities (not yet incorporated) apart from their mining properties. Empire State Mill probably entered the fold in November 1870. Empire State was formerly a Sharon property, and while Sharon and the Mackay and Fair crowd were perennial adversaries, they were not averse to negotiating business deals and transactions that might advance their own financial goals. Occidental, whose previous owner is not known, was purchased next. In a letter to his partners Fair remarked that other parties (not specified) had an interest in Empire and Occidental and the transfers were not recorded in Virginia City. When Pacific Mill and Mining came into existence, the Quartet owned or controlled five or six mills. Once established, Pacific continued to be aggressively buying and building mills. That included the previously-discussed construction and reconstruction of Consolidated and California mills as well as the construction of Omega Mill. These three projects probably required outlays of approximately $1.5 million. In 1875 Pacific Mill and Mining added Morgan and Brunswick (the latter also purchased from Sharon) at a cost of $100,000 and $250,000 respectively. A third purchase (without price or date) was Sacramento.3

2 For data on mills from the mid-1860s see “Annual Report of the Surveyor-General of the State of Nevada for the Year 1866” in State Journal and Appendix, 3rd Legislative Session (1867), insert after p. 21. Letter from James Fair to James Flood and William O’Brien, 19 December 1872 in Mackay & Fair Company, Letters, July 1871-July 1877, #5, Special Collections, Library, University of Nevada at Reno. Marysville appears on the aforementioned survey.3 Letter from James Fair to James Flood and William O’Brien, 19 December 1872 in Mackay & Fair Company, Letters, July 1871-July 1877, #5, Special Collections, Library, University of Nevada at Reno. Hoosier State Mill may also have been purchased in 1873 as a part of Hoosier Mine. Built in 1862 by

2

THE COMSTOCK [P]

A few detailed financial records (i.e., daily or monthly accounts) of Pacific’s operations have been found scattered among several archives. Pacific was one of several Mackey & Fair businesses held privately. The principals were The Quartet – Mackey, Fair, Flood and O’Brien – and perhaps several other minor investors. When Fair gave testimony at a 1878 hearing, he was asked who owned Pacific Mill and Mining, Pacific Wood, Lumber and Flume and Virginia and Gold Hill Water, and to each question he answered that Mackey, Fair, Flood and O’Brien were the principal owners, although in th case of the water company he added Hobart, Shae and Wells.4 For all intents and purposes, however, Mackey and Fair were the “principals of the principals.” Transactions involving these companies were recorded in something known as the Mackay & Fair Account. These ventures were financed with money mainly subscribed by Mackay and Fair. When Pacific was organized its original assets included properties in which Mackay and Fair held substantial interests. Reorganization of Pacific Mill and Mining began in 1880 when a Supplemental List of company officers was filed in San Francisco. Mackay was listed as President, E. C. Platt as Vice-President and W. H. Lowell as Secretary, and Mackay and Platt were listed as directors along with three others. Fair’s name was absent because he was preparing for his retirement from The Firm, to be fully completed in 1881. Also missing were others among the original organizers: Flood, O’Brien (died in 1878), William Barron and Solomon Heydenfelt.5 I have found no records that spell out precisely the financial or managerial roles, if any, of the non-principals in the original group. It was possible that Flood and O’Brien were included because they managed the mercury accounts (purchases and transfers) for The Firm, and mercury was crucial to refining. William Barron owned a large mercury mine in Alamen, California, from whom The Firm bought mercury. Heydenfelt was a transplanted southern who distinguished himself as a jurist and attorney in San Francisco. Both were members of the original Board of Directors for Consolidated Virginia. That said, it’s not clear how any of the proceeds from Pacific benefitted anyone but the principals.

In connection with the Dewey-Burke suit J. H. Gager, who had served The Firm as an accountant, conducted a review of the milling company accounts. As Pacific was winding down business in 1883, he provided an addendum to an 1881 statement (less than an official audit) of what was entitled “Operations of Pacific Mill & Min. Co.” The statement plus the addendum was mainly concerned with the period from 1874 to 1881 but also included some activities between 1881 and 1883. The account in question was something referred to in the document as The Account of Mackay & Fair. This was not

Clarke and Hearst, custom millers, it did not process any Consolidated Virginia ores until 1875. See Account of Supplies, Hoosier Mine, January 1873 in Mackay, Fair, Flood & O’Brien Archives, NC356/1/20, Nevada Historical Society.4 Quote from testimony in Oscar Lewis, The Silver Kings: The Lives and Times of Mackay, Fair, Flood and O’Brien, Lords of the Comstock Lode (Paperback Edition, Reno NV: University of Nevada Press, 1989), 153. Unfortunately, no footnotes were provided.5 Supplemental List of the Officers of the Pacific Mill and Mining Company, January 1880, NC80, Special Collections, Library, University of Nevada at Reno. The directors included George Congdon, Cornelius O’Conner and William Legle. Congdon and O’Conner were directors of Consolidated Virginia and California Mining Companies and would be among the founders of a newly established company through the consolidation of the two mining companies in 1884. See authenticated copy (1886) of Certificate of Consolidation, 1884, of Consolidated Virginia and California Mining Companies, Mackay, Fair, Flood and O’Brien Archives, NC356/1/42, Nevada Historical Society.

3

THE COMSTOCK [P]

account in which the company’s business was recorded, but rather was the account in which the principals recorded (or had recorded) their income from the milling operations. The details are limited and the figures cannot be reconciled in all instance. In Figure 1 (below) I have presented the entries as they appear in the Gager statement.6

Let me start with the most obvious question? Did Pacific make money, and if so what much accrued to Mackay and Fair? Of course is the answer to the first part, and millions is the answer to the second. But the exact amount is hard to discern from the aforementioned document. It would appear that gross profits – surpluses over and above operational costs – ranged between $6 million and $8 million as of 1883. A range emerged because the figures changed between 1881 and 1883 (because according to Gager who said he had reexamined earlier documents). In 1881 the surplus in the Mackay & Fair account was declared to be $7.7 million, but by 1883 it had fallen to $6.7 million (which were called dividends whereas in the 1881 version the document stated money was “turned over” to Mackay & Fair). Why the difficulty in arriving at a final figure? It boiled down to how capital was raised to acquire and renovate the company’s facilities. By 1881 there were profits, but when Pacific started up there were no profits. Mackay and Fair advanced the capital for certain undertakings and then were reimbursed from the accruing profit. The difficulty in reconciling the two versions has to do with those reimbursements. .

Most of the financial information in the Gager document concerned what might be roughly called capital expenditures and surplus distribution. Operational expenses were not included, although later in this chapter I will make some estimate of the latter. The itemized list in the 1881 version was fairly straight-forward, From August 1774 to July 1881 the document stated that the company had “net profits” of $8.8 million, or slightly more than one million dollars per year on average. Profits were derived from “working ores, slimes and tailings, slimes sold;” they were also derived from “dividends from Woodworth Mill (½) & dividends from Eagle Salt Works, etc.” The mill is something of mystery because it did not show up in any of the records of the ores milled. My first thought was that Woodworth was a timber mill, and that may be the correct assumption except a refinery by that name shows up in other mill records.7 The outlays 6 “Operations of the Pacific Mill & Mining Co. – at Virginia – from August 1 st 1874 to July 1st 1881”, Pacific Mill and Mining Company Financial Records, 1874-1881, Mackay, Fair, Flood, O’Brien Archive, NC356/1/2 &13, Nevada Historical Society. This is a single document that summarized financial data to 1881 and then added another page of data up to 1883. Grant Smith (The Comstock Lode, 254) also analyzed Pacific Mill and Mining audits that he said that he found in the library of the Mackay School of Mines, University of Nevada Reno, where John Mackay’s archives were first housed. Those archives were later transferred to Special Collection in the University Library. Smith did not provide a specific reference, and therefore the document that he used could not be located. It could still be in Special Collections but was not turned up during my research. The document that I am using has different figures, has fewer details and is housed in the Nevada Historical Society. “Net Profits” may be an inaccurate description as defined by contemporary accounting standards. The Mackay & Fair Account of which this was a part contained financial data from all the Mackay & Fair privately-held businesses. This account was separate from the accounts for the mining operations. More about this account later in this chapter.7 In 1870 The Quartet purchased a half interest ($12,000) in Woodworth Mine, its location unknown because it did not appear on any the previously discussed surveys. Nothing else is known about the mine. In the early 1870s a Woodworth Mill appeared on the Mineralogist’s survey of mills in Lyon County, and it is possible that the mine and mill occupied the same property. The other possibility is that the mill was a

4

THE COMSTOCK [P]

consisted of purchases such as property, construction and reconstruction of mills and inventory (i. e., value of unused supplies when the audit was made). That amounted to almost $1 million, and when that figure plus the value of slime bullion and cash on hand were added up the deduction from the $8.8 left $7.7 in Mackay & Fair’s account. Among the outlays were $850,000 dollars for four milling facilities: Mariposa, Consolidated Battery & Pan, California Battery & Pan and Omega Tailings. (Consolidated was lost in the 1875 fire.) Eagle Salt (an ingredient needed to refine the ore) cost between $33,000 and $34,000 to acquire. The surplus of $7.7 million, resting in the Mackay & Fair account consisted of the balance after operating costs were deducted from operating revenues (Pacific charged The Firm’s mines at various per-ton rates) along with certain “capital” charges. (It was this surplus that provoked Dewey to sue.)

The 1883 addendum made for more confusion than clarity. The first difference with the 1881 statement came at outset: “Total net profits” was replaced by “Balance against Mackay & Fair” with the date of 1 September 1883 and the amount of $8,101,122.90. This figure did not appear anywhere in the 1881 version. In two years Pacific’s surplus (money left over after operational costs had been deducted from receipts) had dropped by three-quarters of a million dollars. No explanation was given. Were the prior figures incorrect or had business declined so much that the principals had to divert money from their own account to keep the company afloat? Total tonnage in 1883 had fallen to its lowest levels since the initial discoveries with yields between $15 and $20 per ton. Pacific had sold or abandoned most of its mills, and what of value remained of this milling colossus was an inventory (in excess of $100,000) of a few properties plus supplies. In theory, at least, Mackay & Fair account should be worth less, although how that happened cannot be detailed. Next came an unexplained charge of $425,478.43. The starting point for this second version of Gager’s audit was $7,675,644.47. This figure appeared in the 1881 version as the balance after deducting various expenditures for acquisition and construction for which Mackay and Fair were being reimbursed. In the 1883 addendum (and allegedly the reason it was prepared) the aforementioned construction costs (reimbursements not profits) were increased by an additional $11,285.40: for construction ($8,069.94) of the “Old Consolidated” mill, that was destroyed in the 1875 fire, and for construction ($3,215.50) of the new California mill. The confusion arises because in addition to this minor revision Gager added other

separate property and closer to Virginia City. In the same letter concerning the purchase of the Woodworth Mine there was a reference to the fact that The Quartet also owned half an interest in a “Woodworth Sluice Property”. The mill cost them almost $39,000 and another $85,000 to $90,000 to improve the sluices and others facilities. If Woodworth was an ore mill two possible explanations can be suggested: it may have been purchased in connection with their ownership of the Virginia and Gold Hill Water Company, incorporated in 1871, or it may have been purchased in connection with the construction of the Omega Mill, which as a tailings mill had need for the sluices. In terms of analyzing Pacific finances, however, the Woodworth Mill is not especially crucial because no figures on the size of the dividend are given. “Operations of the Pacific Mill & Mining Co. – at Virginia – from August 1st 1874 to July 1st 1881”, Pacific Mill and Mining Company Financial Records, 1874-1881, Mackay, Fair, Flood, O’Brien Archive, NC356/1/13, Nevada Historical Society; Letter from James Fair to James Flood and William O’Brien, 19 December 1872 in Mackay & Fair Company, Letters, July 1871-July 1877, #5, Special Collections, Library, University of Nevada at Reno; and “Biennial Report of the State Mineralogist of the State of Nevada for The Years 1871 and 1872,” Appendix to Journal of the Senate, 6th Legislative Session, 1973, 100. Eliot Lord wrote a long section Virginia and Gold Hill Water Company, set up by Mackay, Fair et al. in 1871 without any mention of Woodworth in Comstock Miners and Mining, 322-333.

5

THE COMSTOCK [P]

figures without fully explaining and in the process reports some figures differently from how they appeared in the 1881 version. Thus, the new figure for the “Balance against Mackay & Fair, July 1st, 1881” was $7,664,359.03 after deducting the unexplained charge and the minor revision. He then listed a series of payments for purchases of mills and supplies in September, October and November of 1875 (at the time of the fire) and in December 1876 for a total of $585,665.21 that did not appear in the 1881 statement. They involved costs for purchases of Morgan and New Brunswick mills and of machinery for Consolidated (lost in the fire) and California mills. The entry read: “Payments by J. H. Gager – per his statement up to July 1st 1881”. Having acknowledged these expenses Gager then declared that “Dividends from April 30, 1877 to May 31, 1881” [first time that either of these dates had appeared] was $6,647,067.89. However, when this figure was added to $585,665.21 plus $218.49 cash on hand in 1883 the total is $7,232,951.62 or $431,407.41 less than the aforementioned $7,664,359.03. And the difference was left unexplained. Finally, again without explanation, he listed “sundry mixed charges” of $162,324.12. While the transfer of more than $11,000 from profits to costs is understandable, the remainder of the 1883 addendum is not. (See Figure 1 below)8 In addition to the unresolved accounting problems the document did not explain how the surpluses or dividends or profits of $6 to $8 million were disposed of. The Mackay & Fair Account was used to deposit monies from their privately-held businesses listed in Fair’s testimony. If the other principals had accounts comparable to the Mackey & Fair Account, they did not surface in the archives I consulted. The money deposited in the Mackay & Fair Account may have been just Mackay and Fair’s share, or, this appears more likely, it may have been undistributed profits from the Quartet’s various businesses.

After numerous failed attempts to try to make sense of these accounts, incomplete as they are, I would propose that the gross profits (or surpluses) of Pacific Mill and Mining until its demise fell in a range of $6 to $8 million. Based on what I have found concerning receipts and costs (to be discussed) in the company’s operations, these profit figures are entirely plausible. It is important to underscore that most of these figures derive from operations prior to 1881, and between 1881 and 1883 Pacific was operating at a deficit. Gager’s audit was to satisfy inquiries about Pacific’s profitability and not to explain how the profits were distributed. The Mackay & Fair Account was not terminated after Fair’s departure because other transactions took place with respect to that account in the early 1880s. None of the businesses in which Mackay and Fair had a stake made money after 1880, and Pacific under the new Board of Directors, according to surviving accounts from 1883 through 1885, was occupied with disposing of remaining inventory and not to resurrecting the company.9 The Mackay & Fair Account survived into the 1880s, and these quasi-post-mortem audits, initiated mainly in response to lawsuits or other inquiries, open a small window into the principals’ private enterprises, operating independently of and yet making money from their publicly-owned companies.

8 “Operations of the Pacific Mill & Mining Co. – at Virginia – from August 1 st 1874 to July 1st 1881”, Pacific Mill and Mining Company Financial Records, 1874-1881, Mackay, Fair, Flood, O’Brien Archive, NC356/1/2 &13, Nevada Historical Society.9 Ledger #4, 1883-1885, Pacific Mill and Mining Company Records, 1876-1884, NC80, Special Collections, Library, University of Nevada at Reno.

6

THE COMSTOCK [P]

FIGURE 1FINANCIAL STATEMENT, PACIFIC MILL AND MINING, BY J. H. GAGER,

1881 WITH ADDENDUM 1883Operations of the Pacific Mill & Mining Co. – at Virginia City

August 1st 1874 to July 1st 1881.

Total Net Profits:derived from working ore, slimes and tailings, slimes sold; dividends from Woodworth Mill (1/2) &

dividends from Eagle Salt works, etc;after taking out the amount expended in constructingthe old Consolidated Mill & the old California Battery

Mill (destroyed by fire) from and after Aug 1st 1874. $8,821,711.66

These Profits were disposed of as follows:[marked “Paid for” before each entry below]Land Mill Slimes (1,487 tons carried/worked Omega Mill) $5,713.02Real Estate in Virginia City & Silver City $16,908.70Personal Property (2 sleighs @ $290 & 1 horse $150 $440 .00Mill Supplies on hand July 1st 1881 $89,512.43Removal & Reconstruction Mariposa Mill (net) $11,448.11

Construction Consolidated Mill (Battery & Pan) $307,700.74 California Mill (Battery & Pan) $274,071.12 Omega Mill (with all appurtenances) $219,089.93 Omega Sluice (with reservoirs) $35,179.98Eagle Salt Works (the whole property) $33,650.00[No description but clearly total of above figures] $993,714.03Slime Bullion on hand, July 1st 1881, assay value $85,756.92Cash remaining on hand (July 1st 1881) $66,596.24Turned over to the acct of Mackay & Fair $7,675,644.47 $8,821,711.66

[A long note follows in which Gager explained why an additional $11,285.44 in costs should be deducted from the profits shown in Mackey & Fair’s Account. What followed the note are the figures below.]

Charges against “Mackey & Fair from July 1st 1881 to Sept 1st 1883—net $425,478.43[Total shown without description] $7,675,644.47Credited for additional construction expense from Aug 1st 1874 to Dec 31st 1876 $11,285.41Balance against "Mackey & Fair" July 1st 1881--net $7,664,359.03 Payments by J. H. Gager per his statement up to July1st 1881[statement referred to above not explained]

Cost of Morgan Mill (Sept 1st 1875) $100,000.00 Machinery for Consolidated Mill (Sep 2nd 1875) $93,234.76 Cost of Brunswick Mill (Oct 1st 1875) $225,000.00 Cost of California Mill (Nov 12th 1875) $150,000.00 Supplies at Brunswick Mill (Dec 23rd 1876) $17,430.48

[No description but clearly total of above figures] $585,665.24 Dividends from April 30, 1877 to May 31, 1881 $6,647,067.89 Cash on Hand July 1st 1881 $218.49 $7,232,951.62 [Difference not described] $431,407.41

7

THE COMSTOCK [P]

Sundry mixed charges by J. H. Gager from Feb 1st 1877 to Oct 18th 1880 - $162,324.13 [Sundry mixed charges not explained]

J. H. Gager closed his acct-----Dec 20, 1876. J. H. Gager opened his acct again Dec 26th 1876 [Not explained]

The acct of Mackay & Fair was credited for construction expenses-Dec 31st 1876 $ 993,580.30Sept 30th 1881 $11,285.44Incurred between Aug 1st 1874 and Dec 31st 1876 $1,004,865.74Sources: See footnote 16. I have replicated the Gager statement as fully I could. I have corrected arithmetic errors and I have entered inside brackets comments about what is missing.

During The Firm’s bonanza years about 1.4 tons of crushed ore from Consolidated Virginia and California passed through Pacific’s amalgamation mills (most of it through mills that it owned) at an average rate of about $11 per ton for a total of $15 million. Tailings, slimes and ancillary business probably generated several hundred thousand dollars more in revenues. Based on Gager’s figures of what accrued to Mackey and Fair it can be estimated that 40 to 50 percent of Pacific’s receipts ended up as gross profits or perhaps more appropriately operating surpluses. Was that possible even as milling rates dropped from $13 to $9 per ton? A few surviving mill accounts allow that matter to be considered.

The reimbursements to Mackay and Fair for capital outlays shed some light on how they financed the expansion of Pacific’s milling capacity. As discussed earlier Mackay, Fair et al. owned several mills that were incorporated into the new firm, Pacific Mill and Mining Company, in 1874. The audits confirmed the acquisition of (and the reimbursement for) Morgan Mill on 9 September 1875 for $100,000 and Brunswick on 1 October 1875 for $225,000, and the “removal and reconstruction” of Mariposa Mill, one of the original properties, for just under $11,500. Mackay and Fair launched and underwrote the construction of a new mill, Consolidated (Virginia) in 1874 that won rave reviews from the State Mineralogist in his 1875 report to the state legislature. He described the battery building as 110 feet long by 10 feet wide, the pan building as 120 feet long and 92 feet wide, the engine room as 58 feet long by 92 feet wide, the agitator room as 20 feet long by 92 feet wide and the retort house as 24 feet long by 60 feet wide for a total of 26,000 square feet at a cost of several hundred thousand dollars.10 Consolidated milled about 60,000 tons of ore between January and October 1875 when the Virginia City fire destroyed it and adjacent facilities. The 1881 audit simply declared without elaboration that the money spent on the old Consolidated

10 “Biennial Report of the State Mineralogist…1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session, 1875, 133.

8

Illustration 1: California Pan Mill

THE COMSTOCK [P]

Mill and old California Battery (a stamping mill) had been removed (the meaning of which was unclear). When Mackay and Fair acquired these works cannot yet be documented. One puzzling item was the purchase on 25 September 1875 of machinery (nearly $93,000) for the Consolidated Mill, presumably the old mill, although it is not clear if this was a payment for machinery to be delivered (and therefore may have escaped the fire) or for machinery already delivered (and a casualty of the fire). A second new mill, California, close to completion at the time of the fire, escaped damage and was up and running as of 1 January 1876. Two California Mill entries appear in Gager’s statements: an undated reimbursement of nearly $275,000 and a dated reimbursement (12 November 1875) of $150,000 for a total of $425,000. In the aftermath of the fire Consolidated Mill was rebuilt at a cost (minimally) of $308,000, and it began processing ore in the fall of 1876. Reimbursements for the new California Mill and the new (post-fire) Consolidated Mill totaled more than $732,000, and if this total were added to the estimated expenditure for the construction of Consolidated Mill and the California Battery lost in the fire these four facilities cost Mackay and Fair more than a million dollars. In accord with the audits, however, only reimbursements for the new California Mill and the reconstructed Consolidated Mill were recorded. The remaining mill project to consider was the slimes or tailings mill Omega that Mackay and Fair built (and were reimbursed for) at a cost of more than $255,000. Although the reimbursements to Mackay and Fair included outlays for mill supplies, property transfers (including Eagle Salt Works) and miscellaneous items, 90 to 95 percent of the reimbursements (which totaled between $1.5 and $1.6 million) were for the acquisition and construction of milling facilities. Even if Mackay and Fair alone or in partnership with several others expended, say, $2 million to build Pacific Mill and Mining, the return on capital of $5 to $6 million certainly made it a highly profitable venture.11

What made the return on investment several times greater than the outlay for plant and equipment was the revenue flow derived from milling operations. In modern parlance

Pacific was a “cash cow”. Because of the richness of the ores and the efficiency of the operations Pacific generated large operating surpluses. This can be seen in a statement of receipts and expenses from 10 of the mills under the umbrella of Pacific Mill and Mining for June 1877.12 Not all mills were equal in terms of comparative costs and potential profits. It will be recalled that 1877 was the best year for Consolidated Virginia and California combined with nearly $32,000,000 worth of ore being extracted and processed. For Consolidated Virginia it was the second best year and for

California the best year. Ores from Consolidated Virginia in June yielded $72 per ton 11 The figures included in the text and the tables are from Pacific Mill and Mining Company Financial Records, 1874-1881, Mackay, Fair, Flood, O’Brien Archive, NC356/1/2 &13, Nevada Historical Society.12 The June 1877 account was not necessarily representative of the operational link between Consolidated Virginia and California and Pacific, but given the paucity of data on Pacific’s finances, it provided as full an accounting as any of the surviving documents.

9

Illustration 2: California Pan Mill-Interior

THE COMSTOCK [P]

(crushed ore), the lowest yield for the year, while ores from California yielded $82 per ton, close to the average for the year. The ores were split among the mills in the following manner: ores from Consolidated Virginia went to California (68 percent), Trench (16 percent), Bacon (12 percent) and Mariposa (4 percent); ores from California to Consolidated (41 percent), Brunswick (27 percent), Morgan (15 percent) and Occidental and Sacramento (8 percent each). The two tailings mills, Mariposa and Omega, processed about 12,000 tons for the quarter (April-June) and we can assume that perhaps a third of that was processed in June.13 How ore was allotted to the mills was not explained, and mills were regularly switched back and forth between Consolidated Virginia and California without explanation. The efficiency and availability of a mill may have played a role.

Mill accounts for June 1877 show the cost to reduce a ton of ore (for the moment I ignore the tailings facilities) and the profit to be realized from reduction. The mills did not own the ores. The reduction rate in June at all the mills was $10 per ton. At the beginning of 1877 some of Pacific’s mills charged a rate of $12 per ton, but by the middle of the year all the mills had dropped their rates to $10 per ton. A mill’s expenses included supplies, labor, freight and repairs, and the difference between the total costs and the per-ton rate charged the mining companies was the gross profit. In addition, what the mill could earn from the bullion in the “slimes” would be added to the operating surplus. If the costs were $7 per ton and the slimes yielded $2 per ton (over and above their costs), then the profits would be $5 per ton ($10+$2-$7=$5). Without the slimes Pacific Mill and Mining’s profits averaged $2.19 or 22 percent on each ton of ore from Consolidated Virginia and $2.64 or 26 percent on each ton from California. The slimes from Consolidated Virginia ores added $2.56 per ton and from California $2.48 per ton. In nominal terms (dollars and cents) the profit from the reduction of the slimes as measured by the value of the bullion could often equal that from the amalgamation of the ores. For this single month California Mill had the best profit record for those mills reducing ores from Consolidated Virginia, and Brunswick Mill had the best record for those mills reducing California ores. Mariposa proved to be the least profitable with Consolidated Virginia ores and Occidental with California ores. Labor costs per ton differed across the spectrum of mills. Average labor costs for the four mills processing Consolidated Virginia ores was $1.60 per ton whereas California Mill spent only $1.17 per ton. With respect to the mills processing California ores Brunswick had similarly low labor costs at $1.16 per ton against an average for the five mills of $1.59. The two-year-old California Mill may have registered lower unit labor costs because it was among the most efficient mills, and perhaps rebuilding Brunswick had raised its efficiency and lowered its per-unit labor outlays. Other factors such as grades of ores assigned to the mills may have played a role. In both Mariposa and Occidental labor was between $2.00 and $2.10 per ton. The cost of supplies per ton did not vary significantly from mill to mill. Apparently the mills paid the cost to deliver the ore from the mine, and that cost ranged from near zero in the case of Consolidated and California mills, which were next door to the mines, to $1.75 per ton for mills along the Carson River near Carson City. Repairs were reported at three mils – Sacramento, Consolidated and California – but none

13 Bullion Records, June 1877, Consolidated Virginia and California Mining Companies, NC99/1/3/5 & 7, Special Collections, Library, University of Nevada at Reno.

10

THE COMSTOCK [P]

at the other mills. Other expenses that one could think of – administrative and legal, for example – were not noted. The above calculations concern mainly operating costs.14

Among the items needed to do the refining including wood, castings (shoes and dies) and bluestone (copper sulfate), quicksilver was the most crucial ingredient. Quicksilver or mercury was first applied to the reduction of low-grade silver ores in sixteenth-century Mexico and Peru through a process invented by Bartolomé Medina. In colonial mines large stone were used to pulverize the ore before it was incorporated with mercury, salt and several other ingredients in open, round patios that had large wooden spatulas attached by a rod to a donkey that stirred the mixture by walking around the patio. Even individuals were known to walk around in the mixture with tragic consequences, of course. By the time of the Comstock bonanza the patio process had undergone important modifications. The plants still consisted of stamps along with batteries for grinding the ores and smashing the rocks, but a mechanized system of pans and agitators in a long building had replaced the patios. Mills were identified in terms of the numbers of stamps and pans. The process of amalgamating the ore with the mercury, which could take up to three months in the patios, had been reduced to weeks and even days. In general the higher the quality of the ore the more mercury was required to separate the metals. Mercury was bought from California and Arizona miners and as far away as Hong Kong. The quality of the mercury was important, and the higher the quality the greater the efficiency of the mercury in amalgamating with the ore. Only a portion of the mercury in the pan was lost with each incorporation, and what appeared as mercury expenses in mill accounts was mainly to recharge the amalgamation pans after a batch of ore had been successfully amalgamated. These recharges were unpredictable and could vary from pan to pan and mill to mill. Recovery of the mercury, which some Spanish colonial miners also practiced, consisted of heating the amalgam of ore and mercury to evaporate the mercury, which could then be condensed into a “retort” that was usable again. Devices for capturing and restoring mercury were far more effective in the late nineteenth century than 100 or 200 years before.15

Amalgamation had been invented primarily to make refining various ore grades profitable. In colonial Spanish America high-grade ores were often smelted rather than amalgamated because mercury sold through the royal monopoly was expensive. Along the Comstock and in the West generally, however, mercury was used even with high-grade ores. Mill superintendents had learned from experience how to adjust the quantity of mercury with respect to the quality of the ore. If manuals existed with the individual milling operations, they have not shown up in the archives that I have consulted. Frequent assays could provide some guidance on how much mercury should be incorporated with the ores. Those who have written about the Comstock have accepted as rough estimates the following: if the pans accommodated 2,000 to 3,000 pounds of ore, then they needed

14 “Comparative Statement of the Operations of Mills, June, 1877,” Pacific Mill and Mining Co, records 1865-1884, Bancroft Library, P-G 207, Oversize Box 1, Folder 11. The calculations in the text are mine based upon data from this statement.15 Much has been written about Medina and the patio process. For example, see Peter Bakewell, Silver Mining and Society in Colonial Mexico, Zacatecas 1546-1700, (Cambridge: Cambridge University Press, 1971), Chapter 7. All the Comstock’s major historians – DeQuille, Lord and Smith - discussed aspects of the refining operations.

11

THE COMSTOCK [P]

200 to 300 pounds of mercury with an expected loss of one pound per pan per operation. Such a loss amounted to 0.3 to 0.5 percent of the total. In addition to the experience in accommodating for grades of ores, some plants and crews were highly efficient at incorporating and reserving quicksilver and therefore minimized the loss and lowered the cost. A loss of one pound per ton was a yardstick based on all Comstock operations.16

The fact that mercury could be used more than once was what made amalgamation an economically viable procedure. If each pan required an average mercury charge of 10 percent of the ore or 200 to 300 pounds, and that charge had to be replaced in each pan after each operation, then amalgamation would have proved to be prohibitively expensive. For example, in 1877 the Pacific mills reduced over 366,000 tons of ore. To replace 200 to 300 pounds of mercury in each pan after each operation would have cost, at 50 cent per pound, from $37 to $55 million dollars. A total replacement would have translated into mercury costs reaching $100 per ton. At $100 per ton instead of $10 to $15 per ton mercury would have played no role in the milling business. Recharging the pans depended on ore grades, which could require recharges several times the average..

FIGURE 2SUMMARIES OF MONTHLY QUICKSILVER TRANSACTIONS, 1877,

PACIFIC MILL AND MINING COMPANY[1] [2] [3] [4] [5] [6] [7] [8] [9] [10]

Jan 21,535 $3,222,725.00 1367 $50,647.87 $0.48 980 3.49 $41,233.50 $0.55

Feb 20,333 $3,081,112.00 900 $32,647.85 $0.47 890 3.35 $34,042.50 $0.50

Mar 22,057 $3,408,014.00 675 $22,978.68 $0.44 1395 4.84 $53,358.75 $0.50

Apr 27,161 $2,709,443.00 1400 $46,536.98 $0.43 765 2.16 $29,261.25 $0.50

May 29,642 $2,106,886.00 895 $29,889.98 $0.44 1643 4.25 $62,844.75 $0.50

Jun 32,943 $1,923,481.00 675 $22,978.68 $0.44 1355 3.15 $51,828.75 $0.50

Jul 32,626 $1,628,698.00 450 $15,319.12 $0.44 1691 3.97 $64,680.75 $0.50

Aug 32,184 $1,627,880.00 2227 $83,582.81 $0.49 960 2.28 $36,720.00 $0.50

Sep 34,057 $1,794,641.00 2500 $99,730.19 $0.52 1450 3.26 $61,008.75 $0.55

Oct 38,368 $1,888,523.00 575 $19,708.31 $0.45 1190 2.38 $50,069.75 $0.55

Nov 39,566 $1,731,309.00 1375 $49,183.80 $0.47 1529 2.96 $58,280.37 $0.50

Dec 36,412 $1,715,623.00 1000 $36,383.50 $0.48 1255 2.64 $48,003.75 $0.50

Total 366,884 $26,838,335.00 14039 $509,587.77 $0.47 15103 3.15 $591,332.87 $0.51Mean 30,574 $2,236,527.92 1,170 $42,465.65 $0.46 1,259 3.23 $49,277.74 $0.51

Median 32,405 $1,906,002.00 950 $34,515.68 $0.46 1,305 3.21 $50,949.25 $0.50Legend: [1] Month; [2] Tons Crushed; [3] Bullion Returned; [4] Flasks Bought/76.6 Pounds; [5] Cost of Flasks of Mercury; [6] Price per Pound; [7] Flasks Sold to Pacific Mill and Mining; [8] Pounds Sold per Crushed Ton; [9] Cost to Pacific Mill & Mining; [10] Price per Pound.Sources: See footnotes 16, 17.

The total quantity of mercury shipped to and consumed by Comstock millers or in particular by Pacific Mill and Mining cannot be stated with any degree of accuracy. This could only be determined if we had a full accounting of mercury purchases by all millers.

16 The reference to the Pacific mills based on data from “Comparative Statement of the Operations of Mills, June, 1877,” Pacific Mill and Mining Co, Records 1865-1884, Bancroft Library, P-G 207, Oversize Box 1, Folder 11. Also see Smith, The Comstock Lode, 257.

12

THE COMSTOCK [P]

A 1992 report on “Mercury Contamination of the Carson River” estimated that 15 million pounds (7,500 tons) of mercury entered the Carson River basin, mainly from mills located along or in the vicinity of the river.17 Comstock millers processed more than seven million tons of ore up to 1885. Based on the performance of the Pacific mills in 1877, each ton of crushed ore required a charge (to cover the loss) of about three pounds of mercury. If that figure were applied to seven million tons, then minimally 21,000,000 pounds of mercury was consumed up to 1885. The total figure must surely be higher than that. The presence of so much mercury in the Carson River would indirectly support an estimate of the consumption of 21,000,000 plus pounds, not only because many large mills were located on the river itself but nearly all the mills were located in the watershed that drained into the river. In addition, all the abandoned mills sites, of which there were scores, had mercury contamination so that the estimated volume of the residual mercury in the Carson River was incomplete with reference to all the mercury consumed. Using the 21-million figure we can also estimate the total cost, based on prices paid by Pacific. The cost of 21,000,000 pounds (275,000 flasks) at 50 cent per pound was $10 to $11 million or 2.5 percent of the total bullion value of gold and silver. A fairly straightforward calculation indicates that The Firm accounted for a fifth or $2 million of the money spent on the mercury purchases plus the freight. For a single mill the quality of the ore would determine how onerous in percentage terms the cost of mercury was. Even though high-grade ores required more mercury, the yields themselves could be so high, as they were at bonanza mines, that increased mercury consumption had little impact on a company’s cost structure. If Pacific’s total mercury expenses were between $2 and $3 million, that amount equaled a fraction of a percent of the total value of the bullion declared. The legacy costs, however, in the form of contamination and rehabilitation of the environment will dwarf the price per ton paid for mercury to refine the ore.18

Pacific Mill and Mining purchased millions of pounds of mercury to maintain its amalgamation operations each year. It was by far the largest purchaser of mercury in the history of the Comstock. It did not purchase mercury directly, at least in a technical sense. Flood and O’Brien through their San Francisco offices signed the contracts for delivery of mercury in behalf of Mackay & Fair in Virginia City, which sold the mercury to Pacific Mill and Mining. (This was another section in the previously-discussed Mackay & Fair Account.) The account showed what Flood & O’Brien paid for the mercury and then what Mackay and Flood received for the mercury when it was sold to their own mills under Pacific Mill and Mining. One might assume that the volume of mercury purchased by The Firm gave it some leverage in negotiating prices, but, if that were the case, it cannot be verified from the transactions detailed in the accounts. It was entirely possible that using such leverage was never intended. During the middle years of the 1870s demand for mercury was higher than it had ever been, and that pushed up prices significantly by as much as a third to a half. Once the boom had ended, prices fell by a fifth or more. No serious mercury shortages were alluded to in The Firm’s 17 Quarterly Newsletter of Nevada Bureau of Mines and Geology, Winter, 1992. This figure was taken from a 1942 report that is not available on-line.18 The number of flasks and the cost per flask from calculations made from the data in “Comparative Statement of the Operations of Mills, June, 1877,” Pacific Mill and Mining Co, Records 1865-1884, Bancroft Library, P-G 207, Box 2.

13

THE COMSTOCK [P]

correspondence, although it occasionally contained references to dissatisfaction over quality, defective flasks and delays in shipments. Mercury from Hong Kong was more expensive by a few pennies per pound than western US mercury, and the cost of freight from Hong Kong added more to the final price than domestic freight. (Size of flask may have been different and therefore direct comparisons are not possible.) The Hong Kong purchases were undertaken to insure a substantial inventory at a time when California was at its peak and Consolidated Virginia was staging a comeback. In 1877 total purchases may have amounted to 5,000 flasks (383,000 pounds) but as many as 3,500 flasks and perhaps 4,000 flasks had not yet arrived in Virginia City by the end of the year. Because of the travail in completing the transaction, Hong Kong would not soon replace domestic suppliers. From the annual mercury statements maintaining an adequate supply was more of a concern than looking for the cheapest price.

At the start of 1877 during the final phase of the Big Bonanza the accounts of Mackay & Fair showed that 2,838 flask or 217,000 pounds were on hand in Virginia City. During the year Flood & O’Brien bought 14,039 flasks or 1.1 million pounds, which were shipped to Virginia City. Another 300,000 pounds, purchased in Hong Kong, never arrived except for a few thousand pounds. About 1.2 million pounds were distributed, and at the end of the year 136,000 pounds remained. At the rate ore was being delivered to Pacific mills, the quantity on hand was enough for a little more than a month. At the same time other mines were hoisting ore, and the mills processing their ores also needed access to a supply of mercury. The total demand was probably greater by several hundred thousand pounds than the totals drawn from the foregoing accounts.

FIGURE 3FLASKS OF QUICKSILVER BOUGHT AND SOLD IN THE ACCOUNT OF

MACKAY AND FAIR, 1877

0

500

1000

1500

2000

2500

3000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Flasks Bought

Flasks Sold

Sources: See footnotes 16.

14

THE COMSTOCK [P]

There was a negative correlation (-.27) between the purchases of mercury in the account of Flood & O’Brien and the sales of mercury from that account to the account of Mackay & Fair. For the year flasks of mercury purchased averaged 1,170 per month while sales averaged 1,259. The local stockpile of quicksilver on the first of each month averaged 2,900 flasks in the first six months and 1,800 flasks in the next six months. For the year crushed ores from Consolidated Virginia and California rose from 21,535 tons in January to 36,412 tons in December, a rate of over 4 percent a month (R2=90 percent). Purchases by Flood & O’Brien in the first half averaged 985 flask per month and in the second half 1,385 flasks, while sales to Pacific averaged 1,171 and 1,486 respectively. By the end of the year the stockpile of mercury was lower than at the start of the year. On 1 August the inventory of quicksilver in Virginia City had fallen dangerously low to 481 flasks (37,000 pounds) against the average inventory on the first of any month of about 2,400 flasks. As shown in Figure 4, almost 2,500 more flasks of mercury were sold to Pacific than Flood & Fair bought through July 1877.19 In the two months after July Flood & O’Brien sharply boosted purchases: they bought 2,227 flasks in August and 2,500 flasks (of which 1,000 arrived from Hong Kong) in September. For the rest of the year, while stockpiles were not fully replenished, they were less overdrawn.

FIGURE 4QUICKSILVER TRANSACTIONS, PACIFIC MILL & MINING, JUNE, 1877

Month Tons Bullion Flasks Total Price Flasks LbsCrushed Values Bought Cost per lb Sold to Sold

76.6# PMMC per Ton

Jan 21535 $3,222,725 1367 $50,647.87 $0.484 980 3.49Feb 20333 $3,081,112 900 $32,647.85 $0.474 890 3.35Mar 22057 $3,408,014 675 $22,978.68 $0.444 1395 4.84Apr 27161 $2,709,443 1400 $46,536.98 $0.434 765 2.16May 29642 $2,106,886 895 $29,889.98 $0.436 1643 4.25Jun 32943 $1,923,481 675 $22,978.68 $0.444 1355 3.15Jul 32626 $1,628,698 450 $15,319.12 $0.444 1691 3.97Aug 32184 $1,627,880 2227 $83,582.81 $0.490 960 2.28Sep 34057 $1,794,641 2500 $99,730.19 $0.521 1450 3.26Oct 38368 $1,888,523 575 $19,708.31 $0.447 1190 2.38Nov 39566 $1,731,309 1375 $49,183.80 $0.467 1529 2.96Dec 36412 $1,715,623 1000 $36,383.50 $0.475 1255 2.64

Total 366884 $26,838,335 14039 $509,587.77 $0.474 15103 3.15Average 30573.67 $2,236,527.92 1170 $42,465.65 $0.463 1259 3.23

Month Total Price % Chg % Chg % Chg Index IndexCost per lb Tons Flasks lb Sold Tons lb Sold

Sold

Jan $41,233.50 $0.549 70.44 108.01Feb $34,042.50 $0.499 -5.58% -9.18% -3.82% 66.50 103.89Mar $53,358.75 $0.499 8.48% 56.74% 44.49% 72.14 150.10Apr $29,261.25 $0.499 23.14% -45.16% -55.47% 88.84 66.85May $62,844.75 $0.499 9.13% 114.77% 96.80% 96.95 131.55

19 Calculating coefficients of variation for the first six months revealed that there was more than twice the variability on the purchase side (58 percent) as on the sales side (24 percent).

15

THE COMSTOCK [P]

Jun $51,828.75 $0.499 11.14% -17.53% -25.79% 107.75 97.62Jul $64,680.75 $0.499 -0.96% 24.80% 26.01% 106.71 123.01Aug $36,720.00 $0.499 -1.35% -43.23% -42.45% 105.27 70.79Sep $61,008.75 $0.549 5.82% 51.04% 42.73% 111.39 101.05Oct $50,069.75 $0.549 12.66% -17.93% -27.15% 125.49 73.61Nov $58,280.37 $0.498 3.12% 28.49% 24.60% 129.41 91.72Dec $48,003.75 $0.499 -7.97% -17.92% -10.81% 119.10 81.80

Total $591,332.87 $0.511 5.24% 11.35% 19.44%

Average $49,277.74 9.26% 19.93%Sources: See footnote 18. Base for indices is series average.

FIGURE 5CRUSHED ORE IN TONS AND MERCURY SALES (REPLENISHMENTS) IN

POUNDS, PACIFIC MILL AND MINING, 1877

R² = 0.8994

R² = 0.206

0.00

1.00

2.00

3.00

4.00

5.00

6.00

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Crushed TonsPounds Added Per TonLinear (Crushed Tons)Linear (Pounds Added Per Ton)

Sources: See footnotes 16.

Can the depletion of stockpiles of quicksilver in Virginia City be accounted for? In the first six months Flood & O’Brien bought less mercury on average per month (985 flask) than Mack & Fair sold on average per month (1,171 flasks) to Pacific. Suppliers may have been pressed to meet the demand (why else turn to Hong Kong) and yet given prices paid, as they appear in the accounts of Flood & O’Brien and Mackay & Fair, not much if any constraint on supplies of mercury can be observed. A more likely explanation for the decline in stockpiles may have resulted from sudden upturn in the extracting and milling of high-grades ores during the Spring 1877. Crushed tons yielded far more bullion in the first half than the second half. Ratios of pounds of mercury sold to Pacific Mill and Mining against tons crushed (a rough measure at best) indicated (Column 8, Figure 4), that sales of mercury by Mackay and Fair, presumably to replenish the pans, were higher in the first half than the second half of the year. The reason for this could be seen be the yields per ton in the first six months: 150, 152, 155, 100, 71 and 58. In the last six months the yields slid into the lows 50’s and then into the mid-40’s. High ore grade consumed more mercury and therefore demanded larger recharges for

16

THE COMSTOCK [P]

successive batches. These yields, declared to the Story County Assessor, in the first half of 1877 were among the higher ever recorded for any bonanza.20 Such yields may well have been unexpected, and thus for a brief few months mercury stockpiles declined normal levels. By the end of the year, even though Hong Kong purchases had been arranged for to restore the stockpiles and to anticipate any further upswing in yields, the yields had tuned in the opposite direction and the state of local mercury stockpiles was no longer a matter of concern. Mercury supplies would be ample as the Comstock moved from bonanzas to borrascas.

The average price paid by The Firm was $0.474 per pound on the purchases of nearly 1.4 million pounds. (Hong Kong’s purchases are included in this figure because they had been paid for.) The average monthly price for purchases by Flood and O’Brien ranged from $0.434 to $0.521 per pound. Only once, in September 1877, when they purchased more than 380,000 pounds of mercury in Hong Kong, did the average price exceed $0.50 per pound. The cost of freight to Virginia City on average was 2.25 cents per pound. To buy and ship a pound of mercury from its source to Virginia City cost on average $0.497, or 50 cent per pound. The price of the sale of a pound of mercury by Mackay and Fair to Pacific mills was higher by a few pennies than the combined average purchase and freight costs. Their accounts always showed how much was on hand after sales plus purchases. There may be an appropriate explanation for boosting the price paid by Pacific by a few pennies, such as covering office expenses, etc., but whatever the explanation was it cannot be found in the accounts themselves. What this meant in financial terms was that Flood & O’Brien paid approximately $530,000 for 14,000 flasks and their freight, or $0.495 per pound, for which they were duly reimbursed by Mackay and Fair, who then sold 15,000 flasks from the stock at nearly $600,000 or $0.511 per pound. Given the inconsistencies and inaccuracies that exist in these accounts it is probably wise not to make too much of the difference between figures for purchases and sales within the same operation. Still, based upon an examination of the accounts, each flask of the mercury sold by Flood & O’Brien to Mackay & Fair cost a few cents more per flask when sold by Mackay & Fair to Pacific Mill and Mining.21

From the beginning of the Quartet’s tenure on the Comstock entailed the intertwining of separate companies to handle distinct tasks in the exploitation of the Lode. Owning an array of businesses did not begin with Mackey, Fair, Flood and O’Brien, but they may have carried the idea of integrating various enterprises farther than others did. Mining companies were incorporated with public stockholders besides the members of the Quartet and issued annual reports and other pronouncements on the state of underground operations. The other companies – logging, water, banking and refining – were privately held and therefore were less transparent, not being required to publish financial statements. How the Quartet allotted duties can be figured out even without any detailed job description - Mackay and Fair in operations and Flood and O’Brien in finances – but how the profits and surpluses were allotted is much harder to unravel. It is 20The above text based on examination of the “Quicksilver Statement, 1877,” in Miscellaneous Accounts, Mackay, Fair & Co., NC95, Special Collections, Library, University of Nevada at Reno. 21 “Quicksilver Statement, 1877,” in Miscellaneous Accounts, Mackay, Fair & Co., NC95, Special Collections, Library, University of Nevada at Reno.

17

THE COMSTOCK [P]

of interest because the Quartet’s various businesses made money, at least the most important ones. All of the members of the Quartet except perhaps O’Brien were hands-on managers and administrators. Fair was the long-time day-to-day superintendent of Consolidated Virginia and California Mines, although Mackay was on the site most of the time and acted as superintendent when Fair was gone or indisposed. In addition to Mackay and Fair in Virginia City D. B. Lyman was the long-time superintendent of Pacific Mill and Mining Company and J. Minor Taylor was the equally long-term office manager. Taylor was more visible than the others because his initials appeared on almost all the correspondence emanating from Virginia City, starting in 1874. He was also responsible for maintaining the financial transactions under the previously-discussed Mackay & Fair account. (J. H. Gager was an auditor or accountant who reviewed and corrected their account.) From all indications he was a meticulous and conscientious manager. The mining company finances were elaborately recorded in bound volumes and in considerable detail. The accounts of the other businesses were on the basis of what have survived less elaborate and specific, although they can be informative. Flood and O’Brien managed what might be called the “corporate offices” since the two largest entities, Consolidated Virginia and California, were incorporated in California. When funds were transferred to San Francisco from the Virginia City Mackay & Fair account they entered the Flood & O’Brien account. Transactions could originate with Flood and O’Brien but be paid out of transfers from the Mackay & Fair Account and vice-versa could originate with Mackay and Fair and be paid out of transfer from the Flood & O’Brien account. In addition they dealt with the US Mint and Treasury on the disposition of the bullion or coin that the Quartet owned. I have found no records directly relating to their affairs, although I have come across documents that summarize some of their activities. Taylor made it quite clear that the Mackay & Fair account was the accounting umbrella for all the Virginia-City-based businesses except for the Consolidated Virginia and California Mining Companies. In response to inquiries that arose out of the Dewey litigation he wrote in a letter to Flood and Fair on 11 September 1881 that “[W]hen I entered your employ in December 1874 Mackay and Fair were the mediums (and have so remained) through which all transactions of the Pacific Mill and Mining Company with Flood and O’Brien and J. C. Flood and Co. were made.” Taylor further noted that the Mackay & Fair account was actually recorded in their names as Quicksilver Accounts, and that was the title that appeared in the heading of each page for the 1877 document that has survived. It is unclear if Taylor regarded this as an error or a risk and, if so, whether he sought to change the accounts to fit more closely with what they reflected. This did not mean that Pacific Mill and Mining (of any other business entity) lacked financial records and ledgers to keep track of day-to-day operations. Indeed the financial documents relative to mill operations, discussed above, were highly detailed. The Mackay & Fair accounts or, as they were titled, “Quicksilver Statements”, concerned the purchase and sale of quicksilver on the one hand and the remittance of funds, presumably gross profits, generated by the businesses that Mackay and Fair owned or controlled in association with Flood and O’Brien.22

22 Copy of Letter to Messrs. Flood and Fair from J. Minor Taylor, Virginia City, 11 September 1881 in Grant Smith Archives, Binder 4, “Bonanza Firm”, NC229, Special Collections, Library, University of Nevada at Reno.

18

THE COMSTOCK [P]

Monthly Quicksilver Statements generally consisted of three parts contained within two pages. Most of the Statements were signed by J. Minor Taylor in behalf of Mackay & Fair in Virginia City and dated. The general format was consistent from month-to-month, but the entries themselves varied considerably. It was not always clear from the entries exactly what items were being referenced with respect to Mackay and Fair’s Account. The first page concerned mainly mercury transactions between the accounts of Mackay & Fair and Flood & O’Brien. The quantity of mercury on hand at the start and the end of the month was noted along with purchases and sales and remittances in cash from Virginia City to San Francisco. These transactions were discussed above. The second part concerned the remittances of monies accruing to Mackay and Fair’s Virginia City account from Pacific’s milling operations to Flood and O’Brien’s San Francisco account. The remittances were in the form of cash, bank drafts and bullion. This section was particularly interesting because a “running total” was calculated each month, and that figure closely approximated the “net profits” under review in the Dewey-Burke suit and the Mackay-Fair distribution in subsequent years (also discussed above). Finally the third section carried the heading of “Cash Receipts & Disbursements”. This was a summary of cash transactions involving the Mackay & Fair account. The account received cash from the mercury business as well as the milling and logging businesses. The cash transferred from Virginia City to San Francisco was only a portion of the total transfers. The value of these Monthly Quicksilver Statements (which obviously dealt with more than quicksilver) even for just one year is that they make it possible to study the stream of income to Mackay, Fair et al. from their ancillary businesses. Let me underscore that these remittances did not include the ingots from the ore extracted from The Firm’s mines. Most of milled ore was shipped from the Comstock to the Federal Mint in San Francisco for the final assay and the conversion into bullion or coin.23 It was the bullion, of course, that came to represent the great wealth of Mackay, Fair et al. But, as can be seen from the monthly accounts, the ancillary businesses could also yield income for the principals.

The remittances involving Pacific Mill and Mining had the largest numbers and the most complicated entries. Total remittances as of 1 January 1877 were $2,428,131.53. Pacific had been in operation since 1874, and in the first two or three years the mills had generated substantial operating profits. During 1877 total remittances rose to $4,272,567.98, an increase of 72 percent. Total remittances continued to grow; by the end of 1879 they had exceeded $7.2 million and by the middle of 1881 when the dissolution of the Pacific partnership was completed they had surpassed $8.9 million. That figure is close to what the “net profits” were said in one of the two documents drawn up for the dissolution. Remittances continued after the middle of 1881 and may have pushed the total somewhere above $9 million.24 The remittances may not have been so much “net profits” as “operating surpluses”. From the 1877 Monthly Statements and other documents it cannot be said that all of Pacific’s operational and capital expenses had been met prior to the transfer of money from Virginia City to San Francisco. The Monthly Statements simply did no more than record what had been transferred. Still the “running 23 A small part of the ore output was minted in Carson City and then shipped to San Francisco.24 The totals for the years between 1878 and 1881 were taken from a typescript copy by Grant Smith of a Letter to Messrs. Flood and Fair from J. Minor Taylor, Virginia City, 11 September 1881 in Grant Smith Archives, Binder 4, “Bonanza Firm”, NC229, Special Collections, Library, University of Nevada at Reno.

19

THE COMSTOCK [P]

total” through 1877 and beyond corresponded to what other sources declared to be “net profits”. While the figures themselves remain ambiguous, the entries for the year 1877 taken as a whole offer some interesting insights into how Pacific’s owners managed their affairs.

The manner in which the monthly remittances of Pacific Mill and Mining funds were entered into the Mackay and Fair accounts followed several different formats. Entries under Pacific remittances were stated in cash and drafts with no further description of the origination of the entries. Some entries were described more specifically as proceeds from sales of ore bars, mostly silver, and from sales of slime or mill bullion plus rebates on freight on the Virginia & Truckee Railroad. Other entries (equal to a quarter of a million dollars) were described as “Bullion in Transit in the account of PMM&Co” or “Fine Silver to be accounted for by PMM&Co” but were kept separate from the remittances and were not included in the running total. It is not clear from the Statements why this was so. It will be recalled that Pacific charged Consolidated Virginia, California and other mining operations a rate per ton to mill the ore and that gold and silver bullion was then registered under the mining company. Even as the rate fell Pacific was processing so much ores of high grades in efficient mills that it could make a dollar or two per ton over and above its costs. Some of those operating profits may have been remitted in the form or cash or banks drafts. But Pacific also earned money from processing slimes and other residues that remained in the possession of the milling company, and the entries concerned with income from sales of bars may well have reflected that side of the milling business. In any event Pacific, incorporated primarily to process ores from Consolidated Virginia and California proved to be a moneymaker in its own right.

The third part of the Quicksilver Statements, Cash Receipts & Disbursements, tracked the receipt and disbursement of cash and its equivalent as opposed to bars of silver and other similar non-liquid financial instruments in the Mackay & Fair account. Cash flowed in from previously discussed mercury sales and milling proceeds and from another ancillary business, Pacific Wood, Lumber & Flume Co and were listed as “debits” in the Mackay & Fair account. Cash from these businesses was disbursed to the Flood & O’Brien account and listed as “credits” to the Mackay & Fair account. The total cash entered as debits was almost $2 million for 1877 and the total entered as credits more than $1.6 million. Not surprisingly during the course of the year some cash was held in reserve in the Mackay & Fair account. Some of the cash or equivalent entries in Pacific Mill and Mining remittances also showed up in Cash Receipts & Disbursements (as they should). Of the receipts, actually in accounting terms a debit, the breakdown was as followed: $1 million from Pacific Mill and Mining, $600,000 from quicksilver and $300,000 from Pacific wood, Lumber and Flume. Conversely on the disbursements, a creditof more than $1 million in cash was disbursed from Mackay & Fair to Flood & O’Brien in the account of Pacific Mill and Mining and $150,000 in the account of Pacific Wood, Lumber and Flume. Mercury disbursements were almost equal to mercury receipts. The Pacific Mill and Mining disbursements were greater than the receipts for 1877 whereas the Pacific Wood, Lumber and Flume were about half of the receipts. Cash transfers from The Quartet’s related business was only a fraction of what they gained

20

THE COMSTOCK [P]

from their mines, but gross operating profits, which these disbursements may represent, of $1 million in a single year was by any measure a highly valued business.25

25 “Quicksilver Statement, 1877,” in Miscellaneous Accounts, Mackay, Fair & Co., NC95, Special Collections, Library, University of Nevada at Reno.

21

THE COMSTOCK [Q]

Chapter 17Mining Taxes And Public Revenues:

Vexing Question-Mining Taxes, 1871 Mining-Proceeds Tax Amendment, Measuring Tax Impact, Tax Rates, Adjustments & Revisions

As a part of the western Great Basin Nevada was largely desert in topography and climate. Little naturally fertile land existed outside of the major river valleys, and over time ranching rather than farming would become the principal agricultural activity. What drove Nevada’s economic engine in the early years was mining. Its great mineral wealth and the inflow of settlers that accompanied the ore discoveries justified, at least in the eyes of the Republican Party, who sought to solidify their congressional majorities, the admission of Nevada before it actually qualified on the basis of population. When A. F. White, Nevada’s Mineralogist, wrote his report for the 4th Biennial Legislative session in 1869, he included a broad survey of the state’s economic resources, and while mining had achieved dominance in a few short years, he noted other emerging economic activities. In describing Washoe County he wrote that Washoe Valley and Truckee Meadows “combine to make this one of the best agricultural counties in the state. Well-tilled farms, comfortable residences and accompanying improvements give it the appearance of an old settled country. Quantities of wheat, barley, rye, oats, corn, and hay and of all the hardier vegetables are produced annually.” In addition the eastern slopes of the Sierras (on Washoe western boundary) boasted of “a forest of fine timber” But when he turned to Washoe County’s neighbor, Story County, his description took on bleaker tones. Story County, he wrote, was “broken and barren.” It had “scarcely any fertile land and but little timber. Were it not for the Truckee River forming part of the northern boundary, this county would be almost wholly destitute of living water.”1 Ironically what allowed Story County to emerge as the state’s most dynamic economy was not what it lacked above ground but what was so bountiful below ground. Notwithstanding Nevada’s other economic assets its economic health and future would become tied directly and inexorably to the resources of its subsoil well into the twentieth century. {See Survey Map in Special Appendix at end of chapter.]

Like every new state Nevada had to arrive at a formula for financing state services. After much wrangling and numerous lawsuits Nevada included in its tax code a provision for taxing minerals as well as plants. The mining boom attracted tens of thousands immigrants who required public services. Road, prisons and schools had to be built and judges, bureaucrats and legislators had to be paid. Despite objections from mining industry executives, who became a powerful constituency in state and national politics, a consensus existed that mining should pay an appropriate share of the cost of government at the local and state level. Although the mining industry was never taxed as heavily as some thought was justified (and never as much as the Spanish Crown taxed its colonial mining industry) the mining industry soon became the major revenue source. In good times government funding was adequate to meet the demand for minimal basic services, pay down the public debt and maintain a small surplus. (There may have been considerable debate about how to define minimal services.) Expectations were high that

1 “Biennial Report of the State Mineralogist of the State of Nevada for the Years of 1867 and 1868” in Senate Journal and Appendix, 4th Legislative Session (1869), 21-24.

1

THE COMSTOCK [Q]

such funding levels would and perhaps grow indefinitely. This was the view in large part because the mining experts often rendered such extraordinarily positive projections of how much profitable ore lay underground. Even the noted German expert Baron von Richthofen, while warning that the structure of the ore bodies could change at greater depths, also concluded that yields at current levels (1864) will not diminish with greater depths. Indeed he went so far as to predict that some mines currently unproductive would become productive again. In comparing the Comstock with Mexico’s most famous mining district, he noted that at 1,200 feet Guanajuato encountered barrenness that continued at lower depths. That was not the case on the Comstock where even richer ore bodies were being exploited at several hundred feet below 1,200. Of course, experts can be misled by what they see or hear, and while von Richthofen’s comparison of Comstock with Guanajuato (Mexico) was correct, his conclusion was not. When the miners reached 1,600 or 1,700 feet, they too found the ore boundary. The State Mineralogist summarized the Baron’s Report and quoted from it in his 1875 Report to the Legislature at the outset of the greatest bonanza to underscore more or less the endless potential ore production as Comstock mines went ever deeper.2 This was good news for the mining industry and for all the public treasuries. But eventually the mines turned barren, and so too did state and county treasuries. But the public infrastructure remained and more importantly had to be paid for. As mines were shuttered and camps abandoned, public expenditures had to be reduced, and where the public infrastructure had to be maintained, even though some depopulation had occurred, taxes had to be raised. The rate of taxation on property in Story County in general and in Virginia City in particular was higher at the end of the great Comstock era than at any time during it.

Relations between government and the mining industry over taxation and other regulations involved mainly the state rather than the county or municipality. Certainly documentation on these relations is more ample with respect to the state than the county or municipality. In fact the legislation concerning the thorniest issue – taxation of the ore – was directly a state matter, not a local one, even though the county was charged with assessing the ore and collecting the tax. These relations were hardly ever amicable. That battle lines were drawn early, and as the industry’s wealth and power grew, they proved difficult to smooth over. The mining companies’ aim was to pay as little as possible in taxes to the state, whereas many officials and citizens believed that at the very least companies should be taxed to pay for the services that had to be extended to the mining camps. Some even believed that the companies should be required to share the great profits that they enjoyed from exploiting Nevada’s natural patrimony. This was a state, of course, in which almost everyone was a newcomer. Although the hope was that no matter one’s origins, once in Nevada one should change one’s stripes and become a Nevadan. The truth was that only a small percentage of those who came during the Comstock bonanzas ever became the ideal Nevada citizen. What drew the investor, the worker or the vagabond was the chance to make money, and what drove them out was the collapse of chance (at least until the rise of the gambling business). Newcomers were itinerants. In the case of those who financed the mining industry they were not even itinerants, they were more often absentees. The ambivalence in the political rhetoric was how to build a

2 “Biennial Report of the State Mineralogist…1873 and 1874” in Appendix to Journals of Senate and Assembly, 7th Legislative Session (1875), 91-101.

2

THE COMSTOCK [Q]

civil society in the absence of control if not ownership of the state’s precious resources. Increasingly over time, as the most powerful driver of the state’s young economy – the Comstock – substituted borrascas for bonanzas, the rhetoric became harsher. The inflow of outside capital mainly from California was duly acknowledged, but the outflow of wealth also mainly to California was first resented and then condemned. Efforts to alter these dynamics, even on a modest scale, ran smack into a powerful alliance between the business of mining and the business of politics. Some of the new state’s most influential politicians came out of the mining industry. They had little interest in accommodating the needs of the state except at some minimal level. Moreover, they were, in a form of perverse logic, prepared to allow the federal government, which held inherent powers of disposition of public lands and mineral rights to set the rules for western mining. Mining companies actually preferred federal regulation to state regulation because it was less intrusive and more protective with respect to their financial and property interests. Nevada’s own congressional delegation was often composed of former mining entrepreneurs who looked after the business interests of the state as much as if not more than the citizen interests. Differing and sometimes opposing viewpoints during America’s late nineteenth century economic expansion were not abnormal, as Americans tried to sort out how the principles of laissez-faire could co-exist with the public’s need for protection and security in a time of a rapid economic transformation. In western mining where the institutional structure (for example, the legal system) was still evolving that struggle between he private and the public turned acrimonious and nasty. Nevadans found themselves in the difficult position of wanting both to promote and to control the business of mining, which all parties recognized as vital to the State’s continuing economic growth and development. As more and more mines went out of business and output of ore fell correspondingly, the bullion tax as a source of revenue virtually evaporated with little hope that it could be revived. Needless-to-say as the public, in particular the state government, tried to assess what future mining had in the State’s economy, the sentiment toward the mining industry turned increasingly hostile. For some the ambivalence was erased: Nevada had been robbed.

Official financial record reveals how the fortunes of the state and the county changed over time. In the Controller’s Report of 1865, the first year after statehood, the receipts of the state treasury amounted to $466,137.31 including a small balance of $1,000 carried over from the territorial government. Proceeds from mining taxes contributed only about 3 percent ($15,447.36) of the total. Poll taxes provided about the same percentage ($17,069.24). Property taxes (current and in arrears) accounted for about 33 percent and the remaining 40 percent came from miscellaneous sources including licenses, fines, tolls and the sale of state bonds. It was not unusual for a newly admitted state to have to issue bonds in the first few years before the tax and revenue systems were in place to pay their bills. In the case of Nevada the issuance amounted to $150,000, a third of all receipts and equal to revenues collected from property taxes.3 More than a decade later in 1877 the state treasurer reported a balance at the start of the year of $351,522.60, with receipts of $699,244.71 for a total of $1,050,767.30. Proceeds from mining taxes equaled $240,558.31 or 23 percent of the total. Disbursements had also

3 “First Annual Report of the Controller of the State of Nevada for 1865” in Senate Journal and Appendix, 3rd Legislative Session (1867), 7.

3

THE COMSTOCK [Q]

reached $605,800.86, but the treasury still reported a balance of $444,966.44. As the mining boom unfolded mineral taxes allowed the state government to meet its obligations at a time when population growth demanded more services and simultaneously to show a surplus.4 But when the boom faded the surpluses served to buoy up state finances for a year or two while adjustments were being made. In 1880 receipts totaled only $151,245 with mining-tax proceeds contributing $20,680 or 14 percent. In that year disbursements exceeded receipts by more than $60,000 so that a surplus of nearly $240,000 shrunk to $179,000. The Governor, John Kinkead, reported in his message to the 10th Session of the Legislature (1881) that receipts from mining taxes for the current biennium (1879-1880) were $436,000 less than the previous biennium (1877-1878). In addition property taxes had fallen as mining properties had been abandoned or closed, and the mining tax itself was reduced by nearly half by the Legislature in response to the deteriorating state of the mining industry. Disbursements had fallen by two-thirds since the 8th Session but they still exceeded receipts, and they were slowly eating away at the surplus.5 But Kinkead was actually optimistic about the future of the state’s economy (perhaps as governors must be) and in particular about the mining industry. He held that mining would remain the backbone of the economy, and that the recent rise in prospecting (outside the Comstock District) would help lead the mining industry back to good health. He wrote “[D]evelopment awaits upon discovery, and material wealth upon both.”6

During the next biennium (1881-1882) Kinkead’s optimism about mining was not borne out. Mining receipts came in slightly above $20,000 in 1881 but still below the receipts for 1880, and they fell again in 1882 to less than $16,000.7 Total treasury receipts in both years were actually much higher - $461,000 in 1881 and $381,000 in 1882 – than the previous biennium. These increases resulted not from improvements in mining but rather from higher receipts in property taxes and from sales of bonds and assets. Total expenditures (although some were not for current outlays) exceeded receipts by $25,000 in 1881 but came in under them by $33,000 the following year. After certain receipts and expenses were excluded for accounting purposes the 1881-1883 biennium reported revenues of more than $605,000 and expenditures of nearly $634,000 for a deficit of just under $30,000. Kinkead, however, continued to believe that mining would be the engine for economic growth, and to that end he proposed new legislation to encourage investment and development in mining. “Much of the [mineral wealth] lies dormant for lack of capital and transportation facilities. The decline in the production of the great Comstock Lode…has through unjust comparison greatly retarded the prosecution of the mining industry in other portions of the state.” And he acknowledged openly that Nevada’s financial future would be shaped in part by how the Legislature answered once

4 “Annual Report of the Controller…1877” in Appendix to Journals of Senate and Assembly, 9th Legislative Session (1879), 80-88; “Annual Report of the Treasurer of the State of Nevada [Jerry Schooling, Treasurer] Fiscal Year Ending 1877” in Appendix to Journals of Senate and Assembly, 9th Legislative Session (1879), 10-19, 60-72.5 “First Biennial Message of his Excellency Governor John H. Kinkead to the Legislature of the State of Nevada,” in Appendix to Journals of Senate and Assembly, 10th Legislative Session (1881), 5-7.6 “First Biennial Message of…Kinkead to the Legislature….” in Appendix to Journals of Senate and Assembly, 10th Legislative Session (1881), 9.7 Figures cited by Kinkead differed from the actual treasury numbers because he added $33,000 in penalties paid by The Bonanza Firm on taxes withheld in 1877.

4

THE COMSTOCK [Q]

again that “vexed question” of how much to tax the mining industry.8 His sanguine outlook for Nevada mining (not necessarily Comstock mining) was apparently drawn from the Surveyor-General’s biennial report (once again responsible for mining surveys since the Office of the State Mineralogist had been abolished) in which he stated that despite the declining output at the Comstock other regions were taking up the slack. Every mountain range, he averred, had mines of gold and silver of “greater or less value” with the area around Eureka showing the most promise. But then the Surveyor-General had to admit, as did the Governor, that results had not yet matched up with prospects. Notwithstanding all the wealth extracted from the Comstock “the people of Nevada to day[sic] are poor.” The populist rhetoric that grew in intensity during the 1880s was immediately recognizable in his report:

Not a dollar of the net proceeds of our mines is invested in the State. The city of San Francisco has been the principal recipient of Nevada’s mineral wealth….Mining corporations leave no monument of their wealth with us, while railroad corporations, with gasping avarice, continue to exact their pound of flesh. No wonder the state is poor!…When taunted with being poor, as Nevada frequently is, it is well enough to let the world know the cause of her poverty.”9

It was hard to accept that Nevada’s unprecedented mining boom had run its course, at least given the prevailing state of knowledge about its mineral assets and the technology to recover them, and not to avoid the question of how so much wealth could have failed to lay the foundations for a more diverse and productive economy. In fact extractive industries, even as big as Nevada’s was for a quarter of a century, often left local economies in disarray. It happened repeatedly in western United States mining and throughout colonial Spanish America from Mexico to Peru. The economics of extractive industries can be fairly easily delineated and analyzed, but that does not make the results any less controversial or more acceptable. Gold and silver represented real wealth, almost none of which remained in Nevada or Story County as capital to invest. There was little interest in investing in anything but mining and its ancillary businesses (including railroads) and when mining collapsed, as happened on the Comstock and throughout much of Nevada after 1880, there was little else to show for how that great stockpile of gold and silver benefited Nevadans.

Indeed mineral taxes had “vexed” Nevadans from the outset. The first constitution, written in 1863, was rejected in part because the mining interests disliked the taxing provisions. In this constitution mining taxes were simply an extension of property taxes. In his history of Nevada taxation Romanzo Adams explained that since many early settlers, especially miners, came from California where mines were exempt

8 “Second Biennial Message of…Kinkead to the Legislature….” in Appendix to Journals of Senate and Assembly, 11th Legislative Session (1883): the summary of state finances included in the message covered pp. 4-10 with total revenues and expenditures for 1881 and 1882 cited on p. 10; the discussion of mining prospects appeared on pp. 23-24.9 “Biennial Report of the Surveyor-General…1881 and 1882” in Appendix to Journals of Senate and Assembly, 11th Legislative Session (1883), 10-11. See also “The Persistent Optimists” in Hulse, The Silver State, 144-145, for Nevadans’ attitudes a decade after the collapse of the Comstock.

5

THE COMSTOCK [Q]

from taxation (until 1872), they favored the same approach in Nevada. He pointed out that the amount of taxable property excluding mining properties was so small in Nevada that it could not have served as the sole financial support of the new state government. Mining was what put the state on the map, and irrespective of the Californian transplants’ approach to taxation mining had to help pay for the cost of organizing and financing government. Taxes on mining were inevitable.10

“To escape taxation,” according to Adams, may have been the best description of how the mining industry approached the subject first in the territorial government and then in the state government. It did not totally escape taxes, but it succeeded in limiting or reducing taxes due. In the First Territorial Legislature (October-November, 1861) mining was exempted, but in the Second Territorial Legislature (November-December, 1862) a “gross proceeds” tax was enacted: 12 cents per $100 of ore for the territorial government and 18 cents per $100 for county governments. Gross proceeds were less than precisely defined to be “bullion recoverable from the ore”. In Story County where mineral mining was concentrated the District Attorney in the absence of a legislative mandate declared that the mines’ proceeds were the untreated ores (and therefore assigned lower dollar values) whereas the mills’ proceeds were the treated ore (and assigned much higher values). Adams estimated that under this interpretation 60 percent of the bullion escaped taxation.11 Nevada’s first constitution, written in November and December 1863, contained a provision that taxed the properties rather than the proceeds of mines, and in response the Third Territorial Legislature (January, 1864) abandoned the gross proceeds tax in favor of a property tax. The new constitution was rejected, however, in January 1864. Taxing mines as property went against the wishes of William Stewart, who was among the most prominent of Nevada’s early mining entrepreneurs and was emerging as political leader (later elected U. S. Senator) and who preferred a tax on proceeds, and his opposition to the new charter helped to defeat it.12 In the second constitution, written in July and approved in September 1864, Article X, Section 5 provided for a proceeds tax. Some miners preferred a total exemption, but inasmuch as Nevada already had a deficit of more than $264,000 on which it was paying interest of between 10 and 18 percent there was little support to give special waivers to mining companies. The formula by which proceeds were taxed as defined by the first State Legislature was complex. Adams explained it this way:

The term “proceeds of mines” was interpreted to mean the value of the ore, not the value of the bullion, and the value of the ore was determined by subtracting twenty dollars a ton from the value of the bullion extracted by ordinary processes and by subtracting forty dollars a ton from the value of the bullion extracted by the Freiburg process, and then by taking three-fourths of the remainder as the value of the ore for taxation.13

The deductions were arbitrary numbers that were justified (at least by the mining interests) as reflecting the cost of extraction, reduction and transportation of the ore. Once 10 Adams, Taxation in Nevada, 69, footnote 1.11 Adams, Taxation in Nevada, 71-72.12 See Hulse’s discussion of Stewart’s position and strategy in The Silver State, 81-83.13 Adams, Taxation in Nevada, 73.

6

THE COMSTOCK [Q]

the deductions were determined, however, everyone paid taxes on the remaining 75 percent of the ore. Obviously costs varied from company to company, but having taken that into account and also granting a 25 per cent general discount the legislation required all assessment be standardized at the 75-percent level. When the Nevada Supreme Court initially was asked to rule on the whether any deductions should be granted, it decided that while the deductions may be interpreted as too extreme, that in and of itself did not make the legislation unconstitutional. In 1867, however, in a ruling from the court the 75-percent assessment was found to be unconstitutional. In the aftermath of the decision the Legislature decreed that once the assessed value were determined, the rate for purposes of state and county taxes was fixed at $1 per $100 in ore, a figure that was below what other property owners paid. This too was declared unconstitutional. Also in the 1867 legislative session the $20 deduction per ton was reduced to $18.14 Finding a workable solution was not easy. The growing fiscal crisis faced by state and local government necessitated some new approach to taxing mineral output, Nevada’s most prosperous industry.

In 1871 the Legislature amended the statutes governing mining-proceeds taxes. In an earlier section I discussed the provisions of the amendment with respect to how assessment and tax records could be assembled to describe the structure of the industry. Herein I am interested in the 1871 law with respect to how the Legislature addressed the need for revenue and how its decision affected the tax burden of the mining industry. The justification for amending the original bullion tax was to assure a flow of revenue to state and local governments that lacked the financial resources to provide minimal basic public services, especially in Story County, where the expansion in mining itself required an extension in services. Mining interests still carried clout in these negotiations and debates, and although the amendments both modified and formalized the approach set out in earlier legislation, the mining companies prevented wholesale changes, which could have greatly increased their taxes, by accepting tax revisions that offered a measure of stability for financing public services. Perhaps the most important change was that mining taxes would be based on the value of the bullion instead of the value of the ore. In terms of enforcement this change meant that county assessors could rely on mint records to determine the dollar value of the gold and the silver extracted from a company’s ore rather than on estimates of what the ore might yield. Companies could continue to deduct costs for extraction, transportation and reduction from the value of the bullion without the strict oversight by mining-company critics who feared that even under an amended law companies would practice deception and fraud in accounting. The amended law limited deductions based on expenditures by linking them to the ore yields: for yields of $12 per ton or less, 90 percent of the costs could be deducted from the gross value to determine the assessed value (to be taxed); from $12 to $30, 80 percent could be deducted; from $30 to $100, 60 percent; and over $100, 50 percent. If a company had yields in the $30 to $100 per ton range and its costs came in under 60 percent of the value of the bullion, then no deduction was granted and the assessment from which the tax was determined would be the “net” or the balance after costs had been subtracted from revenues (value of bullion). If the company’s outlays exceeded the percentage for the yield, say, for ore yields between $30 and $100 the outlays equaled 70 percent of the value - then the formula would be applied so that the company could only deduct 60 percent and not 70

14 Adams, Taxation in Nevada, 73-81.

7

THE COMSTOCK [Q]

percent. That meant that even if a company spent $10 more per ton to extract, transport and refine its ore, it received no exemption for the added cost. The legislation was clear that “in no case whatsoever shall the whole amount of deductions” be permitted when those deductions exceeded the threshold based on the yield per ton in bullion. This formula was a compromise that did not satisfy any of the parties in the dispute, but despite efforts to alter the percentages the formula remained intact until the end of the Comstock era and beyond. Finally, as required by the state constitution, the rate applied to the assessed value of the bullion could be no higher than the rate for other real and personal property.15

Romano Adams concluded that the 1871 legislation was still “favorable to the mine owners” but less so than past legislation. What concerned Adams on the basis of his review of assessments and taxes three decades after the collapse of the Comstock was that the percentages were simply too generous: “…it is probable that the statement of a maximum limit encouraged mining operators to return costs nearly up to the limit and without much reference to the actual costs.”16 In brief, if a mining company declared ores with yields of $30 to $100 per ton that allowed for a 60 percent deduction against the total bullion value, it could try to push up the costs as high as possible so that the “net” (difference between bullion value and operational costs) upon which the tax was calculated was as small as possible. If the assessor was suspicious, he could order an audit, although to date no such audits can be documented as having taken place. The question remains: How inflated were the companies’ reported expenses? And the answer is no one knows. In making his assertion Adams relied on official commentary. In one instance he cited the comments of Governor L. R. Bradley in his biennial message to the 8th Legislative session. The Governor’s message was mainly concerned with fairness - did mining companies, often California corporations, pay less than their fair share in taxes when compared to other property holders? The governor did not address the question of fraud directly. His calculations showed that under the 1871 law companies paid taxes on assessments that were less than 50 percent of the actual bullion value. Was that fair in comparison to other companies and businesses that paid taxes on higher assessments because they were not granted generous deductions? That question was indirectly related to how expenses were reported, but more specifically it was related to the formula itself.17

Adams also cited a report from the State Controller that exemptions allowed mining companies between 1875 and 1878 were “fifty per cent larger than was allowed under former law”. Unfortunately the footnote is incomplete, and I could not confirm the accuracy of the assertion.18 That the procedure for assessing the value of the bullion, as established in the 1871 law, granted favorable tax advantages to mining companies that other businesses did not enjoy is hard to miss. But on the matter of how often and how

15 “An Act providing for the taxation of the net proceeds of mines” [Approved February 28, 1971, p. 87] in The Compiled Laws of the State of Nevada, 2:225-228; Adams, Taxation in Nevada, 82.16 Adams, Taxation in Nevada, 83.17 “Third Biennial Message of Governor L. R. Bradley of the State of Nevada” in Appendix to Journals of Senate and Assembly, 8th Legislative Session (1877), 7-8.18 Adams cited page 100 of the “Biennial Report of the Controller…1876”, Appendix to Journals of Senate and Assembly, 8th Legislative Session, 1877, and while that page contained fiscal data, it did not have anything to do with a comparison between the two laws nor could it have covered the period from 1875-1878.

8

THE COMSTOCK [Q]

much mining companies cheated in reporting their costs the evidence remains to be discovered.

FIGURE 1COMPARISON OF PER-TON YIELDS AND COSTS FROM TOTALS AS

RECORDED IN STORY COUNTY ASSESSMENT ROLLS BY QUARTER,1871-1885

$0

$10

$20

$30

$40

$50

$60

$70

$80

0 10 20 30 40 50Quarters Sequentially

Per-Ton Yields

Per-Ton Costs

Notes: Reported totals for bullion and cost each quarter divided by reported total tonnage to achieve a per-ton figure. Total of 43 quarters between first quarter 1871 and fourth quarter 1884 with some quarters missing between 1871 and 1876.Sources: See footnote 19.

Close scrutiny of Story County assessment records did not resolve the question of whether companies exploited the loopholes that Adams and other critics had highlighted. The key was how companies reported their costs. On the value of the bullion the assessor could check mint records and receipts; on the cost of extraction, transportation and reduction the assessor depended on honest company declarations. Audits were seldom if ever undertaken on a regular basis, and company accounts if they have survived at all provide partial but not definitive summaries of company outlays. Combing through company accounts is an arduous and not always a rewarding venture since accounting principles and practices were less than enthusiastically embraced. One modest approach is to examine the stated declarations of all companies appearing before the county assessor to see if any patterns emerge. Companies were permitted to make their declarations and payments in the quarter following the quarter that they were reporting. Figure 1 above is derived from dividing total tons by total bullion receipts and total operational costs as declared before the assessor each quarter (for which data exist). Between the first quarter of 1874 and the third quarter of 1879 total bullion receipts per ton were two to three times higher than total costs per ton. In the remaining quarters the differences were less obvious. For the period from the fourth quarter 1880 through the third quarter 1881 costs consistently exceeded receipts. The large differential between the

9

THE COMSTOCK [Q]

two variables in the middle 1870s can be explained, of course, as the result of extraordinarily rich ores and relatively moderate costs to extract and refine those ores at Consolidated Virginia and California. The reversal was the result of the deep contraction in output and not surprisingly the sharp rise in cost. Even after output began to grow ever so slightly after 1881 costs tended to exceed receipts. What, then, to make of this pattern? The median for bullion receipts was $27 per ton versus $22 per ton for operating costs. (The average was higher at $32 for receipts and lower at $21 for costs.) Receipts were more volatile than costs (coefficient of variation 61 percent versus 27 percent). Receipts had a wide range from $10 per ton to $80, but costs stayed within a much narrower range of $10 to $35. Over the period for which quarterly data exist operating costs as reported by companies were fairly predictable: during the 1870s $20 to $30 per ton and in the 1880s $10 to $20 per ton. If companies were cheating, they were all cheating to the same degree. Individual companies could exaggerate their costs, but as a group they reported figures that changed only slightly from year to year. These figures do not prove that cheating never took place. What they may best reveal is that a range of costs over periods of time came to be accepted as normal. As long as declared costs did not significantly disrupt that standard, they were not challenged.19 Public officials (as evidenced in the governors’ addresses) were always suspicious that companies were less than honest, but they, in particular local assessors, may have been unwilling to challenge company declarations so long as the range of costs was not seriously violated. That companies periodically reported far higher costs than revenues was not in itself a signal of deception because it was well known on the Comstock that massive expenditures were often needed to make a mine productive. Mines known to be profitable would certainly have a difficult time maintaining the charade of excessive costs in order to reduce taxes. Lacking large, professional auditing staff assessors had to depend on companies to make relatively honest declarations. Both sides were prepared, it would seem, to live with each other without demanding too much.

Bonanza mines might arouse immediate suspicions about “cooking the books” in order to qualify for deductions under the law. In the case of Consolidated Virginia and California the ratio between yields and costs do not appear to be greatly exaggerated. But some notable differences between what was declared before the assessor and what was reported in the accounts or to the stockholders do exist. In the end the 1871 amended law did not specify precisely what was to be included in costs for extraction, transportation and reduction. It would appear that instead of systematically fabricating figures (not an easy task) companies took advantage of the law by including as much as possible under costs of extraction, transportation and reduction. In this way costs could be inflated without necessarily directly violating the law. This may have raised official eyebrows, but was it serious enough to merit the kind of review that a full-blown audit would require/ Even with both company accounts and public records in front of me I cannot determine with certainty the accuracy of the accounting. What the surviving historical record provides is a glimpse from which we must make an educated guess. For example, at Consolidated Virginia in 1876 ore yielded nearly $17 million in bullion, and, when 19 For the quarters from 1871 through 1874 data taken from surviving Abstracts of Story County Assessments in the Nevada State Archives; for the period from 1875 through 1884 data from microfilm copies in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno. The calculations are mine.

10

THE COMSTOCK [Q]

dividends, cash on hand etc. (totaling between $12 and $13 million) are stripped from general disbursements, the new total is a proxy for mining costs of between $4 and $5 million or 29 percent of the bullion value. Items under disbursements included actual operating operations – timber, lumber, hoisting, reduction, freight, supplies, wages, to name a few – plus other items such offices expenses, books and stationary, legal outlays, etc. The exact comparison would be the declared expenses for extraction, transportation and reduction before the assessor along side of the reported disbursements to the stockholders. Unfortunately because of the fire the former has not survived. But even if it had survived, the reported costs for tax purposes were general rather than itemized so that what the company included in extraction, transportation and reduction cannot be ascertained without more records. For the two quarters (third and fourth) in which assessments survived the average reported costs were $1.5 million, which if projected backward would approach $6 million, a figure somewhat higher than the general disbursement figure in the 1876 Annual Report (that covered 1875 business activities). The report to the stockholders was more discrete, although not perfect, than the declaration to the assessor, and yet the spread did not point to any massive cheating.20

A similar test can be run on Consolidated Virginia’s accounting for 1878: the Annual Stockholders’ Report (dated 1878) can be compared with declarations before assessor. Declarations of expenses were supposed to be by category: extraction, transportation and reduction. Some companies adhered to the procedure with regularity (although that did not mean what constituted these expenses was revealed) and other companies, in particular Consolidated Virginia and California, simply reported totals for all three categories. Since this happened with regularity, even though a technical violation of the law, the assessor apparently did not object.21 In 1878, for example, Consolidated Virginia’s declared costs before the assessor appeared as follows: $1.3 million in the first quarter; $900,000 in the second; $500,000 in the third; and $300,000 in the fourth. It should be noted that Consolidated Virginia’s operations were curtailed during the year because of extensive repairs to the main shaft and other facilities. Of interest is how these costs were reported: the $1.3 million was entirely assigned to reduction and the $900,000 entirely to extraction; the remaining two entries were simply listed as totals.22 It is dubious that these declarations can be trusted in terms of how they were assigned. When summed, however, the entries for all the quarters total slightly more than $3 million. Checking these figures against the accounts in the Annual Report proves to be equally complicated because the Annual Report contained several different accounting documents (see footnote), each of which has to be examined.23 In accounting for the

20 Relevant Annual Reports in NC99/1/5/1, Bx 2 and NC99/1/5/6, Bx 2, Special Collections, Library, University of Nevada, Reno.21 One possible reason is the bonanza mines seldom qualified for deductions in assessments. Their per-ton yields were so high that their costs never reached the threshold where those costs would change the assessments. Under these terms the assessor might have been willing to accept unitemized totals.22 The mill records for 1878 show that most but not all the ores were reduced during the first half of the year. The total value of the bullion from the reduced ores was between $1.1 and $1.2 million, slightly below what was reported to the assessor. See Bullion Records, 1878, Consolidated Virginia Mining Companies, NC99/1/3/5, Special Collections, Library, University of Nevada at Reno.23 Within what is titled the “Chief Clerk’s Report” (pp. 38-44) are four accounting documents to be consulted: Consolidated Virginia’s “Annual Statement (Balance Sheet)”, “Inventory of Property”, “Actual Cost of Mine” and “Consolidated Virginia and California Joint Shaft and Disbursements”. Annual Report,

11

THE COMSTOCK [Q]

actual cost of operating the mine – presumably from extraction to reduction since the company paid for removing and refining the ore - the company put total costs at $2.6 million, or about one half of a million dollars less than the assessor’s figure. The explanation for the difference lay in ferreting out costs from the other accounting documents. In short, without burdening the text with the details of the search let me state the basic proposition that the total costs as declared for purposes of assessments included items that did not appear in the accounts detailing actual mining costs but appeared in other documents that detailed costs incurred to manage the company. Two examples will suffice: the company both purchased and consumed supplies; some purchased supplies, however, remained unconsumed at the end of 1878. The assessor’s declaration included both purchased and consumed, but the calculation of the actual mining cost included only that which was consumed. The unconsumed became a part of the property inventory on hand at the end of the year. The second example has to do with the C&C Shaft. The outlays for construction, operation and repair show up in the assessments but not in the accounting for the cost of operating the mine. Through this process it is possible to reconcile the difference of nearly $500,000. The conclusion that one must draw is that since the 1871 law did not spell out in detail what could be counted and not counted the company bundled together all direct and related costs for running Consolidated Virginia This was not necessarily illegal or illegitimate in the absence of specific instructions from the statute itself. Since the cost for operating the mine as reported to the stockholders was lower than the cost reported to the assessor, the per-ton expense will be different - $20 per ton in the Annual Report versus $24 per ton in the assessment declaration. Since Consolidated Virginia’s bullion yields were so high even in 1878 between $64 and $65 per ton, the mine’s assessment was computed by subtracting straight-away mining costs from bullion receipts without any deductions or exemptions. The more the company could show in expenditures, the lower the tax burden would be. Similar tests with similar results could be run for other years at Consolidated Virginia and for California. How much was lost to the county and state by including additional $500,000? About $15,000 on the basis of the tax rates in 1878.24 Even in modern times tax laws without loopholes are difficult to write, and while the 1871 law allowed considerable latitude over identifying mining expenses, it may have been written and allowed to stand as written because a case could be made that extracting, transporting and reducing the ores involved legitimately both direct and indirect costs.

While the companies and their executive complained of the tax burden that the mining-proceeds levy imposed, the statistics do not necessarily support the outcry. The tax burden borne by Comstock mining companies could hardly be described as excessive. Even companies with low yields and high costs in dollar terms paid only hundreds of dollars in taxes. Recall that the change in the 1871 law required all companies (or individuals) with bullion had to pay taxes. Even the bonanza mines or, more precisely, in particular the bonanza mines, had little to complain about. In 1876 when both

1878, Consolidated Virginia Mining Company, NC99/1/5/1, Bx 2, Special Collections, Library, University of Nevada, Reno.24 From 1875 through 1880 (the last full year) Consolidated Virginia received no deductions based on ratios of costs to yields in 68 percent of the quarters (15 of 22) and California received no deductions in 73 percent of the quarters (14 of 19). In other words, they paid a tax based on the net after subtracting expenses from receipts (in bullion).

12

THE COMSTOCK [Q]

Consolidated Virginia and California declared ores for the first time in the same year the companies paid more than a half million dollars in taxes on ores that yielded more than $20 million or two-thirds of the Comstock total yield. In brief the companies paid out about 1.7 percent of their receipts in state and county taxes based on the net-proceeds mining tax (and excluding taxes paid on properties such as mills, offices, etc. owned by Mackay & Fair and their associates).

As the Comstock’s star producers Consolidated Virginia and California had no rivals in outlays for state, county and municipal taxes. In 1876 when Mackay and Fair’s two mines paid over $500,000 in mining-proceeds taxes the other two-dozen mines or mills assessed for taxes paid less than $70,000. In other words two mining companies paid 91 percent of the mining-proceeds taxes collected by Story County in 1876. The third and fourth highest taxpayers were Ophir ($19,432) and Belcher ($17,264). In 1876 both mines were under the control of Sharon, Ralston and their associates, although Mackay and Fair bought Ophir in 1877 after Ralston’s apparent suicide in the San Francisco Bay in 1876. Ophir did not pay dividends but Belcher did at least until 1877. Ophir produced $2.4 million worth of bullion at a cost of $1.6 million (66 percent). It paid taxes on an assessed valuation of more than $870,000 or 36 percent of the $2.4 million. Its tax bill amounted to .79 percent of the total bullion. Its yields per ton fell from $40 per ton to $24 per ton over the four quarter. It paid “net” (yields minus costs) in the first quarter when its costs amounted to 54 percent and it received deductions of 60 percent in the second and third quarters and 80 percent in the fourth quarter as its yields declined and its cost accelerated: 65 percent in the second, 62 percent in the third and 90 percent in the fourth, its worst quarter. Lacking company records for 1876 I have been unable to check these figures against other financial documents. It is known that the fire destroyed nearly 400 feet of Ophir’s main shaft and it was retimbered along with other renovations after the fire. What was more telling, however, was the expenditure of money in search for the extension of the California ledge under the Ophir claim by the current and future owners.

The Belcher story was different. Being located on the Comstock’s southern end it was not connected to the frenzy of activity that animated the northern end after the discoveries at Consolidated Virginia, and although it had remained productive longer than Crown Point after their bonanza years in the early 1870s (having paid dividends through 1876), it had entered the final phase of profitability. Its bullion valued at $2.8 million cost about $2.5 million (90 percent) according to the company’s declarations. Its tax bill amounted to .63 percent of its bullion. Its yields, already well below its earlier achievement continued to fall in 1876 from $26 per ton to $16 per ton. Without access to more company financial data I cannot comment on the accuracy of its ratio of yields to costs except to say that Comstock miners themselves had more or less established $20 per ton as the break-even point. Its yields per ton entitled the company to 80 percent deductions, which it was granted in every quarter but the first when its cost reached only 76 percent of the value of the bullion. In the subsequent quarters expenses were equal to 88 percent, 100 percent and finally 135 percent. Belcher had sunk into the red for the first time in years. Even though it lost more than $100,000 in the fourth quarter mining ore, it paid taxes of more than $1,600. Whether or not Belcher accurately or inaccurately

13

THE COMSTOCK [Q]

reported its costs, the fact is that the mine ceased producing recoverable ore until the early 1880s.

The remaining $30,000-$35,000 in taxes during 1876 was raised from companies well-known and long-established and from companies virtually unknown. More than a dozen of the taxpayers were tailings operations, which were listed as mills or as individuals. Tailings were assessed under the same rules as ores, but they contributed only a fraction – less than 1 percent – of the total tax receipts. Of the $250,000 worth of bullion that the tailings produced the taxes on tailings of $600 amounted to about a quarter of one percent. The yield per ton of ore came in between $8 and $9. The largest of the tailings operations was Express Mill, which generally reported costs to be about $8 per ton against receipts of about $9 per ton. Of the remaining ore producers several reportedly operated in the red throughout the year. Chollar Potosi had total costs that exceeded receipts by nearly a million dollars and Crown Point by nearly half a million. Their yields per ton were between $12 and $30, and that entitled them to an 80 percent deductions except for the fourth quarter when Crown Point’s yield fell below $12 per ton and it earned a 90 percent deduction. Their tax bill totaled more than $7,500 when Crown Point paying the largest quarterly bill of more than $3,000 on receipts under $500,000 but costs over $500,000. Both of these mines had reached their ore-bearing limits and would make only sporadic appearances in the assessment rolls during the next decade. That they may have exaggerated their costs in 1876 was still a possibility, even though it was evident that the expense of operating the mines was far greater than the return.25

Tax policy treated the mining community well, at least in comparison to other property classifications. Adams pointed out that nearly a half century later with only minor technical revisions in the 1871 law (which continued in effect for many more years) the difference between ad valorum taxes (i. e., taxes based on assessments of values of properties) in mining and in farming was 8 percent (15 percent versus 23 percent).26 The difference between the two categories in the decades after the founding of the state and during the Comstock bonanza has not, to my knowledge, been calculated simply because comparable data are hard to come by. During the first two decades, beginning in 1867 (earliest ore and tax records) through 1884 more than $379 million worth of gold and silver bullion was reported from all of Nevada’s mining districts. This was a yearly average of $21 million. Of that total $176 million or 46 percent was subject to taxation. The taxes collected from the assessments amounted to about $3.7 million or 2.1 percent of the total assessable property and 0.97 percent of the total bullion value. Assessments as a percentage of the bullion value never rose above 57 percent (1876 and 1877) and they fell as low as 22 percent (1883 and 1884). During the years of the highest assessments taxes on mining operations consumed 1.2 percent of the reported bullion value and during the years of the lowest assessments they consumed an equal amount. These figures do not include what mining paid for assessments on surface properties (and their improvements) such as mining shafts or what mills and ancillary operations paid on their business properties. How much the properties and in the case of the mines how 25 The above discussion of assessments and taxes for 1876 used the microfilm copies in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno. All the calculations are mine.26 Adams, Taxation in Nevada, 100.

14

THE COMSTOCK [Q]

much the proceeds should be assessed constituted one part of the continuing debate. The other part concerned rates that were levied against those assessments.

FIGURE 2COMPARISON OF NEVADA COUNTY TAX RATES IN DOLLARS PER $100

ASSESSED VALUES OF MINING PROCEEDS,SELECTIVE YEARS: 1867, 1877 and 1885.

County 1867 1877 1885Rate $/$100 Assessment Rate $/$100 Assessment Rate $/$100 AssessmentYear 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q

Churchill 2.8Elko 3 3 3 3 3 2.15 2.15 2.15 2.15 2.15Esmeralda 3.5 3.5 3.5 3.5 3.5 2.5 2.5 2.5 2.5 2.5 3.5 3.5 3.5 3.5 3.5Eureka 2.5 2.5 2.5 2.5 2.5 2.55 2.55 2.55 2.55 2.55Humbolt 2.9 2.9 2.9 2.9 2.9 2.9 2.9 2.6 2.6 2.6 2.6 2.6Lander 2.9 2.9 2.9 2.9 2.9 2.6 2.6 2.6 2.6 2.6 3.6 3.6 3.6 3.6Lincoln 3.84 3.8 4 3.8 3.8 3.55 3.75 3.5 3.5 3.5Lyon 2.45 2.45 2.45 2.45 2.45 2.75 2.75 2.75 2.75 2.75Nye 2.25 1 1 1.5 2.75 3.2 3.2 3.2 3.2 3.2 3.35 3.35Story 1.42 1 1.5 1.5 1.5 2.05 2.05 2.05 2.05 2.05 5.15 5.05 5.2 5.35 5.25Washoe 3.15White Pine 3.3 3.3 3.3 3.3 3.3 3.45 3.45 3.45 3.45 3.45Mean 1.74 1.33 1.61 1.82 2.12 2.14 2.12 2.19 2.14 2.17 3.47 4 3.46 3.18 3.16Median 2.9 1.95 2.2 2.2 2.9 2.75 2.75 2.75 2.75 2.75 3.25 3.45 3.45 3.35 3.45Notes: Rates computed from Controllers’ Biennial Reports: total tax collected divided by total mining-proceeds assessments. Figures in red estimated. Sources: See foot note 26.

The history of tax rates is far more difficult to untangle than the history of mineral assessments. State and local government determined the rates. State rates were more stable because revisions could only be made during biennial legislative sessions while local rates could be changed annually and even changed more than once during a fiscal year. Once rates were determined, the State Constitution (Article 1, Sections 1 and 9) required that ad valorum rates must be applied uniformly to all categories of property, generally defined as “real, personal and possessory” but also defined to include proceeds of mines. To treat mining proceeds as a separate category with its own rate structure was impermissible. Equally impermissible, as some had proposed, was to make owners of rich mines to pay a higher rate than owners of inferior mines. This principle was reaffirmed in several court cases from the late 1860s and the early 1870s and remains largely unchanged after more than a century. Public officials could employ within reasonable bounds different measures for assessing the value of property of different classes (residences might be assessed differently from business), but once assessed all properties (including mine proceeds) paid the same rate within the taxing jurisdiction. These bodies could not adjust the assessment formula for mining proceeds because that was established in a legislative statute. From the standpoint of how property assessments

15

THE COMSTOCK [Q]

were established local governments had some flexibility to raise or lower tax revenue by adjusting the assessment formula. With respect to rates, however, all property holders including mining companies paid the same. Assessment schedules could differ but rate schedules could not.

Between 1867 and 1885 the Legislature changed tax rates four times. In 1867 (prior to the legislation of 1871) the state collected $1.25 per $100 of taxable assessed value (or 1.25 percent of that value). For example, mining proceeds assessed at $1,000 would yield taxes of $12.50 if calculated at $1.25 per $100 ($1.25 times $1,000 divided by 10) or if calculated at .0125 times $1,000. In 1875 the rate was reduced to 0.90 percent where it remained until 1879 when it was lowered again to 0.55 percent of the assessed bullion value. Two years later the Legislature restored the 0.90-percent rate, and that was the last change through 1885. The Legislature altered rates for various reasons. The obvious reason was to try to adjust tax receipts to match up with revenue needs. Because of the Comstock boom in the first half of the 1870s the state treasury began to report surpluses that increased pressure on the Legislature to lower its ad valorum rates in 1875. Legislatures had to negotiate the shoals of protests erected by the mining interests, who although still publicly opposed to any proceeds tax increasingly shaped their arguments in terms of taxes diverting capital from investment needed to maintain the expansion of the Comstock. Like all booms this one eventually came to an end, and by the late 1870s the engulfing depression added pressure for the Legislature to drop rates further to cut mining costs. In 1879 the Legislature complied with another reduction. It was assumed among the politicians as well as the investors that the Comstock would recover as it had in the past, and the diminution in revenue accompanied by a drawing down of surpluses was seen as temporary. By 1881 with Comstock output falling further and with no new major discoveries or recoveries in sight the state, having exhausted its surpluses, was forced to raise taxes at a time when logic would dictate the reverse action. In the following years the Comstock recovered slightly from the lows of 1880 and 1881 but the recovery was statistically insignificant against the backdrop of the previous recoveries. The state’s financial health grew more precarious, and that led to more borrowing and cost cutting including the elimination of the Office of the Mineralogist.27

27 The Controllers’ Biennial Reports contained information on the rate structure. Beginning with the 3rd

Legislative Session (1867) through the 13th Legislative Session (1887) the reports are in Appendix to Senate Journal through the 6th Legislative Session (1873) and in Appendix to Journals of Senate and Assembly through the 13th Legislative Session (1885). When compiling the reports the Controllers indicated the state-tax receipts at the prevailing rate plus the county-tax receipts without any notation of the prevailing rate since rates varied from county to county. A rate can be calculated for each county in each quarter (tax receipts divided by assessed values), and an average can be calculated for all counties from the total county tax receipts divided by the total county assessment values. I have used the Controllers’ Biennial Reports in the Nevada State Archives. As noted in Chapter 2 the 1871 law helped to clarify and standardize the procedures for assessing mining proceeds, collecting taxes due and transferring tax revenues owing to the state. County assessors were required to gather the following information from the mining companies and tailings mills: total tons, per-ton yields, bullion values, costs of extraction, transportation and reduction, deductions (if any), assessed values and total taxes. Mines and mills were required to report their taxable ores every quarter. The above data were copied to an Abstract Statement from the Quarterly Assessment Roll of the Proceeds of the Mines that was virtually identical to the accounts kept by the assessor (at least in Story County). The county auditor verified the figures in the Abstract, and after state revenue stamps were attached the county clerk notarized the document. Usually written in at the bottom of the Abstract was a breakdown of the total tax between the state and the county. These abstracts were the sources used by the

16

THE COMSTOCK [Q]

County government had the responsibility for administering assessments and collecting taxes. As noted above, a share of those taxes were claimed by and transferred to the state. Over time most all Nevada counties derived some revenue from mining. In 1867 only five counties had taxable mining proceeds, and during the next 20 years 13 counties reported such proceeds at least once. Figure 2 presents the average rate county-by-county based on the Controller’s biennial reports for selected years: 1867 because it was the first year in which the Controller’s data appeared in print; 1877 because it was the most productive year in the history of the Comstock; and 1885 because it was the final year of this study. A word of caution about these figures is called for. They were computed by dividing the assessed values of declared ores into amount of tax actually collected. This yields a percentage rate that can be converted to dollars and cents per $100 of assessed value. The actual county rate for any given time period (a year or less) most appropriately should be drawn from county records. I have not searched for or consulted county archives, in particular Story County archives for discussions and decisions about tax matters. I have examined Story County assessment and tax ledgers currently available in the County Assessor’s Office in Virginia City. The October 1875 fire destroyed many of the Story County records, but according to the index of the County Microfilm Project some pre-1875 records exist on microfilm. I have not checked those microfilm copies. My aim is not to write a history of early taxation in Story County, but to evaluate assessments and rates and their impact on the mining industry. The rates can be calculated from the taxes paid, which were recorded as a part of the assessment information, and that calculation constitutes the rate structure that I am using in this analysis. I am well aware that if I had Story County’s tax-rate schedule for each year in front of me, I might be looking at rates that were slightly different from the “backward” calculations that I have done. Moreover there is an additional problem in that the county government could establish different rates for municipalities within its jurisdiction. Presumably these different tax rates were based on different expenditure levels that had to be met in the municipalities. These different municipal rates show up in the assessment records with respect to Gold Hill, Virginia City and later Flowery, and while they can be calculated in the “backward” fashion noted above, I cannot always be certain that they accurately reflect the real rates as legislated by county government and as applied to the assessed proceeds of mines within these municipalities. The rates that I discuss in the following paragraphs are in my opinion close to the real rates but remain to be confirmed through the reconstruction of the Story County rate schedule, something that may or may not be possible. Finally, it is important to note that these rates were not simply set at 2 percent or 3 percent but often carried one or two digits to the right of the decimal point – 2.15 percent instead just 2 percent or 4.60 percent instead of 5 percent. (When the rates are shown as x dollars per $100 of assessed value, the first figure can be converted to a percentage.) What the State Constitution constrained municipalities from doing was taxing one class of property differently from another class. Hence county tax rate data in Figure 2 above are no more than a calculated rate for all local taxing jurisdictions. The actual rates for counties and taxing jurisdictions within those counties could only be

state Controller in making his biennial reports to the State Legislature. Story County Assessment Rolls survive from the third quarter 1875 (post-fire) through 1885 both in their original form at the Assessor’s Office in the Story County Courthouse, Virginia City, NV and in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.

17

THE COMSTOCK [Q]

documented though research in county records or, as I will show below, analysis of the bullion-tax assessment rolls.

Despite considerable variability in county tax rates (not unexpected given the state’s demographic and economic diversity) both the average and median county rates rose during the selected years. The mean rate for all counties rose between 1867 and 1885: from $1.74 to $3.47 per $100 and median rate from $2.90 to $3.25 per $100. From the larger sample of 10 counties between 1877 and 1885 the mean and median rates rose from $2.14 to $3.47 per $100 and from $2.75 to $3.25 per $100 respectively. The county-by-county pattern was somewhat more complex. From the 1867 list three had higher rates in 1885, one had a lower rate and one had the same rate. The most notable increase occurred in Story County where average rate in 1885 was $5.15 per $100 compared to $1.42 per $100 in 1867. The rate in Nye County climbed from $2.25 to $3.35 per $100 and in Lander County from $2.90 to $3.60 per $100. Esmeralda’s rate was unchanged and Humboldt’s fell by a few cents. For the shorter period from 1867 to 1877 rates fell in Esmeralda and Lander counties, rose in Nye and Story and remained unchanged in Humboldt. Between 177 and 1885 rates continued to rise in Story and Nye. In Lander 1885 rates not only rose above the 1877-level but also above the 1867-level, and in Esmeralda the rate was higher in 1885 than in 1877, although the 1885 rate was the same as the 1867 rate. In Humboldt the rate was lower in 1885 than 1877. Of the remaining five counties two had lower rates in 1885 than 1877 and three had higher rates. Presumably the movement in levies applied to mining-proceeds shadowed the movement of levies on general property. On the one hand, mining was encouraged because it created jobs and raised incomes, and without the in-migration that accompanied mining Nevada’s statehood may have been delayed indefinitely. On the other hand, in-migration could overwhelm local services and facilities, and while mining taxes helped to pay for these needs, they were not so generous as to obviate the need for upward adjustments in all tax categories. When mining booms ended, the counties faced new fiscal crises. Although out-migration usually accompanied the collapse of mining, municipalities and counties that had depended on revenue from the bullion tax had to make some wrenching decisions about how to meets the needs of the remaining population with less revenue and in some cases like Story county with far less revenue. Higher property taxes at times when they were least affordable had to be part of the answer.28

When bullion was declared before the county assessor, the mining jurisdiction was noted and the county tax levied against the bullion was based on the property-tax rate in that jurisdiction. As noted above, the share of net-proceeds taxes paid by the mining companies to the state treasury was uniform across all jurisdictions and counties regardless of local rates set to cover local expenditures. At the local level tax rates varied from county to county and from municipality to municipality within a county. It is possible to calculate the rate of taxation paid by the mining companies on their assessed valuations within their respective jurisdictions, but that rate may be different from what other property owners paid. The way in which this could occur, as it did in Story County for nearly a decade, was that the county rate was based on the sum of the millage needed

28 See footnote 26 for references to Controllers’ Reports with respect to calculating comparative mean and median values.

18

THE COMSTOCK [Q]

to fund each division: tax millage for general government or public education or debt reduction, etc. Net proceeds of mining companies, it turned out, were not required or expected to contribute to the funding of all public business, and if they enjoyed a waiver that part of the county’s tax levy would not be applied to their bullion assessments. In Story County until 1876 mining companies only paid that part of the county/local tax that funded general government, and as a result the rate at which their net proceeds were taxed was lower than what other ordinary property owners paid. Prior to 1876 the county/municipal share from Comstock mines was $0.25 per $100 and then jumped to $0.35 per $100 because they were exempt from paying for public education and debt reduction while other property owners paid more than twice the rate because they were not exempt. Like mining companies all across the state Story County mines paid the same state rate of $1.25 per $100. After the law was changed in 1876 mining companies like other property owners paid taxes to support all government services. The local rates paid by mining companies on net proceeds jumped sharply to bring them into conformity with all other property tax rates. For the next decade rates fluctuated between $1 per $100 (or 1 percent) to $4.60 per $100 and were inclined toward the high end rather than the low end of this range. In addition, since jurisdictions within the county could fix their rates at different levels what mining companies (and other property owners paid in Virginia City could be higher or lower than what was paid in adjacent Gold Hill. State rates declined after 1876 and then rose again, but from 1876 on local taxes constituted a higher proportion of the total tax bill than state taxes.

The rise in rates to support county and municipal functions for Comstock mining companies after nearly a decade of modest rates was immediately manifest. From 1876 through 1880 Virginia City’s rates fluctuated between a low of $1.05 and a high of $3.00 per $100 while Gold Hills fluctuated between $1.10 and $2.55 per $100. In more than half the quarters they shared the same rate. After 1880 with production on the northern branch of the Comstock Lode in a nosedive rates in Virginia City rose to $4.00, then $4.10 and finally to $4.60 per $100. Rates also rose in Gold Hill, although somewhat less severely, to $3.25, then $3.50 and finally to $4.10 per $100. For comparative purposes Flowery with a small burst of mining activity in the 1880s had tax rates on net proceeds of between $2.50 and $2.90 per $100. There is little doubt that as production declined along the Comstock after 1880 tax rates had to rise to support an infrastructure that continued to exist as if it was serving fewer people. The out-migration that combined decline in output along the Comstock actually in the short term, at least, intensified the financial dilemma because all through the tax structure from general property to mine proceeds less income was being generated to finance public services. In time adjustments would be made that brought public expenditures in line with tax receipts, but unless the old mining towns of Gold Hill and Virginia City or the County of Story was simply erased from the map, tax-supported public business would remain along with the challenge to figure out how to pay for it. One thing for sure mining became a relatively modest contributor.29

29 Data from the microfilmed copies in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.

19

THE COMSTOCK [Q]

FIGURE 3COUNTY TAX RATES FOR VIRGINIA CITY AND GOLD HILL, IN DOLLARS

PER $100 OF ASSESSED BULLION, 1876-1885(State bullion rates excluded)

YEAR & QUARTER COUNTY RATE YEAR & QUARTER COUNTY RATESBY DISTRICT $ PER $100 BY DISTRICT $ PER $1001876 18811Q VC $2.50 1Q VC $4.001Q GH $2.50 1Q GH $2.502Q VC $1.05 1Q FL $2.002Q GH $1.55 2-4Q VC $4.003Q VC $1.05 2-4Q GH $3.253Q GH $1.55 2-4Q FL $2.904Q VC $1.05 18824Q GH $1.55 1-4Q VC $4.001877 1-4Q GH $3.50All Qs $1.15 1-4Q FL $2.901878 1883All Qs $1.10 1-4Q VC $4.101879 1-4Q GH $4.101Q VC $2.00 1-4Q FL $2.901Q GH $2.00 18842-4Q VC $3.00 1-4Q VC $2.602-4Q GH $2.00 1-4Q GH $2.101880 1-4Q FL $2.501Q VC $2.00 18851Q GH $2.00 1-4Q VC $4.602-4Q VC $2.00 1-4Q GH $4.102-4Q GH $2.55 1-4Q FL $2.90DISTRICTS: VC=Virginia City, GH=Gold Hill, FL=Flowery.Sources: See footnote 26.

20

THE COMSTOCK [Q]

Special Appendix: Survey Map from 1867 showing Virginia City. Gold Hill, Cpmstock Tunnel & Sutro Tunnel plus topographical features.

21

THE COMSTOCK [R]

Chapter 18Mining Taxes And Public Revenues:

Tax Revenues and Government Finances, Tax Showdown, County and Municipal Property Taxes

Total tax revenues from statewide mining can be assembled from the Biennial Controllers’ Reports. Between 1867 and 1885 the counties reported the declaration of $385 million worth of bullion of which $176 million or 46 percent was assessed as taxable. On the assessed bullion the counties collected $3.7 million or 2.1 percent, and on the total bullion 1 percent. Of the $3.7 million the state received $1.8 million ($94,000 per year) or 49 percent and the counties $1.9 million ($102,00 per year) or 51 percent. From 1867 through 1875 the state and counties more or less split the bullion revenues, although in 1874 the state took more than 72 percent of the total. That led to a call for reducing the state tax in 1875, and after the state rate was lowered the county treasuries claimed half or more of the taxes on mining proceeds. On average the state treasury and the county government received $114,000 per year through 1875, but after 1876 the state averaged $76,000 per year and the counties treasuries $124,000. In a state with a population of only several tens of thousands of taxpaying citizens the mining-proceeds taxes became the most important component of the financial structure. In the seven years from 1872 to 1879 the median revenue per year from taxes on proceeds was nearly $300,000. The peak years, not surprisingly, were 1876 with $531,000 and 1877 with $572,000 and corresponded with the peak years on the Comstock. When the decline set in after 1879, it was severe and sharp. From 1880 through 1885 mining-tax revenues dropped 75 percent. In the final year, 1885, the state treasury gained only $6,300 from mining taxes, the equivalent of what the state earned in interest from various bonds that it owned. Although mining had spread across the state with new camps being opened and abandoned with regularity, the bullion-tax revenues were driven in large measure by events surrounding the Comstock industry. No other camp came close to matching the performance of the Comstock, and therefore no other camp could match the impact that the Comstock had on overall revenue levels.1

Story County earned the most tax revenue from the bullion tax because it had the state’s most productive mines. It also had the highest maintenance and infrastructure costs because its population reached tens of thousands during the Comstock’s peak years. Whether the services were adequate or inadequate, efficiently managed or corruptly mismanaged, necessary or unnecessary is not my concern. What is of interest is how much the county raised through the taxes on companies’ net proceeds. Between 1867 and 1885 taxes on mining proceeds generated $2.3 million (Story was 2 percent of the counties with 62 percent of the bullion tax), and of this amount the county received $992,000 (44 percent) and the state $1.3 million (56 percent). On average the county collected $52,000 per year and the state collected $67,000. The combined impact of the bullion tax on the declared valuation (without any deductions as permitted under the law) 1 Biennial Controllers’ Reports began with the 3rd Legislative Session (1867) and continued through the 13th

Legislative Session (1887), and they may be found in Appendix to Senate Journal through the 6th

Legislative Session (1873) and then in Appendix to Journals of Senate and Assembly through the 13th

Legislative Session (1885). Copies of the Appendices are housed in the Nevada State Archives and Library, Carson City, NV.

1

THE COMSTOCK [R]

was less than 1 percent, more precisely 0.91 percent. The county took 0.40 percent of the declared value and the state 0.51 percent. Bear in mind that because county rates changed frequently, county tax-revenue levels could be highly variable. Over the long term, of course, the ultimate determinant of tax-revenue levels was the state of mining in the county. Figure 1 (in logarithms) shows that the total bullion declarations of the county’s mines (and mills) and total tax revenues generated by those declarations followed similar paths. The trends correlate at about 80 percent, a fairly high result. Unless rates dropped as output increased (an inverse relationship) one could expect that higher mineral output led to higher tax revenues, and that is what Figure 1 demonstrates. Since county tax rates could change from year-to-year or from quarter-to-quarter within the mining jurisdictions movements in rates could have an impact on revenues from bullion beyond the cyclical phase in mineral production. According to the coefficient of variation, a measure of variation within a series, county tax revenues compared to total bullion declarations (not assessments) were almost twice as great (154 versus 88 percent). In other words tax-rate changes imposed by the county were more variable than production cycles associated with the Comstock. Over the period for which tax data exist the average county tax rate on total bullion declarations was 0.40 percent or 40 cents per $100 of mining proceeds.2

FIGURE 1COMPARISON TOTAL BULLION VALUE AND TOTAL BULLION-TAX

REVENUE, STORY COUNTY(in logarithms)

$1

$10

$100

$1,000

$10,000

$100,000

$1,000,000

$10,000,000

$100,000,000

Tota l Bullion Va lue

Tota l County Revenue

Sources: See footnotes 1 & 3.

2 The median is even lower at 23 cent per $100, but it is a less useful measure with these variables. The percentage would be higher if I measured proportion of tax revenue from assessed valuations, but I do not always know how assessments were determined prior to the 1871 amended law on mine proceeds or what assessments were for every quarter between 1871 and the fire of 1875.

2

THE COMSTOCK [R]

Tax revenues from mining proceeds as a percentage of the total bullion value averaged out at 11 cents per $100 (.11 percent) through 1875 and then jumped to 66 cents per $100 dollars (.66 percent) after 1875. The highest point was reached in 1879 when county taxes absorbed $1.05 of every $100 of mine proceeds or 1.05 percent. Had the actual county tax rates been applied not to the assessed values (which included deductions for expenses, etc.) but to the declared valuations the county receipts from mine proceeds would have averaged closer to $100,000 each year. But one must recall that the county tax rates were set where they were because of the use of assessed value rather than declared values. General property-tax rates were also applied to assessed values rather than market values (in most jurisdictions). The debate concerned the level of deductions (which general property owners could not take) in determining the assessed values against which tax rates were applied. Even in the years (1876-1879) with highest yields from tax revenues – on average $182,000 per year – the revenues amounted to less than three-fifths of 1 percent of the total value of the declared bullion. That mining companies fought hard to preserve what others saw as unjustified tax breaks can be fully appreciated in light of the numbers analyzed above. The profitable companies benefited more than the unprofitable companies. Marginal or unprofitable mines wanted to eliminate any expense they could in order to eliminate the red ink. It was unlikely that the elimination of all tax payments by marginal or unprofitable mines would have made much difference since the taxable product was so small because of the deductions (up to 90 percent) granted companies with low-profit ores. More likely the anger or concern was directed at the bonanza companies, even the cost-efficient ones, which could deduct millions of dollars in expenses before taxes were levied. Companies also paid taxes on their surface properties under the same procedures and rates that other property owners paid. These general property taxes to be discussed briefly later were modest compared to the mine-proceeds taxes.3

Since all mining companies paid the same rates within their respective jurisdictions, the companies declaring the highest yields paid the most in taxes. This may seem self-evident, but it needs to be emphasized in order to clarify how the tax on mines’ net proceeds was structured. The higher the yields, the lower the deductions and the greater the taxes. From the third quarter of 1875 through 1884 (1885 assessment rolls ignored) over 38 quarters 56 different mines, mills and individuals declared bullion worth $128 million of which $73 million (57 percent) was taxed. These figures agree with totals in the Controllers’ Reports except for a few minor variations stemming from errors in arithmetic or transcription. The taxes paid on mining proceeds to the state and the county totaled nearly $1.6 million. The county quarterly assessment rolls did not consistently specify how much of the tax collected was forwarded to the state and how much was retained by the county, although that percentage can be calculated for each company in each quarter by subtracting the state’s rate (which was indicated in the Controllers’ Reports) from the total and using the difference as the county’s rate. The county rates could differ because the millage in Virginia City and Gold Hill could differ quarter by quarter. To avoid numerous calculations I have computed a ratio between the county’s 3Story County Assessment Rolls survive from the third quarter 1875 (post-fire) through 1885 both in their original form at the Assessor’s Office in the Story County Courthouse, Virginia City, NV and in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.

3

THE COMSTOCK [R]

share and the state’s share 75 percent to 25 percent. I then applied the 75 percent figure to total taxes paid by each company to illustrate how much the county collected from each company.4 These estimates are not perfect, but they present a fair picture of the distribution of the county tax burden among the companies. The county was entitled to about $1.2 million of the $1.6 million raised by the bullion tax. Many of the companies or individuals who made declarations and paid taxes were marginal producers. Of the 10 largest taxpayers nine were mining companies and one was a tailings mill. Five of the nine were on the northern branch of the Comstock Lode in Virginia City and four were on the southern branch in Gold Hill. Half of the 10 were owned or controlled by Mackay, Fair et al. The top 10 accounted for 96 percent of the declared bullion valuations and 98 percent of the county bullion taxes. They paid 0.95 percent in taxes of the declared value and 1.62 percent in taxes of the assessed value. They generated $1.2 million for the county coffers compared to only $29,000 total from the remaining 46 companies and individuals. As with so many other comparisons relative to the Comstock mining industry, fiscal wellbeing also depended on a precious few operations.

FIGURE 2TOTAL BULLION TAX REVENUES AND TOTAL STATE AND LOCAL

SHARES OF TAX REVENUES.

Sources: See footnote 1.

The list of contributing taxpayers can be narrowed to individual companies. The two behemoths, Consolidated Virginia and California, paid 87 percent of county taxes. Mackay and Fair’s Pacific Mill and Mining Company owned the tailings mill Omega, and they also acquired an interest in the mines Ophir and Union so that their total county tax payments may have reached 92 percent. The other taxpayers – the remaining five in the top ten and the balance of 46 – combined to pay 8 percent of the bullion tax receipts.

4 It is also possible to calculate the county’s share from the Controllers’ Reports but not each company’s share.

4

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

1867

1868

1869

1870

1871

1872

1873

1874

1875

1876

1877

1878

1879

1880

1881

1882

1883

1884

1885

Tota l Tax

Sta te Tax

County Tax

THE COMSTOCK [R]

To be sure, Belcher, Crown Point, Yellow Jacket and Kentuck were high- flyers from the period prior to the fire and the destruction of the assessment rolls. They may well have played the same role with respect to tax generation prior to 1875 that Mackay & Fair’s companies did after the fire. The mines of Gold Hill, although still operating on a modest scale, only contributed between 3 and 4 percent of the collected taxes in the Comstock’s final decade.

FIGURE 3

PERCENTAGE CHANGE IN BULLION VALUES &-TAX REVENUES FOR STATE AND STORY COUNTY, 1867-1885

[1] [2] [3] [4] [5] [6]1867 $13,853,348 $75,951 0.55%1868 $9,441,717 -31.85% $52,629 -30.71% 0.56%1869 $6,684,065 -29.21% $28,918 -45.05% 0.43%1870 $6,859,699 2.63% $34,781 20.27% 0.51%1871 $10,644,704 55.18% $58,045 66.89% 0.55%1872 $12,630,675 18.66% $81,917 41.13% 0.65%1873 $22,657,724 79.39% $185,341 126.25% 0.82%1874 $22,529,615 -0.57% $171,314 -7.57% 0.76%1875 $26,023,051 15.51% $176,840 3.23% 0.68%1876 $38,038,146 46.17% $466,349 163.71% 1.23%1877 $37,062,252 -2.57% $475,264 1.91% 1.28%1878 $20,436,685 -44.86% $258,057 -45.70% 1.26%1879 $7,557,712 -63.02% $96,534 -62.59% 1.28%1880 $4,280,907 -43.36% $34,981 -63.76% 0.82%1881 $1,468,919 -65.69% $13,759 -60.67% 0.94%1882 $1,675,098 14.04% $17,455 26.86% 1.04%1883 $2,024,558 20.86% $16,284 -6.71% 0.80%1884 $2,584,580 27.66% $14,799 -9.12% 0.57%1885 $2,952,499 14.24% $8,361 -43.50% 0.28%Total $249,405,954 $2,267,579 0.91%

% Tot TaxMean $13,126,629 $119,346

[7] [8] [9] [10] [11] [12]$60,556 0.44% $15,395 0.11%$43,857 -27.58% 0.46% $8,772 -43.02% 0.09%$24,129 -44.98% 0.36% $4,820 -45.05% 0.07%$28,457 17.94% 0.41% $6,324 31.20% 0.09%$48,370 69.98% 0.45% $9,674 52.97% 0.09%$68,264 41.13% 0.54% $13,653 41.13% 0.11%

$154,451 126.26% 0.68% $30,890 126.25% 0.14%$142,762 -7.57% 0.63% $28,552 -7.57% 0.13%$127,325 -10.81% 0.49% $49,515 73.42% 0.19%$213,444 67.64% 0.56% $252,904 410.76% 0.66%

5

THE COMSTOCK [R]

$208,652 -2.25% 0.56% $266,611 5.42% 0.72%$116,126 -44.34% 0.57% $142,931 -46.39% 0.70%

$17,265 -85.13% 0.23% $79,269 -44.54% 1.05%$7,516 -56.47% 0.18% $27,465 -65.35% 0.64%$2,778 -63.04% 0.19% $10,981 -60.02% 0.75%$3,456 24.41% 0.21% $13,998 27.47% 0.84%$3,377 -2.29% 0.17% $12,907 -7.79% 0.64%$4,329 28.19% 0.17% $10,470 -18.88% 0.41%$1,467 -66.11% 0.05% $6,893 -34.16% 0.23%

$1,276,581 0.51% $992,024 0.40%56.30% 43.75%

$67,188 $52,212 Notes: [1] Year; [2] Total Bullion Value; [3] % Change; [4] Total Tax Paid; [5] % Change; [6] % of Total Value; [7] State Share; [8] % Change; [9] % of Total Value; [10] % County Share; [11] % Change; [12] % County Share; [13] YearSources: See footnote 1 & 3.

FIGURE 4MINING COMPANIES, DECLARED BULLION, ASSESSED BULLION, STORY

COUNTY TAXESMines [1] [2] [3] [4] [5] [6] [7]

Con Vir [VC} $51,252,898 $33,334,008 $738,712 $554,034 1.08% 1.66% 46.52%

Calif (VC) $46,830,260 $31,556,875 $648,204 $486,153 1.04% 1.54% 40.82%

Belcher (GH) $6,059,755 $1,583,017 $35,377 $26,533 0.44% 1.68% 2.23%

Ophir (VC) $5,390,720 $2,165,279 $48,247 $36,185 0.67% 1.67% 3.04%

Cr Point (GH) $4,123,907 $765,315 $22,012 $16,509 0.40% 2.16% 1.39%

Justice (GH) $3,476,607 $747,992 $16,202 $12,152 0.35% 1.62% 1.02%

Omega (VC) $1,597,114 $474,088 $11,577 $8,682 0.54% 1.83% 0.73%Yel Jacket

(GH) $1,341,847 $261,227 $9,677 $7,258 0.54% 2.78% 0.61%

Union (VC) $1,285,873 $450,053 $14,206 $10,654 0.83% 2.37% 0.89%Choll Pot

(VC) $1,273,069 $254,059 $5,191 $3,893 0.31% 1.53% 0.33%

Total (10) $122,632,049 $71,591,912 $1,549,406 $1,162,054 0.95% 1.62% 97.57%

Others (46) $5,160,645 $1,197,533 $38,553 $28,914 0.56% 2.41% 2.43%

Grand Total $127,792,693 $72,789,446 $1,587,958 $1,190,969 0.93% 1.64%100.00

%Notes: Con Va=Consolidated Virginia; Calif=California; Cr Point=Crown Point; Yel Jacket=Yellow Jacket; Choll Pot=Chollar Potosi[1] Companies; [2] Declared Value; [3] Assessed Value; [4] Taxes Paid; [5] Estimated Tax Due County 75%; [6] % County Tax Declared; [7] % County Tax Assessed; [8] % Total TaxSources: See footnote 1 & 3.

To what extent did county taxes place a burden on mining operations? A financial burden, of course, would depend on the overall health of the mining enterprise. If operating in the black, taxes may have had little impact; if operating with losses, they could only make the red ink redder. It is worth recalling that even when their costs

6

THE COMSTOCK [R]

exceeded their per-ton yields companies still paid taxes on any bullion that they declared, and like all property owners they paid general property taxes on all surface structures. At the same time, when companies were hemorrhaging red ink, they usually had high costs on low yields and that meant, given the permissible deductions of 80 to 90 percent before any taxes were levied, their tax bills were modest. Consolidated Virginia and California paid county taxes of more than $1 million from 1875 to 1881. Against declared bullion values of just under $100 million their county tax bills were slightly above 1 percent; against assessed values of more than $64 million their bills were about 1.6 percent. Inasmuch as their dividend payouts amounted to more than 50 percent of their bullion declarations taxes represented a minor outlay. Because of the richness of their ores they seldom could qualify for assessment deductions and therefore had to pay taxes on what was called the “net” – the difference between bullion receipts and mining costs. On the other hand, Yellow Jacket, which tried to make a comeback in the early 1880s, paid county taxes of about $7.200. Its expenses substantially outpaced receipts, and its yields were range-bound in the low teens. It qualified for deductions of up to only 80 percent so that the tax bite against assessed ores was 2.78 percent, the highest of the ten, but against the declared bullion value the tax bite was among the lowest at 0.54 percent. To be sure, had it been excused from taxes because it was basically a money-losing operation it could have improved its balance sheet slightly. The real problem was more fundamental than a tax burden: Yellow Jacket simply lacked profitable ores. From the public perspective its presence in Gold Hill, even though it added to the local labor force, imposed certain costs on the municipality and the county. The day of tax incentives to attract business whatever the cost had not yet arrived in Story County.

FIGURE 5BULLION VALUE AND PERCENT OF BULLION VALUE PAID IN BULLION

TAX, STORY COUNTY

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

Tota l Bullion Va lue

% Tax of Value

Sources: see footnote 1.

7

THE COMSTOCK [R]

It is well known among Comstock enthusiasts that Mackay and Fair refused to pay taxes on proceeds from their flagship mines, Consolidated Virginia and California, beginning in the third quarter of 1876. Perhaps the most colorful account appears in Ethel Manter’s “story” of John Mackay, Rocket of the Comstock. She opened her narrative with a description of Mackay and Fair and their San Francisco routine as told by a Comstock miner: “They are like two buckets on the end of a rope. When one comes up [to Virginia City], the other goes down.” It turned out, however, they both showed up in San Francisco at the Palace Hotel during the same week because, according to Manter, they had been quarreling about the tax-evasion issue.5 Mackay’s reputation, as it had evolved on the Comstock, would not have suggested that he was prepared to initiate or to execute a tax-evasion plan. Fair, on the other hand, was certainly not above such scheming. Why, after having dutifully paid taxes in prior years (even if they might have disagreed with the policy), should they consider such a course of action that in all likelihood would fail and certainly had the potential of sullying their image? It is not clear from what has been reported that what angered Fair in particular was the tax itself. Rather it may have been the change in the rate for the year 1876. I noted earlier that mining companies with their hefty deductions had only paid a fraction of what owners of real and personal property paid to the county prior to 1876. According to county property assessment rolls the rate of taxation on real and personal property had reached $2.25 per $100 in Virginia City. The rate may have been higher in Gold Hill. After deducting the state’s share of 90 cents per $100 (on properties a well as proceeds), the actual county rate was $1.35 per $100, or $1.00 per $100 higher than what the mining companies paid. Originally the companies only paid 25 cents per $100 to cover county government expenses, but the rate had risen to 35 cents per $100. In an appeal to the elected officials in 1875 local property owners including merchants and farmers persuaded county officials to equalize the rates, as required under the State Constitution. Real and personal property and mining proceeds would be taxed at the same rate, which in 1876 would be $1.95 per $100. After subtracting 90 cents for the state the county would receive $1.05 per $100 in order to cover county costs at 40 cents per $100, school appropriations at 15 cents per $100 and Virginia and Truckee Railroad bonds at 50 cents per $100. The petitioners argued that the mining-proceeds tax was already generous enough because it allowed mining companies to reduce their taxable proceeds by subtracting expenses from receipts, an exemption not extended to other properties. The lawmakers “placed a tax on a farmer’s crop without any regard to his seed and labor, taxed the product of the mechanic’s skill without deduction for time or cost, taxed the merchant according to his goods, and the laborer according to his wealth and possessions.”6 The change went into effect in 1876, and Fair went into action to undo this violation of a long-standing fiscal principle.7

The tax-rate issue in 1876 was a more complicated issue than the foregoing suggests. Under a law approved by the Legislature on 25 February 1873 county commissioners were to set tax rates “on or before the first Monday of March in each

5 Ethel Manter, Rocket of the Comstock (The Story of John William Mackay) (Caldwell, ID: Caxton Printers, 1950), 137.6 Manter, Rocket of the Comstock, 138.7 Grant Smith believed that the rate change propelled Fair to action. His earlier description presented some of the same details that appeared in Manter’s account. See The Comstock Lode, 204-206.

8

THE COMSTOCK [R]

year” for that calendar year.8 These taxes would be paid at various intervals (quarterly for mine proceeds) through the first quarter of the next year when the rates would be reconsidered. In 1875 the tax rate that mining companies paid to cover state and county taxes was $1.25 cent per $100, but the other county tax payers paid $2.25 per $100 on their properties. Since the mining companies paid 90 cents to the state they only 35 cents to the county. (Both classes of taxpayers paid a state tax of 90 cents per $100 so that the county’s share was $1.35 per $100 - $2.25-.90=$1.35.) One would expect the October 1875 fire to have caused havoc with tax collections and to have necessitated a rise in tax rates to meet any fire-induced government outlays, at least in Virginia City. In March 1876 the county had the opportunity to raise tax rates. Here, the tax-rate picture becomes blurry. In the first quarter of 1876 the county tax rate levied against mine proceeds, based on assessor’s records, was set at $2.50 per $100 but the rate against general property, based on the general tax ledgers, was set at a lower rate. Rates in Virginia City and Gold Hill were comparable in the first quarter of 1876, but they fell farther in Virginia City than in Gold Hill in succeeding quarters (even though Virginia City suffered directly from the fire). The state rate of 90 cent per $100 was unchanged and can be ignored. Whether fire-related or not, the fact is that mining companies paid higher rates on mine proceeds than other property holders paid, a reversal of the situation in previous years. However the anomaly arose, it was temporary. What was not temporary was that beginning in the second quarter of 1876 a uniform tax rate was applied to all property holders, and that meant for the first time that mining company proceeds were levied at the same rate as every other class. Their tax bill rose not just because of higher rates but more importantly because of uniformly applied rates. For mining companies in Virginia City the tax rate excluding the state rate of 90 cent per $100 was set at $2.50 per $100 for the first quarter and then it dropped to $1.05 per $100 for the remaining three quarters. In effect to meet all its current expenses the county approved rates that all its property holders would pay with no exceptions granted to mining companies. Companies like Consolidated Virginia and California were faced with higher local tax bills. That mining companies should be treated on par with other property owners apparently deeply offended James Fair. Even though mining companies kept their assessment deductibles, they no longer enjoyed other waivers. During 1876, then, Consolidated Virginia had a tax bill to the county alone of about $220,000 and California of about $103,000, for a total of $323,000. In 1875 California had paid no taxes to the county, and Consolidated Virginia had paid under $40,000. This was probably the biggest quarterly tax bill that The Firm or any other mining company had ever received. Although taxes due in 1876 were 1.1 percent of the total bullion value and less than 2.0 percent of the dividends paid to the stockholders ( of which Mackay, Fair et al. owned 75 to 80 percent of all the stock), the outlay for taxes in 1876 did not escape notice. The Firm was assuming a public burden that no previous bonanza company had been asked to bear.9

For Fair (if not Mackay) the shift in taxing procedures could be not treated strictly as a matter of equity in tax policy. Long-time friction between the Mackay-Fair crowd and the Sharon-Ralston crowd contributed to the decision to take a stand against the 8 “An Act to define the time for levying and assessing taxes for state and county purposes,” The General Statutes of the State of Nevada, 359.9 Microfilm copies in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.

9

THE COMSTOCK [R]

change. To be sure, the death of Ralston and the collapse of his banking monopoly, Bank of California, in 1875 left the mining empire of Sharon and Ralston in tatters, but, even so, Sharon was still a figure to be reckoned with. In fact Fair was alleged to have framed the issue about taxes in terms of Sharon’s past role as entrepreneur and politician. Because of higher rates beginning in 1876 mining companies, especially those under the control of The Firm, now at its zenith, had to make substantially larger contributions than ever required of Sharon and his investors. Sharon had been instrumental in persuading (perhaps coercing in the eyes of some) the county to keep taxes on mining proceeds low with the customary argument that mining was a risky business and could not thrive if overburdened with many fixed costs. For most of the productive years of his mines the county taxed proceeds at 25 or 35 cents per $100. In response to Sharon’s assertion that the new taxes were just, Fair may have retorted that Sharon favored increased county taxes “because the interest on the bonds issued by Ormsby and Story counties for the construction of Sharon’s railroad is long overdue.”10 The railroad was the Virginia & Truckee that Sharon and his associates built with contributions from the mining companies and from Story and Ormsby counties. Virginia & Truckee also enjoyed exemption from property taxes that residents and businesses alike paid, partly in order to cover the interest and retire the bonds sold to raise money to build the railroad. From the outset the county had struggled to meet these obligations. Prior to 1876 the bullion tax had not been used to cover these annual county expenses, but under public pressure to moderate the property-tax burdens the county added levies, calculated separately for the school fund and the sinking fund (that had responsibility for paying the interest and the principal on the bonds), to the tax bill for the mining companies. Previously the mining companies had been exempt from contributing to these county programs. The Firm was not only paying higher taxes per $100 of assessed bullion value than Sharon ever paid but was also contributing to the cleanup of a financial mess that Fair believed that Sharon helped to create and from which he still benefited. Fair failed to mention, of course, The Firm used the Virginia & Truckee Railroad and received substantial rebates from doing so. Nor was there any mention that the holders of real and personal property had been paying 50 cents per $100 more since the bonds were issued. But Fair, if not Mackay, was preparing for a battle royal mainly because it involved William Sharon.

While the Bonanza Kings may have had Sharon in mind as they launched their attack on mining taxes, they like most mine owners and investors had long opposed such taxes. Story County mining interests had managed to maintain the status quo with respect to county tax rates, and even though they opposed the tax in principle, they were capable of taking a pragmatic view that maintaining a relatively low rate was preferable to taking a harder line that might result in higher taxes. Moreover, the state had reduced its share from $1.25 to 90 cents per $100 in 1875. What happened in 1876 - the equalization of rates for all properties including mining proceeds - meant not lower rates in the aftermath of the state reduction but higher rates that exceeded any prior level. Whether these concerns resulted in a broadly based strategy embraced and supported by all mine-owners or became the obsession of Mackay and Fair and in particular Fair is not easy to answer. Mackay and Fair had allies among other mining entrepreneurs, but on the surface at least the campaign appeared to be primarily a one-company or perhaps even a one-man

10 Manter, Rocket of the Comstock, 138-139. I could not verify this remark.

10

THE COMSTOCK [R]

crusade to settle some grudges. It was not a cause that rallied the mining interests into an implacable enemy of local or state government.

One line attack failed miserably. In the fall elections of 1876 a slate of candidates, who were allegedly supported by Mackay and Fair, failed to win a single seat. Shortly thereafter, according to some published accounts The Firm began to withhold taxes. Some essential details are still obscure: for example, precisely when did the withholding begin and how long did it continue. Ethel Manter, Mackay’s biographer, claimed that by the end of 1876 $52,000 from Consolidated Virginia and $61,000 from California had been withheld, and this had caused the county assessor to seize bullion belonging to the mining companies, although she did not explain how or where the seizure took place. Apparently the assessor released the bullion after Mackay and Fair said under oath that they had the resources to pay the debt should that be required of them.11

The withholding action apparently began in the second quarter of 1876, when in June Consolidated Virginia paid its first quarter taxes of $227,180 but under protest. Taxes from the following three quarters (April-June, July-September and October-December) were withheld for both Consolidated Virginia and California. By the time that taxes were due during the second quarter of 1877 on proceeds from the first quarter of 1877 Mackay and Fair had ended their protest. In his Fourth Biennial Message to the 9th

Biennial Legislature in January 1879 Governor L. R. Bradley discussed the legal and financial issues concerning Consolidated Virginia and California. He reminded the legislators that when the last legislative session ended (early March 1877) the two mining companies owed more than $290,275.95 in mining taxes. The penalty for withholding taxes as provided by law amounted to $101,596.57. The figure of withheld taxes, as cited by Bradley, squared with the totals owed by two companies but not paid according to the assessment rolls. The rolls included a column with the heading “Date of Payment”. For the three quarters noted above (Apr-Jun, Jul-Sep, Oct-Dec) this column showed in the second quarter assessments that the past-due taxes were paid on 5 May 1877. The penalty, if paid in part or full, was not recorded by the assessor.12

One matter, not easy to explain based upon an examination of the assessment rolls and the Controllers’ Reports, is how the state’s portion of the taxes due from Consolidated Virginia and California was handled. The assessment rolls contained all the appropriate information regarding the companies’ operations including the taxes that were supposed to be collected by the county treasurer and delivered to the state treasurer, but they also indicated that no taxes had been paid from the third quarter of 1876 to the second quarter (in May) of 1877. The Controllers’ Reports did not show that any taxes had been withheld. One report presented to the 8th Biennial Legislature in 1877 included taxes collected during the second and three quarters of 1876, and the next report for the 9th Biennial Legislature in 1879 included the taxes collected for the fourth quarter of 1876. Since all withheld taxes had been paid by the 9th session, there was no reason to note any unpaid taxes. It was a different matter, however, for the 8th session. More than 11 Manter, Rocket of the Comstock, 13912 “Fourth Biennial Message of…Bradley…” in Appendix to Journals of Senate and Assembly, 9th

Legislative Session (1879) 6, and microfilm copies in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno.

11

THE COMSTOCK [R]

$207,000 in taxes had not been paid, and of that amount $93,000 or 45 percent was owed to the state. Was the county, as the official tax collector, obligated to pay the state’s share even though it could not collect any of the taxes due from Consolidated Virginia and California? The assessor was said to have confiscated bullion in lieu of unpaid taxes but then to have released it when Mackay and Fair posted a bond with property as collateral. The posting of the bond simply gave the county a lien on property, which could be sold at a later date to cover back taxes. It did not generate any cash immediately. If the county had to advance the state’s share regardless, where would it find the available funds in view of the fact that it had not been paid the $114,000 that was the state’s share? Consolidated Virginia and California combined represented 65 percent of the taxes due from the proceeds of the mines, and that was not an amount that be easily covered by other temporary actions. The withholding of tax payments by Mackay and Fair must have left county finances in disarray and perhaps, to a limited degree, state finances as well.

Withholding taxes was a prelude to a further confrontation with the government. Mackay and Fair launched a campaign to overhaul the 1871 amendment on mining-proceeds taxes at the 8th Biennial Legislation scheduled for 60-day session to start in January 1877. Setting up shop in rooms above the Carson City Savings Bank Fair readily dispensed champagne, cigars and probably cash to as many legislators and tycoons as he could find. That money may have exchanged hands was not what Mackay would have preferred, according to Manter. “John Mackay remained aloof, trying to reconcile himself to the actual posture of affairs. Fair [Mackay knew] could not be ‘bossed’”.13 For two weeks in February 1877 weekly mine reports from Virginia City to San Francisco noted that Fair was not in Virginia City tending to the business of the mines but was in Carson City tending to the business of the legislators. Fair had notified the Virginia City office that while there was opposition in the House he was confident ultimately of victory. The Territorial Enterprise reported in detail the daily progress of all the bills including the bill to revise the mining proceeds. The revision or compromise (Bullion Tax Compromise Bill) was to change the way in which assessments were made. Sixty percent of all milled ores were to be exempt if they yielded less than $100 per ton and 50 percent if they yielded $100 or higher. Instead of using costs to determine assessments or in the case of mines that had costs that exceeded receipts a graduated exemption schedule based on per-ton yields, all mines would be assessed after exclusions at either the 50- or 60-percent level. In the case of Consolidated Virginia and California the impact of the compromise would be significant. Because their costs were so low and their yields so high, they could only exclude a quarter or a third from taxation. Under the compromise the amount to be exempted nearly doubled. Even though both House and Senate members thought the compromise was unconstitutional, both chambers passed the bill by fairly close votes – 27 to 23 in the House and 14 to 11 in the Senate. Governor Bradley, who had already publicly proclaimed in his Third Biennial Message (January 1877) that the state had been generous enough to the mining sector, promptly vetoed the bill. Had it been allowed to become law the state and county governments would have had to raise rates on all other classes of property in order to make up for lost revenues.14

13 Manter, Rocket of the Comstock, 139.14 Manter, Rocket of the Comstock, 140; “Nevada Legislature”, Territorial Enterprise, 21 February 1877; Copy of Letter from James Fair to A. W. Havens, Secretary of the Board. [actually written by J. Minor Taylor], 18 February 1877, Letterpress Book, November 1876-August 1878, Consolidated Virginia Mining

12

THE COMSTOCK [R]

But the story did not end with Bradley’s veto. In spite of the veto of the Bullion Compromise Bill the Bonanza mines still owed several hundred thousand dollars in overdue taxes and penalties, and the county’s fiscal shortfall was so great that a Temporary Relief Committee had to be organized to collect donations to finance certain much-needed public services. In the background were several judicial proceedings that included a soon-to-announced decision from the United States Supreme Court in a case known as Forbes v Gracy. This case like so many others challenged the constitutionality of mining taxes, and if mine owners prevailed in court the county and state governments would be faced with an enormous financial challenge. In light of a rising public outcry against the mining interests and their legislative friends, Mackay and Fair proposed a new strategy. Until the judiciary settled the matter of the constitutionality of any bullion tax, they proposed to advance $80,000 to the county to cover current expenses except for the railroads. If Mackay and Fair lost the lawsuit and had to pay all past-due taxes, the $80,000 would be deducted from the amount that they were required to pay. If they won the lawsuit, the county could keep the donation. In addition, if they won the lawsuit, they would make a contribution (one-half of 1 percent of all mining proceeds) each quarter to the county for various public uses but not for any state obligations. To many observers this offer constituted a bribe. Few citizens were prepared to grant mining companies, no matter how generous they tried to be, exemptions from taxes that other property owners did not enjoy. While this became a public-relations disaster for Mackay and Fair, who actually resided in Virginia City, the county with a mounting fiscal crisis had to weigh the options because it was unclear how soon the taxes in arrears would be paid if ever. Ultimately the county rejected the settlement because it was unpopular and would establish an unhealthy precedent. Within weeks after the county’s rejection the Supreme Court issued a ruling in support of bullion taxes, and the county set about quickly to collect both taxes and penalties. Taxes of more than $300,000 were paid to the county on 5 May 1877 with the matter of penalties to be negotiated.15

On the same day that the Firm paid its back taxes James Fair gave an interview to the Territorial Enterprise, what the paper called a “brief conversation”. Although his tone was more moderate in comparison to earlier statements that he was alleged to have made, Fair made no apology for the strategy that he and Mackay had followed. Although invoking Mackay’s name only twice in the published version, Fair wanted to leave no doubt that this was collaborative effort. They had not decided to end the protest and to pay the tax because they had concluded “the tax was just” or because their attorneys had advised them to do so. No, showing his combative side, he declared that “we know we could have worn out the State and country, and that, if we had not beaten the suits entirely[,] we would have eventually compelled a compromise upon our own terms.” The reason for changing their minds, insisted Fair, was to come to the aid of the county and its citizens. The county’s revenue shortfall could have a ripple effect across the economy. Being unable to fund its schools, hospitals and other services would mean bankruptcy for

Company, NC99/2/8, Bx 6, Special Collections, Library, University of Nevada, Reno; and Smith, The Comstock Lode, 204-220. 15 Manter, Rocket of the Comstock, 140-142; “Fourth Biennial Message of…Bradley…” in Appendix to Journals of Senate and Assembly, 9th Legislative Session (1879), 6-7; and “The Payment of Taxes”, Territorial Enterprise, 6 May 1877.

13

THE COMSTOCK [R]

“a score of merchants” who depended on business from the county and their employees. “In such an emergency, Mackay and myself could not resist the appeal” to loan the county $100,000. Now that the times have grown worse “when there is so much despair and stress in the State, we have concluded if there was no levy against us, it would be necessary for us to donate to the people more than the difference between the taxes which we think would be just and the taxes actually levied against us.” Without acknowledging that their withholding of taxes might have actually precipitated the crisis Fair sought to align the partners’ actions with what all “fair-minded” citizens would have done in the face of unjust levies. He further reminded the reader that two years earlier (when the levy against bullion was 90 cent and 35 cents per $100) the state and the county were far more prosperous than today (not unlike today – taxes hurt growth). In his final remarks Fair admitted that what he said in the interview would not placate their enemies and would probably not erase the divide that existed between their duties to their stockholders and to the “sorely-perplexed people of this State”. He lashed out at the “heavy San Francisco capitalists” who were more intent on breaking up the Comstock than holding it together. “We are carrying as many mines as we can, and employing as many men. We are doing the best that we can for the stockholders, and shall continue to do so for as long as we have charge of the mining properties.” But the desperate circumstances of the state and the county required that the course be altered. That desperation was also motivation for “Mackay and myself” to make a contribution to the county Relief Committee, the amount not specified.16

The Territorial Enterprise ended the article with its own comment. Without knowing how the public would react, the newspaper hoped that the conversation should “open the eyes of the most prejudiced enough to cause them to do justice to the Bonanza people, and to cause men generally to begin to understand who their real friends are.” The role of the Territorial Enterprise in the battle over bullion taxes was ambivalent. By and large in the commentary that followed the Fair conversation the Territorial Enterprise was mute on critical issues concerning private and public rights. In truth the Territorial Enterprise was not always uncritical of the mining interests and in particular of The Firm. It was perhaps more the crusader under its original owners Joseph T. Goodman and Denis T. McCarthy, but Goodman had sold the newspaper to William Sharon in 1872. Along with his many mining and milling properties Sharon had decided to acquire the Territorial Enterprise in order to advance his political career. His goal, to be elected to the United States Senate by the Nevada Legislature, was attained in January 1875. Because he did not wish to alienate legislators, who may have opposed special treatment for mining and railroad interests, he remained neutral on the emerging debate over the bullion tax. Its commentary did not address issues that Fair failed to address directly, i. e., the inequities that existed in the assessment procedures. Nor did he reveal that the Quartet owned a huge stake of Consolidated Virginia and California as well as the ancillary corporations like Pacific Mill and Mining, and therefore the stockholders, whom Fair wished to protect, were principally himself and the other three. In spite of expressions of support for ordinary citizens the Bonanza Kings like other mining entrepreneurs had long opposed any taxes on their operations or the products of those

16 “The Payment of Taxes”, Territorial Enterprise, 6 May 1877, and Manter, Rocket of the Comstock, 138-139.

14

THE COMSTOCK [R]

operations. Fair spoke of sharing fiscal burdens with other taxpayers but left unclear how this burden should be shared. Local government could not meet its obligations even if some of those obligations in retrospect were entered into unwisely by depending on the charity of the citizenry. Fair appeared to understand that when local government lacked funds citizens and businesses suffered, but he seemed to be oblivious to the fact that the actions taken by him, Mackay and other owners were a source of that suffering. Grant Smith, citing standard histories of state politics, accepted the idea that Sharon had less to lose by dropping his opposition to the bullion tax (which he had fought many years earlier) and more to gain by accepting a broadly-based tax that insured the future of the railroad bond sinking fund. Although Sharon might well have launched an attack on his archenemies, who had no doubt about his perfidy on bullion-tax debates, through the pages of the Territorial Enterprise, he apparently chose a less vindictive course. In any event, Fair was allowed to make his case without much critical response from the newspaper.17

Not everyone saw the Territorial Enterprise as a neutral observer. Several months before Mackay and Fair paid up their taxes during the legislative debates in February 1877, the Reno Gazette lambasted Sharon’s newspaper for supporting the Bullion Tax Compromise against the interests of the citizens in Nevada. The Gazette made the unequivocal pronouncement that the legislators should ignore the opinions expressed in the Territorial Enterprise because it was “the mouthpiece for Mackay, Fair, Sharon and others.” There was no doubt in the view of the Gazette that the Comstock titans were prepared to modify the bullion tax in such a way that it would shift to the “rancher, mechanic and business man [sic]” tax burdens that were far heavier than these groups could endure.18 In a lengthy reply to the Gazette’s charges the Territorial Enterprise began by describing them as “trash”. It denied that it had ever received any instructions on what to write about the debate: “it is the plea of a baby and an ass to make such a charge against us. We have never whined against the present tax and have never had anything to say against it save that it was not framed by a miner, and that its scale of rates is not adjusted properly, as every mine and mill-man in the State knows.” The Territorial Enterprise went on to espouse the opinion that it spoke for “more than half the men of the State” and may be speaking for “three-fourths of the taxpayers of the whole State.” Of course, the Gazette had also claimed that it was voice of the majority of the citizenry. The Territorial Enterprise once again reminded the Gazette that its principal owner, William Sharon, had paid his bullion taxes “without protest or delay” (in the late 1860s) and had helped to lift “the State out of bankruptcy into solvency, and that the only instruction he ever gave in relation to the conduct of the Enterprise was that it ‘should be true to the interests of the whole people of this State.’” Finally the Territorial Enterprise reminded the Gazette that the so-called people that it claimed to speak for would have property of far less value if the “millionaires” such as Mackay, Fair and Sharon had not assembled the capital and assumed the risk to make the Comstock into the economic engine that it had become for the region (including Washoe County, the home-base of the Gazette) and the state during the last decade. The rival newspapers continued to lob their salvos, and 17 “The Payment of Taxes”, Territorial Enterprise, 6 May 1877 and earlier article reprinted in San Francisco Chronicle, 28 April 1877.18 As quoted in a reprint of the article from Reno’s Gazette, 21 February 1877, Territorial Enterprise, 21 February 1877.

15

THE COMSTOCK [R]

without any modern polling data to back up their respective claims it is doubtful that either paper spoke for Nevada’s majority. (One reason I seldom use newspaper sources.) The Territorial Enterprise presented a case that bore the trademark of the state’s mining moguls who had long contended that they paid too much in taxes. It is worth pointing out that the Bullion Tax Compromise would not have helped mining operations with huge losses since they could no longer exempt up to 90 percent of their bullion receipts under the 1871 amendment, but the Compromise would have directly benefited low-cost and high-yield mines. And with the equalization of rates between mining proceeds and real and personal properties in Story County the tax burden borne by the highly profitable companies would have been markedly reduced. Notwithstanding the Territorial Enterprise’s alleged objectivity the Bullion Tax Compromise favored a narrow segment of the mining community, its Mineral Millionaires.19

The Comstock boom had saddled Story County and its municipalities with real costs in the form of public services needed to support its large (by Nevada standards) and ever-changing population. The mining industry acknowledged (as evidenced in Fair’s remarks to the Territorial Enterprise) that it should bear some of the tax burden to pay for the public services from which that its businesses benefited. But how much of that burden it might or should assume remained the flash-point in the debate. Based on the Controllers’ Reports, which are complete from 1867 through 1885, taxes on real and personal property may have generated more income for the county than taxes on bullion. This cannot be tested definitely until a database of revenue received from property-tax collections has been constructed, and that task is made more difficult by the loss of all assessment rolls in the October 1875 fire. The documentation is complete for post-1875 years, but so far as I could determine these figures have not yet been assemble and analyzed. Even without a property-tax series comparable to the bullion-tax series some information is available to be examined.

I have not undertaken a detailed analysis of Story County taxes. The survival of the assessment rolls after the fire of 1875 would allow such a study for the last decade of the Comstock era. Few county financial documents survived the fire, and any effort to reconstruct tax policies before 1875 would have to depend on the information that could be dug out of the state archives. My aim is to evaluate the role played by taxes on the proceeds from the mines in the county’s overall finances. It is understood that net-proceeds taxes were authorized in part because determining the value of mining property for tax purposes was more controversial and probably more difficult than other properties such as farm lands or retail stores or private residences, all of which had at the very least market values that could be related to sales of property. What was the market value of a mine with relatively little profitable ore compared to a mine with much profitable ore? And what was the value of the rich mine once the ores were exhausted? Net-proceeds offered a simple platform from which to determine how much a mine was worth. Under the procedures for residential, commercial and agricultural properties the assessor was charged with the power to determine the valuations for: “Possessary Claims” that is, properties that were in the possession of an individual or company; improvements to properties either by the owners or “others”; and personal property. A Board of

19 “The Compromise (?)”, Territorial Enterprise, 21 February 1877.

16

THE COMSTOCK [R]

Equalization reviewed the assessor’s work when complaints were filed. What is not clear from the assessment rolls was the basis for the assessment of the property by the assessor. Was the assessment a reflection of a property’s full value or a portion of the value (as is the case with most assessments today), and was the assessment of one type of property different from another type (farms versus banks, for example)? Fifty years after the collapse of the Comstock mining industry Romano Adams presented a long list of defects in assessments within counties and among counties.20 Surely Story County’s assessments suffered from many of the defects cited by Adams, although references to specific county defects were irregular and inconsistent.. Whatever the basis for the valuation by the assessor a total figure was computed for each parcel or site and the prevailing rate was applied to determine the tax. It should also be understood that “real and personal” property on the surface even though it was connected to mining (mills for example) could be assessed in the same way as other businesses were assessed. Only underground mining operations were exempt from general property taxes. For the other property taxpayers the rub was that mining companies’ assessments were arrived at after deductions to cover operational costs were allowed. Despite inconsistencies in assessments among categories of non-mining properties deductions like those enjoyed by mining companies that could reduce assessed valuations on bullion declaration did not exist.

Figure 6 above shows the Story County assessments and taxes as found in the actual ledgers for 1875, 1876 and 1877.21 I wish that I could report that the bookkeeping was straightforward and direct; unfortunately it was not. It proved to be harder to untangle than the accounts that contained the mining assessments. Let me take note of the fact (and repeat again) that in these three years the Comstock reached its apex in production - $26 million in bullion, $38 million and $37 million respectively, that in 1876 the rates levied against general property and mining proceeds taxes were standardized and that in 1875 and 1877 Virginia City and Gold Hill had the same rates but in 1876 they had different rates with the result that their assessment and tax data were presented in separate entries. The county collected taxes for specific local purposes. In 1875 and 1876 they were listed as county government, schools and railroad, but in 1877 a levy for the construction of a new courthouse (post-fire) was added. (As noted above, the county also collected the state’s share of property taxes at a rate set by the State Legislature.) In 1875 non-mine-proceeds assessments totaled $6.1 million, in 1876 $6.6 million and in 1877 also $6.6 million. In those same years assessments on net-proceeds of the mines amounted to $14.1 million, 23.7 million and $23.2 million. Clearly the value of the taxable bullion far exceeded that of non-mining properties. Tax revenues generated by

20 Adams, Taxation in Nevada, 54-63. When the Nevada’s Citizens’ Economy and Taxation Committee published its report on the state’s tax system and in particular property assessments in 1913, it found a lack of uniformity in assessments across the state. In some counties 15 to 20 percent of the value of the property was taxed; in others it was 40 to 50 percent; and in still others it was 100 percent. Properties within a single classification like private residences could be subjected to different assessment standards: in some cases small residences carried a higher assessment than large residences.21 I read the actual surviving ledgers (large leather-bound volumes) in which were recorded property assessments and taxes for 1875, 1876 and 1877 at the Assessor’s Office, Story County Courthouse, Virginia City, NV. The discussion that follows is based on notes taken from these ledgers. The same information exists on microfilm in The County Records Microfilm Project, ST 67 Story County, Special Collections, Library, University of Nevada, Reno. Data on assessments and taxes on bullion were drawn from the microfilm version.

17

THE COMSTOCK [R]

general property assessments for county projects were $83,000 in 1875, $78,000 in 1876 and $76,000 in 1877 whereas bullion levies generated for the county $28,000 in 1875, $253,00 in 1876 and $267,000 in 1877. The difference in bullion-tax receipts in 1875 compared to 1876 and 1877 underscored the importance of equalizing rates among all property classifications. Because the county could only collect $0.35 per $100 of assessed bullion instead of $1.35 per $100 ($190,000) that other property owners paid, the bullion tax was 60 percent what others paid in property taxes. In 1776 and 1777, however, bullion-tax receipts were 3.5 times greater in 1876 and 1877. One can greatly appreciate the negative impact of declining gold and silver production on county revenues in subsequent years to the extent that they constituted a fraction (2 to 3 percent) of the total tax receipts even at the highest rates of the two decades.

FIGURE 6PROPERTY –TAX ASSESSMENTS EXCLUDING MINING PROCEEDS FOR

VIRGINIA CITY AND GOLD HILL, AND TAX RECEIPTS FOR COUNTY AND STATE, 1875-1877

[1] [2] [3] [4] [5] [6] [7] [8]1875

VC/GH$1,278,955.0

0 $2,935,245.0

0 $44,490.0

0 $1,855,328.4

9 $6,114,018.49 $137,565.41 $2.2

5 1876

VC$1,021,870.0

0 $2,170,125.0

0 $87,125.0

0 $1,023,535.0

0 $4,302,655.00 $83,901.77 $1.9

5

Mortg $344,157.39 $344,157.39 $6,711.06 $1.9

5

GH $320,065.00 $131,350.00 $7,750.00 $437,056.00 $1,896,221.00 $46,457.41 $2.4

5

Mortg $62,000.03 $62,000.03 $1,519.00 $2.4

5

Tot$1,341,935.0

0 $3,301,475.0

0 $94,875.0

0 $1,866,748.4

2 $6,605,033.42 $138,589.24 $2.1

0 1877

VC/GH$1,267,615.6

3 $3,789,135.0

0 $87,336.2

5 $1,425,427.0

0 $6,569,513.88 $134,675.04 $2.0

5 Notes: VC/GH=Virginia City/Gold Hill; Mortg-Mortgage (certain assessments was assigned to values of mortgages.)[1] Year; [2] Real & Possessary Property; [3] Property Improvement; [4] Others; [5] Personal Property; [6] Total Assessments; [7] Total Taxes; [8] Rate per $100.Sources: See footnote 21.

Separate assessment and tax accounts for Virginia City and Gold Hill in 1876 document what was well known: Virginia City had outpaced Gold Hill in size and wealth. By the middle 1870s Virginia City was not only the county seat but could claim the richest mines ever discovered on the Comstock Lode. The predominance of Virginia City was evident in property assessments. In 1876 if all mortgaged property, which was also taxable, was counted, Virginia City had nearly $5 million in such properties compared to Gold Hill’s $2 million. Although both had mining and milling properties that were subject to taxation Virginia City could boast of larger and more modern and technically advanced facilities. Although population figures are difficult to verify perhaps 30,000 to 40,000 lived along and in the vicinity of the Lode with 20,000 (plus?) in Virginia City itself. The year 1876 is interesting for another reason. In the aftermath of

18

THE COMSTOCK [R]

the fire Virginia City was quickly rebuilt. Improved properties accounted for almost half of the total assessment whereas in Gold Hill, which had escaped the fire, improved properties accounted for 7 percent of the total. Mortgaged properties were also five times higher in Gold Hill than Virginia City. For this particular year Virginia City residents paid in property taxes $42,000 to the state and $48,000 to the county whereas Gold Hill paid about $18,000 to the state and $30,000 to the county. The difference between county tax receipts was narrower than it might have been because Gold Hill residents paid a rate that was 50 cents higher per $100 in the second, third and fourth quarter than residents of Virginia City paid. By the middle of the 1880s, however, while both municipalities experienced a loss of mining and population county tax rates had doubled or tripled with Virginia City residents paying 50 cent to $2.50 per $100 more than Gold Hill residents. More importantly, the burden for maintaining public services fell squarely on general property inasmuch as the tax on bullion yielded very little.

In addition to county property taxes the residents of Virginia City and Gold Hill could be liable for municipal property taxes. Municipalities could tax general property including surface properties owned by the mining companies but not underground operations or bullion proceeds.22 The actual assessment ledgers consulted for the years 1875, 1876 and 1877 contained information on Virginia City but not, so far as I could determine, on Gold Hill. Virginia City property assessments totaled $5.8 million in 1875, $5.4 million in 1876 and $4.9 million in 1877.23 Virginia City collected $23,000 or 40 cents per $100 of assessed value, $27,000 or 50 cents per $100 and $30,000 or 60 cents per $100 in the three years. For the 1877 the assessment rolls indicate that 22.5 cents of the 60 cents was to cover the expense of city government and 37.5 cents to cover the water bond.24

The county and municipal assessment rolls provide a small window on how public services were distributed. County government had assumed responsibility for financing public education and rail construction while municipal government had taken

22 Gold Hill’s Charter (1862) stated that the town trustees could enact a tax not to exceed one-half of one percent of the “assessment valuation” of all property except mines, “which shall not be subject to taxation.” See “An Act to Incorporate the Town of Gold Hill, 17 December 1862, Chapter XXVIII, Laws of the Territory of Nevada Territorial Laws…, 2nd Legislative Session. (Virginia, NV: John Church & Co., Territorial Printers, 1862), 24-26. Virginia City, on the other hand, had a charter (according to the Nevada Supreme Court in 1865) that allowed it to tax mining proceeds as it taxed other properties. In the following year, however, the charter was amended to prohibit the municipality from taxing mining proceeds. but they were permitted to include on property-tax rolls the values of surface buildings such as hoisting shafts, assay and general offices, milling operations and storage facilities. And this meant that the county and each municipality could collect taxes on mining and milling properties. As I will discuss below, county and municipal assessment rolls could differ.23 When the 1876 Virginia City tax assessments are compared to Story County tax assessments for Virginia City specifically there was a discrepancy of about $700,000: $5.4 million versus $4.7 million. Since a single assessment roll was used for all county and municipal property tax levies, the total value of assessed property in Virginia City whether used by the county tax collector or the city tax collector should be the same or at least close to the same. The discrepancy could be tracked down, I suspect, by rechecking totals for all categories of property assessments and tax payments or by comparing property lists to see if the county or city exempted certain properties, but that would be a sizable task not warranted by the intent and scope of this study. The discrepancy will simply have to remain unresolved for now.24 See ledger for 1877 in Assessor’s Office, Story County Courthouse, Virginia City, NV.

19

THE COMSTOCK [R]

charge of the local water system. Eliot Lord provided ample description of the history of the construction of the water system that not only served Virginia City but also Gold Hill and Silver City (south of Gold Hill).25 A private company, Virginia and Gold Hill Water Company, built the facilities to transport the water from its sources. It was reincorporated as a California company in 1871. William Sharon was among the stockholders, but he quickly sold his stock at time that James Flood was buying up stock in the company. Eventually it became the property of the Quartet. One reason why the Quartet was interested in a water company was to assure a supply of water for their businesses. The arrangement between the city and the water company remains to be documented. One set of figures, according to the superintendent J. B. Overton, stated the cost for “flumes, dams, reservoirs, pipes, water-rights, litigation, &c” $2.2 million.26 Presumably the private water company had assumed or financed those costs. And yet of municipal taxes collected in 1875-1877 in Virginia City about two-thirds of the total $80,000 was committed to debt obligations arising from the construction, repair (after the fire) and extension of the local water system. Whatever the relationship between the municipality and the private water company the municipality had a continuing financial obligation in the form of interest on and redemption of bonded indebtedness.

County and municipal property taxes had at most a marginal impact on company costs. Some fragmentary tax records among the Savage Mining Company financial papers permit a close look at the financial impact on that company in the late 1860s. To begin with I should note that tax structure, as it applied to mining camps, was different from what it would become after the 1871 amended law. The bullion tax was set at $1.50 per $100 worth of ore with $1.25 for the state and 25 cents for the county. Municipalities were excluded from receiving tax dollars then (or later for that matter) from the product of the company. The Savage Company documents were for property taxes paid to Virginia City in 1868 and for those paid to Story County in 1869. The county and the city computed their taxes from the county assessments rolls, although some changes had occurred in certain categories between 1868 and 1869. Each document listed the lot, the block, the assessor’s valuations for possessary claims, personal property and improvements and the tax. In Virginia City in 1868 the rate was $1 per $100 and in Story County in 1869 the rate was $3.55 per $100 of which $1.25 belonged to the State Treasury. That left $2.30 per $100 for the county or about $3,200 from Savage properties. For 1868 Savage paid $1,447 in property taxes on real estate and improvements valued at $144,725 to the city, and in 1869 it paid $4,989 on basically the same parcels now valued at a lower figure of $140,525 to the county. Savage owned several dozen Virginia City lots in Blocks numbered 173 to 183. This swath of land was between Howard Street on the west and M Street on the east, Flowers Street on the north and Silver Street on the south.27 It also owned a lot (Block 193) across Silver Street between Howard and B Streets. The assessment rolls described the size of the lot and the value of the lot and its contents. It did not indicate how the lot was used or what the contents were. Approximations can be determined from other surveys and maps of Virginia City and the 25 Lord, Comstock Mining and Miner, 323-333, which included a discussion of the impact of the fire. See also Smith, The Comstock Lode, 120-121 for a briefer discussion.26 Lord, Comstock Mining and Miners, 333. I cannot confirm the Superintendent’s figures.27 Block and lot identifying numbers have not changed much in the original tract laid out in the 1860s. One can consult a current plat map (in the Story County Assessor Office) to identify the Savage properties.

20

THE COMSTOCK [R]

Comstock Lode. In 1868 the company’s most valuable lot was in Block 176, Lots 5-9. The land had a value of $1,625 but the improvements were assessed at $100,000 so that the total value (for assessment purposes) was $101,625 with a tax (1 percent) of $1,625. A year later when the county tax was paid this site was said to have no improvements with only the land being valued at $1,625 for a tax (3.55 percent) of $58.00. The most valuable plots had shifted to Block 178, lots 4-7, where the land was assessed at $525, improvements at $100,000 and personal property at $26,800 for a total of $127,325 and a tax of $4,520. The year before this site was only worth the value of the land or $525 with a tax of $5.25. The company’s hoisting works were known as the E Street Shaft and occupied a site (Block 177) between E and F Streets and Flowers and Silver Street.28 On the two assessment documents Block 177 had Lots 3 through 14 with an assessed value of only $2,200, hardly sufficient for a mine the size of Savage. A company mill was another possibility, but according to the superintendent, even though the company owned a seldom-used mill in Washoe County, it contracted with custom or independent mills to process its ores. Since the Blocks 176-178 were bracketed in the 1868 assessment document, the entire area irrespective of how the individual lots were used was the location of Savage’s surface operations - hoisting works and attendant transportation facilities. Lots not noted above were modestly assessed at $25 to several hundred dollars, and the tax due amounted to a few cents to a few dollars. In 1869 according to Grant Smith Savage declared $1.2 million worth of bullion and paid dividends slightly less than $300,000. Its local property taxes (not including the prevailing bullion tax) totaled over $4,800 ($3,200 to the county + $1,650 to the city) or 0.4 percent of the total value of Savage’s ores. It may be worth noting that the Superintendent complained to the Mineralogist that because costs for exploration and extraction were rising, company profits (per ton) were falling. While local taxes were an obligation that the company had to assume, they no doubt paled in significance to other costs directly related to mining operations. Even the bullion tax (at the time 50 cents per 100 pounds of ore) would have been two to three times higher than the local taxes.29

By 1875 as the Comstock boomed with the recent opening of Consolidated Virginia and the soon-to-be-opened California mines county and city rates had been adjusted downward from the rate structure in effect for Savage in 1868-1869. The county rate was set at $2.25 per $100 and the city rate was set at 40 cents per $100. Of the county rate the State’s share was $0.90 and when subtracted from $2.25 the county was left with $1.35 per $100. (It should be recalled that this was the last year that the mining industry would be exempt from paying their full county tax rate, as discussed above.) The new behemoth being created by Mackay, Fair et al., virtually in the heart of Virginia City, generated more revenue from property taxes than any other property owner in the

28 See Graphic Chart of the Comstock Mines, State of Nevada, 1876 [J. B. Treadwell, C. E.] issued with the S. F. News Letter, 3 June 1876.29 It is possible, of course that the assessment documents cited in the text were incorrect in their citations, or that the block and lot numbers for that part of Virginia City was revised. The documents themselves may be read in Savage Mining Company Papers (from Barry Cassidy[?]), NC62, Special Collections, Library, University of Nevada, Reno. References to the E Street Shaft in “Biennial Report of the State Mineralogist…1869 and 1870” in Senate Journal and Appendix, 5th Legislative Session (1871), 7. Also Grant Smith’s Notes contain data on Savage ore production in NC229, Binder 1, Special Collections, Library, University of Nevada, Reno.

21

THE COMSTOCK [R]

county or the city. The Firm’s businesses (mines, mills, shafts, etc.) occupied approximately four-dozen lots scattered across the center of the city. The lots can be divided into three different property groupings: Consolidated Virginia Mine occupying lots in Blocks 81, 87, 95-97, 101 and 115-116; C&C Shaft occupying lots in Blocks 92-93 and 95; and Consolidated Mill occupying lots in Blocks 69-78. These Blocks could be found in an area bordered by Stewart Street on the west, Q Street on the east, Mill Street on the north and Taylor Street on the south. The lots associated with Consolidated Virginia were assessed at $61,780 with a tax of $1,390, the C&C Shaft $15,490 and $149 and Consolidated Mill $142,234 and $3,200 for a total of $219,504 and $4,939. Of this amount the county received about $3,000. In addition the city received (based on 40 cents per $100) about $900. By almost any measure these were modest figures for the city’s largest enterprise. The assessed properties were 1.5 times higher than Savage’s properties, and yet taxes were less by several hundred dollars. County tax rates had fallen by a third since the late 1869, and city rates had fallen even more by 60 percent. Consolidated Virginia’s tax burden will grow as city rates rose in subsequent years. County tax rates will fall for several years before rising again, but at the same time beginning in 1876 mining companies paid the full rather a modified county rate. Even though the fire damaged or destroyed some Mackay-Fair structures in central Virginia City their new valuations probably increased the company’s taxes. (And of course California was ready to come on line and would have to start paying taxes.) Still the impact for Mackay, Fair et al. was small given the fact that the mines produced tens of millions of dollars over the next several years.30

Consolidated Virginia’s shaft and related operations were spread over a dozen or more lots situated in Block 87 between E and F Streets (north-south streets) and Union and Sutton Streets (east-west streets). This was also known as the E Street Shaft. Block 87 had at least 11 lots with lots 1 through 8 assessed at $43,000 and lots 9 through 11 assessed at $15,280 for a total of $58,280 or 95 percent of all lots that fell under the ownership of Consolidated Virginia. Moving east from the shaft toward Q Street one encountered the new C&C Shaft being built by both Consolidated Virginia and California. Even though underground work in California, which lay to the north of Consolidated Virginia approximately under the city Blocks with numbers 65 to 70, was going on during 1875, the mine did not officially came on line in the spring of 1876. According to the tax rolls the lots with numbers 1 through 5 in Block 93 and numbers 1 through 4 in Block 95 had the highest values of $6,000 and $9,290. Finally on the north side across Sutton Street in Blocks 69 through 78 sat the sprawling Consolidated Mill. The main plant was located on lots 1 through 9 in Block 69 and lots 1 through 10 in Block 70. Of the total $142,234 in assessed values for all lots connected to the mill, the lots in Block 69 and 70 were valued at $106,000 or 75 percent of the total. The next highest valued lots were at the other end of the mill’s properties next to Q Street in Block 78 was assessments of $30,100. Compared to the total assessments – possessary, improvement, personal and other – in Story County these mining and milling properties of Mackay, Fair et al. comprised 4 percent of the total.31

30 Consolidated Virginia’s property assessments and taxes were taken from the 1875 assessment roll in the Assessor’s Office, Story County Courthouse, Virginia City, NV.31 See footnote 58 above.

22

THE COMSTOCK [R]

FIGURE 7PLAT MAP OF VIRGINIA CITY PROPERTIES

23

CURRENT PLAT, VIRGINIA CITY, NV PINK: LOCATION OF SAVAGE WORKS

ORANGE: LOCATION OF CONSOLIDATED VIRGINIA & CALIFORNIA WORKS & C&C SHAFT

THE COMSTOCK [S]

Chapter 19An Assessment

“Big strikes” of precious metals unfolded in a predictable path. Populations swelled in remote areas with few civic or legal institutions. Ad hoc arrangements among the participants preceded the establishment of a more orderly political, economic and social order. Early locators and stakeholders gave way to entrepreneurs, bankers and investors who supplied the capital and organization that deep mining required. Scattered claims were consolidated in the name of efficiency, and over time several mining behemoths emerged to control the industry and reap the rewards. To support these enterprises a camp evolved into a city, and mining assumed an urban character in the form of processing mills, commercial suppliers, transportation systems, banking operations and labor pools. And to function properly a city needed public agencies, infrastructure and elected officials. At some point, sooner for some cities than others, when the ores gave out, the economy (in the absence of any other industries to take up the slack) collapsed and the population shrunk. If a formerly robust mining center survived (many simply disappeared) it did so mainly as an administrative center (e.g.a county seat) and perhaps eventually as a tourist center.

Dan DeQuille, the most famous of the Territorial Enterprise journalists (except perhaps for Samuel Clements whom he hired) described the discovery of Peter O’Riley and Patrick McLaughlin:

The manner in which the grand discovery was made was not very romantic. What our miners found was a great bed of black sulphuret of silver, a decomposed ore of silver filled with spangles of native gold. This gold, however, was alloyed with silver to such an extent that it was more the color of silver than of gold.

When the discoverers struck into the odd looking black dirt, they only thought that it was a sudden and rather singular change from the yellowish gravel and clay in which they had been digging. They at once concluded to try some of the curious looking stuff in their rockers.

The result astounded them. Before, they had only been taking out a dollar or two a day, but now they found the bottoms of their rockers covered with gold as soon as a few buckets of the new dirt had been washed. They found they were literally taking out gold by the pound. In a few weeks after the discovery had been made, and the work had been advanced further into the croppings of the lode they were taking out the gold at the rate of one thousand dollars per day. This they were doing with the rockers. Taking the harder lumps left on the screens of the rockers, one man was able to pound out gold at the rate of 100 dollars per day in a common hand mortar.

1

THE COMSTOCK [S]

After specimens had been assayed in Grass Valley, California, and news of the richness of the discovery spread across the region, the rush commenced.

The mines at Virginia town and Gold Hill are exceeding the most sanguine expectations of their owners. At Virginia town, particularly, the claims on the main leads promised to excel in richness the far-famed Allison lead in California in its palmiest days.

Claims are changing hands at almost fabulous prices. No fictitious sales, either, but bona-fide business operation. The main lead, on which is the celebrated Comstock and other claims, appears to be composed of ores producing both silver and gold, and the more it is prospected the richer it is proving.1

A decade later the Comstock Lode boasted one of the West’s largest cities with amenities and attractions that few other mining cities ever had. In The Roar and the Silence Ronald James described Virginia City’s progress:

When enumerators for the 9th U. S. Census began working on the Comstock in June 1870, they found a mining district radically different from the one documented ten years earlier. Gone were the Mexican packers, the prospectors, the thrown-together buildings, and the society in which women were a scarce curiosity. The Comstock was now a place of industry and engineers, boasting almost four hundred men employed in milling, nearly three hundred in the manufacturing industries, and roughly three thousand working in the mines.

And after combing through the census he found many non-mining occupations that testified to the diversity and variety of life in Virginia City (and to a more limited extent Gold Hill).

…the census recorded twenty-two bakers, forty-nine butchers, five people operating confectionery stores, two oyster vendors, a coffee vendor, and one man who ran a peanut stand. There were also nineteen people involved in the theater, including actors, actresses, managers, and a “tragedian”. The census recorded fourteen musicians and two gymnasts, and there were gardeners, a librarian, photographers, milk dealers, tailors, stockholders, politicians, federal tax agents, doctors, lawyers, and several people in jail.2

The history of the Comstock has been written from many angles. The statistical approach may be the least interesting for the general reader, and yet the numbers, so highly important to many of the contemporaries, confirm the monumentality of the

1 DeQuille, The Big Bonanza, 24-25.2 James, The Roar and the Silence, 91-92.

2

THE COMSTOCK [S]

Comstock venture. Its broadly-understood history, as assembled over the decades, will not be extensively modified by examining production trends, daily hoists, wage schedules or tax collections. Economists, when analyzing numbers, often ask how big, and in the case of the Comstock it was big. It may not have been the biggest – that’s not the point – but it generated some very large numbers. Numbers work both ways. They illustrate how fast the rise was as well as how fast the fall was. They testify to both grandeur and folly, lure and power that accompany the relentless search for two lustrous metals. Perhaps no figures are more startling and revealing than how many miles of tunnels and shafts were built and how many tons of ore, rock and waste were extracted, transported, hoisted, milled and abandoned through the combination of laborers and machines but most especially by laborers.

Mining entailed hard work and constant risk, and yet despite the demands and imponderables the Comstock like the phoenix rose repeatedly from disappointments and disasters until the inevitable occurred – the ground would yield no more shine. The forecasts of charlatans and professionals that the Comstock had an almost inexhaustible supply of ore, like the grand mining centers of Potosí and Zacatecas, whose mines were productive for more than 300 year, eventually dissolved in the face of ever greater depths that were barren of ore. The nature of the Lode was confounding from the outset. It was not a solid ledge of profitable ore that extended downward for thousands of feet. It appeared and disappeared and finally vanished altogether. In a curious way, however, the unpredictability of the Lode inspired hope rather than despair until there was no longer any basis for hope. Once the Lode’s upper region was mined the mining community came to the realization that the Lode’s lower region was made up of pockets of rich ores that had to be found. As one pocket of ore after another was picked clean, the hope if not the conviction grew that the pockets would keep appearing at random at ever-greater depths. Neither the vast distances between the pockets nor the deep explorations were ever regarded as hindrances by the most active entrepreneurs. When new pockets failed to materialize as companies explored areas twice as deep as the last great bonanza the numbers told the story that no one wanted to hear – the Comstock was finite.

The most important numbers from the Comstock related to production. Such figures from the earliest years are scarce. A few companies had bookkeeping systems that captured the output of their mines and the value of their bullion, but not much of that documentation has survived. As companies replaced individuals in the extraction of ore, the need for bookkeeping systems became an imperative. Companies had investors, and investors had a proprietary interest in knowing the financial soundness of mining operations in which they had invested. The largest companies like Consolidated Virginia and California instituted managerial policies and financial controls that covered virtually every aspect of their mining operations, not only to please their stockholders but also to make management more effective. In addition, as governmental oversight increased, companies large and small had to comply with certain rules on financial reporting. The quantity and quality of extant documentation, private and public, are surprisingly solid. Given the richness of the documentation it is possible to trace in considerable detail mining trends for the Comstock as a whole and by individual companies.

3

THE COMSTOCK [S]

In the aftermath of the initial discoveries nearly all the land along the Comstock and for miles beyond the Lode was claimed. Tens of thousands of claims may have been posted, although the number of legally registered claims was surely smaller. But under the system of parole, a spoken or verbal claim, the conveyance of a claim without a deed was accepted in court. It is not known how much ore was removed from all of the claimed areas between 1859 and 1885 – a figure that will remain permanently unrecoverable – but it can be stated with some accuracy how much was extracted from the Lode itself. In the final analysis very few productive or profitable mines were found outside of the Lode. The history of mining in Story County and surrounding counties during the third and fourth quarters of the nineteenth century was really the history of mining on the Lode.

At the most basic level was the tonnage of ore hoisted and crushed for processing at the mills. To reach the ore, of course, vast quantities of rock, soil and waste had to be removed through construction of shafts and excavation of tunnels. Then the ore itself was removed and after being hoisted was shipped to the mills where it was crushed in preparation for incorporation with quicksilver. A few scattered figures may be found in some company documents on the amount of so-called “waste” removed but never enough data from which to create a dataset. And in a few cases company records included both the quantity of ore hoisted and shipped to the mills and the quantity of ore hoisted and shipped that was actually worked before incorporation began.3 The difference could be thousands of tons per month in the large operations, but again the standard tonnage that companies reported was worked or crushed ore. The laws under which companies paid net-proceeds taxes required companies to declare tonnage (worked as opposed to gross) along with the value of the bullion (as determined at a federal mint). From these two figures an average yield was calculated for tax purposes. Tonnage is a straightforward figure that is not complicated by monetary conversions as is the case with bullion values. What is not clear is how the tonnage was determined. There is no evidence that scales were used to weigh the ore. More than likely it was derived from the number of ore cars, each of which could be loaded with 1,600 to 1,800 pounds, which moved the ore from the mine to the mill.

Based on the public record compiled from 1867 through 1885 nearly 12 million tons of ore were declared across the state and seven million in Story County. The average for this period was about 611,000 tons per year for Nevada and 358,000 for Story County. For the period 1860 through 1866 one can add several million tons to the totals for the state and for Story County. Since most of the early mining was concentrated in Story County the overall totals could reach 14 million tons for the state and 9 million tons for Story. Throughout the period Story accounted for 60 percent or more of the reported ore tonnage. Statewide the peak in tonnage at more than 900,000 tons occurred in 1877, when Story County topped 600,000 tons as a result of the high output of The Bonanza mines. Although Story County represented nearly 70 percent of the state total, more than 10 percent above the average from 1860 to 1885, but this was not the highest. In 1867 3 The ledgers of Consolidated Virginia and California had columns for hoisted and worked ores, but the former was not filled in consistently. Also daily hoist records occasionally listed the amount of waste removed from the areas of the mines yielding ore, but such records have not survived in a form that allows for the creation of a dataset.

4

THE COMSTOCK [S]

and 1868 Story County accounted for more than 95 percent of the state total, but by the mid-1870s Story County’s share fell as mining spread across the state. But the long-term success of Nevada mining was tied to the Comstock. Only in the late 1870s and early 1880s when Comstock output was contracting rapidly did mining in other areas help to pick up the slack and slow the slide. Comstock’s share fell below 50 percent for the first time and reached its nadir at slightly more than 25 percent. Story County’s decline amounted to as much as 40 percent in some years, but the state’s decline was far less than that. The capacity of other mining regions to fill in for the Comstock, which never recovered, was short-lived. In 1885 total state tonnage was even less than what had been reported in 1867, the first year with official data.

If Comstock mines extracted from 7 to 9 million tons or more (20 billion pounds) between 1860 and 1885, what estimate can be made for the removal of ore and the residue? Twice as much? Three times as much? Obviously without actual data any figure that is advanced is speculative. Not even the few entries found on removal of residue can be extrapolated. Given the miles of tunnels dug underground and the depth of the shafts to serve those tunnels an estimate of 20 to 30 million tons extracted in both ore and waste was a plausible figure. In the end the actual number may not matter since the officially reported ore tonnage of nearly 10 million was itself huge.

Another way to think about total tonnage is to try to envision it in terms of output per miner. Company records from Consolidated Virginia and California indicated that on some days miners extracted as much as 3 tons per person. This was probably only possible when miners were working in some of the widest sections of the richest ore veins where the material was easily removed. Digging through various rock strata, some very hard and some dangerously soft, plus clay, heat and water could slow removals significantly. Despite these challenges worker output was remarkable and at times extraordinary. On average the Comstock mines hoisted about 400,000 tons of ore per year, and if one assumes on average an underground work force between 500 and 1,000, the output per worker per day would be between 1 and 1.5 tons, that is, 2,000 to 3,000 pounds. Even one half of a ton (1,000 pounds) per day (i.e.day in and day out) would tax the average person. (Compare to digging a garden or a foundation 1,000 feet underground.) But, imagine, if the ore and waste were totaled, would underground workers face twice the above figure – 2 to 3 tons per day? The speculation is endless, but since contemporaries spoke highly of the work ethic of the Comstock miner, that reputation may well have been honed on a daily output in the thousands of pounds.

Tonnage as an example of Comstock performance is less “sexy” so to speak than bullion values. Bullion, which was the term that was used in the official and company documentation to represent what the owner received from the mint, was always expressed in dollars. Millions of dollars were more eye-catching than millions of pounds. The custom was to assign Comstock ore a monetary value even though much of the output, especially silver, was never coined. That monetary value was then recorded by the company and declared to the assessor. Since gold could be coined and often was, its ascribed value was fairly reliable. In the case of silver, however, its coinage was either limited or prohibited for most of the Comstock period, and the ascribed values were often

5

THE COMSTOCK [S]

artificially high compared to market values. Whether coined or not, the gold or silver bullion (bars or ingots with prescribed a weight and finesses) that emerged at the end of the process had a value that was entered as such into the public records and the companies’ accounts. And those figures, for better or worse, expressed the triumph of the Comstock. For the years (1867-1885) when the official records can be consulted Nevada produced $390 million worth of gold and silver, and of that amount Story County produced $250 million or 64 percent. Some estimates exist for the period from 1859 to 1867, and perhaps another $50 million worth of ore could be added to the Comstock and slightly more to Nevada totals: $300 for the Comstock and $450 million for the state. The extent to which these figures may overestimate or underestimate the production of ore in Nevada and on the Comstock will continue to be debated, but even with that uncertainty these were big numbers. Comstock ore probably contained more gold than most other mining regions so that of its projected $300 million silver was worth about $180 million and gold $120 million.

While hundreds of individuals made claims and opened mines, the original locators found little if any profitable ore. Small pockets of ore on or near the surface encouraged miners and their backers to push ahead with expensive explorations that soon entered endlessly barren ground. As outcroppings gave way to lode mining, entrepreneurs who operated from the premise that the Comstock needed control, consolidation and capitalization soon replaced the early locators. The Comstock turned out not to be a solid ledge of gold and silver ores hundreds of feet deep but rather a series of pockets of ores unconnected to each other and surrounded by ground of little or no value. The pockets were mainly located along the Lode for about two miles from Ophir Mine in Virginia City to Belcher Mine in Gold Hill, and as the depths grow their locations angled eastward from Mt Davidson. There was no sure-fire way to locate these pockets, although some experienced miners had the uncanny ability to separate promising streaks of vein matter from the dead ends.

The element of concentration grew more apparent after lode mining replaced surface mining. For the period with the best documentation, 1875-1885, about 50 mining companies, tailings mills and a few individuals declared all the taxable bullion. Even within this capitalist/entrepreneur group only a handful - perhaps a half-dozen – struck it big. Based on more scattered documentation prior to 1875 the structure of the industry was not much different in preceding decade when the first large mining corporations appeared. Technically this was not monopoly but rather oligopoly. But for all practical purposes, however, the Comstock fell under the dominion of Sharon and Ralston for nearly a decade and then under Mackay, Fair, et al. for another decade. Their business networks included mines, mills, banks, railroads, water pipelines and logging tracts. Other prominent Comstock entrepreneurial figures from mine and mill owners to bankers and lawyers could be highlighted, but in the end the Comstock’s economic and financial powerhouse was a small contingent. For at least half of the period under consideration the ore declarations before county assessors showed how concentrated the production of ore was in the hands of a few companies. Mining camps historically developed such entrepreneurial systems, and what can be observed about Comstock mining was that it

6

THE COMSTOCK [S]

hardly qualified as unique.4 Mine owners had to be risk-takers, but even the most successful risk-takers had to find the ores that would compensate for the risks. No doubt some miners were more skilled at finding the markers that led to underground riches than others, but even they could fail to anticipate the natural obstacles that surrounded all such undertakings. Moreover all faced additional risks even after locating new deposits because they could not muster the skills or the finances needed to make the operations profitable. Mining titans, even the most ruthless, had to bring a combination of talents to their tasks along with the elusive luck. In light of the formation of the Comstock Lode, which only came to be well understood after the Lode had given up most of its wealth, the surface or shallow (within a few hundred feet) mineral deposits were less than reliable indicators of deeper deposits. It made sense for more daring investors to try to collect groups of mines with potential under single ownership and to develop them under a joint plan, and additionally, if their potential came to fruition, it made sense for them or other investors to try to secure claims on adjoining mines. Claims traditionally could not exceed certain dimensions, although small parcels could be fused up to those limits. Few legal restrictions prevented entrepreneurs and their investors from buying up adjacent mining properties and consolidating the operations of these mines even if the claims themselves could not be merged. Consolidation was more about operations than properties. One might criticize the early rush to carve up the Comstock and the absence of a legal or political framework for the disorder that inflamed those early years and contributed to the rise of a situation that allowed a small oligarchy of owners and their backers to control the Comstock. In point of fact almost all modern gold and silver rushes began the same way and evolved toward a highly concentrated ownership structure as deep mining required increasingly larger doses of capital and expertise. The Comstock was not an exception.

Even if the argument can be made that precious-metal mining tended toward an oligopolistic structure (and that was what Comstock statistics indicated), driven in large by the financial considerations for developing high-risk operations, the argument must take into account other potentially controversial questions. The reach of the mining entrepreneurs did not stop with the mines themselves. Over time they came to dominate other essential businesses in and around the Comstock. Controlling the most important mines became a springboard to owning or controlling ancillary enterprises such as mills, banks, rails, water and timber. Along the Comstock money spoke volumes, and little stood in the way of those with the penchant and wherewithal to acquire or assemble a financial empire. The more of the mining economy that they could own or control the greater the potential to make more money. Milling operations could be spun off as separate corporate entities from the mining enterprises whose ores they processed because the business of milling was a potentially profitable enterprise on its own. These were seldom publicly-held companies like their mining clients, and therefore whatever profit from whatever efficiency of scale size provided accrued to the principals and their partners rather than to the mining companies’ stockholders. Of course, bonanza stockholders could realize huge profits even without sharing in mill profits, but the principals of the mining and milling companies enjoyed dividends from the mining

4 Several examples could be cite from the period of Spanish colonial mining: Antonio López de Quiroga at Potosí and Conde de la Regla at Pachuca and José de la Borda at Zacatecas in Mexico.

7

THE COMSTOCK [S]

operations and surpluses from milling operations. To be sure, the creation of milling empires by the founders of mining empires helped to break whatever dominance the custom millers had managed to exert over the necessary process of converting ore to bullion. Little documentary evidence on milling finances existed in or survived from those years so other than the anecdotal reporting that custom millers charged exorbitant rates for less than efficient services. Given the rush to build mills, even by mining companies themselves, it should not be unexpected that some would attempt to bring order to the milling industry by driving down prices while also controlling capacity. Whatever the actual financial relationships and conflicts among early miners and millers, the large and somewhat disparate custom-milling group could not survive as mining came to be controlled by the so-called corporate powers. As the size and power of the mining corporations grew, they had ample capital and leverage to take command of milling sector, and that was what happened under one of the earliest corporate titans, William Sharon, in the mid-1860s. The documentation is not sufficient, at least until the late 1860s, to confirm how many mills he purchased or how efficient these mills were, but his accumulation of milling properties began the process of shifting control from custom millers to new milling entities under the direction and ownership of prominent mining entrepreneurs. And that with new milling technologies began to push down milling rates. Prominent miners who followed Sharon pursued the same strategy. Custom mill probably did not completely disappear, and the documentation is so sparse that it cannot be said with any certainty what their role was after the new milling giants appeared. During the peak years of Consolidated Virginia and California Mackay and Fair had to secure the services of mills outside of those owned by Pacific Mill and Mining, the milling arm of their Comstock properties, but the documentation as to the exact status of these outside mills is sparse. Were they custom mills or mills owned by other mining companies? In the tailings business custom mills may have survived longer than in mainstream milling. It is no clear how much business was left for the unaffiliated amalgamation mills. There was a sharp increase in the number of tailings mills as the surplus of ores lost during crushing and refining continued to build. But independent millers outside of the network created by the important mining companies would seem to have be relegated to a insignificant role for most of the Comstock’s triumphant years.

Tailings mills were of a different classification from amalgamation mills. They also entail far less documentation. Tailings millers dealt in ores that had been discarded, and therefore unlike amalgamation millers they paid the ore taxes instead of the original mine owners. Taxes paid on tailings were grouped in a different section of the assessment ledger, although the rates and deductions were the same as those applied to the mining companies. Some mining and milling companies operated their own tailings mills, and some mills were equipped to be both amalgamation and tailings mills. It is not easy to find detailed accounts of how tailings mills operated. What is known is that the discarded ores ended up as extremely hard, tightly packed mounds of ore and residue. The process of preparing these mounds to extract whatever gold or silver they contained was costly and time-consuming. The yields were small, and the trick was to balance the cost of hauling and processing against the improbably tiny yields. One of the largest tailings mill, built by Mackay and Fair’s Pacific during the height of the Comstock boom, was Omega. Pacific also owned a second mill, Mariposa, with tailings operations. Presumably

8

THE COMSTOCK [S]

most of the tailings came from Consolidated Virginia, California and adjacent mines, and it would appear that the construction of tailings mill in conjunction with the acquisition or construction of amalgamation mills was to allow for a quick-turn-around in recovering ores that escaped amalgamation. Mackay and Fair actually realized tens of thousands of dollars in bullion from their tailings stockpiles, and few of the mills that declared bullion from tailings could match the output of their mills. Tailings represented only a fraction of the bullion declarations, but Mackay and Fair operated on the basis that as little ore as possible should be lost for others to recover. The yields per ton from tailings compared to amalgamated ores generally came in under $10 per ton. Often it was half that amount. For millers who bought tailings the price-paid component was important. With their own tailings mills Mackay and Fair made the price paid less crucial. In the case of Pacific, since Mackay and Fair owned both the mines and mills, the price that the tailings mills paid for the residues from Consolidated Virginia, California and other mines surely favored the mills. It is not known to what extent a market for tailings may have existed so that as stockpiles of tailings grew (as they did with rising output) some downward pressure on prices may well have come into play. From strictly a documentary angle there remains a large unfilled hole in how tailings mills were operated or financed. Not only is the process not spelled out, but also the cost structure, as is understood with the amalgamation mills, is lacking.

The bonanzas mines from the middle 1860s through the middle 1870s clearly made money for their investors. The cycle of profitability lasted no more than a few years for each mine. From the earliest years through the middle 1870s the Comstock experienced several profit cycles, but by 1880, as the mines reached unprecedented depths, the results were uniformly disappointing. There were no new discoveries and no new bonanzas. Much smaller operations (by comparison with earlier years) carried on the business of mining (and milling for that matter) along the Comstock. Small operations had come and gone throughout the period, and in the absence of detailed financial records one can only speculate about their profitability. The assessments indicate that the costs often absorbed all the revenues or exceeded them, but verifying the declared costs is nearly impossible without more data. No doubt some small operations at least for brief periods happened upon rich veins that were profitable in the short run. In the end, though, unless companies had large underground deposits to exploit they could not maintain a flow of capital that was necessary to support and expand their operations. Even some of the large bonanza companies, when they ran out of good ore, ran out of capital also. It was said that a company needed $20 per ton or ore to break even, although that was not a figure to inspire much investor confidence. Many small operations with bullion declarations had yields below $20 per ton. And while a few small operations with such yields could eke out profits, they had at best a limited role in Comstock mining history. The Comstock became a captive of big companies.

Mining and milling operations depended on a pool of labor that ranged from skilled to unskilled. Thousands of Americans made the journey to the Comstock in search of work (and fortune). In spite of the dangers associated with mining the work paid wages above those in other industries. In setting wage levels employers had to consider the higher-than-usual cost of living in a remote area like the Comstock. So much of what was

9

THE COMSTOCK [S]

needed by companies and workers had to be imported over hundreds of miles. Even after the opening of the Virginia and Truckee Railroad the cost of transportation remained a large component of the retail price. In addition scarcity of housing pushed up lodging costs that employers had to be mindful of in determining compensation. And finally throw into the mix the presence of unions almost from the outset. Unions including some fairly radical ones were active in many western mining camps. The Comstock unions did not appear to follow a radical agenda, at least once they were organized and recognized, although they and the employers were from time to time at odds compensation, ours and other working conditions. But strikes were few and far between. Defending what the unions had won for the most part in the earliest years remained their chief goal. Unions made little effort to demand higher wages and better working conditions during the bonanza years, and conversely companies made little effort to change the contracts during the lean years. There may well be some truth to the assertion of those who have studied relations between companies and their unions that they needed each other. Certainly frequent interruptions, delays and closures would have jeopardized the companies’ balance sheets as well as the unions’ past gains.

The labor scene was more robust than the frequently-cited wage negotiations between the companies and their workers. Underground miners constituted the largest occupational category among all the employment categories. Although they performed various tasks, they were essentially involved with building the underground infrastructure and extracting and lifting the ores. Early in Comstock history they had won the wage of $4 per day, and that remained the standard daily compensation in good and bad times. There are a few examples in the company accounts of miners being paid more or less than the standard, but the deviations were infrequent. Mining companies, especially the big bonanza mines, organized their labor systems around dozens of different job categories. These included skilled workers such as blacksmiths, carpenters, and engineers as well as less skilled workers such as laborers, carmen and assistants to various skilled categories. Hours worked per day were basically the same for all categories – eight hours per day – but wages ranged from $2 to $3 per day to $5 to 6 dollars per day. Some employees - foremen, assayers and even watchmen – were generally paid a monthly salary rather than a daily wage, although when that monthly salary was translated into a daily wage the recipients might actually receive less than some of the most skilled wage-earners. Most of the employees had union representation. Except for minimum wages and hours and some other mandated working conditions, companies faced few other imposed contractual restrictions in dealing with workers. They were known to provide some health and death benefits and to make inquiries concerning the welfare of their workers. By and large, religious charities, public agencies and unions themselves provided the safety net and undertook the role of caring for workers and citizens who could not care for themselves. As well paid as Comstock workers were, they faced challenges from dangerous conditions to job losses to inflated prices. Many employees worked 25 to 30 days a month, and some worked double shifts a few days each month. If one can imagine a miner lucky enough to keep an underground job for a decade, say, from 1865 to 1875, his gross compensation for the year would only have changed if he agreed to work more hours. It cannot be said with certainty how many if any workers (below the supervisory or administrative staff) remained employed in Comstock mines (or for that matter mills)

10

THE COMSTOCK [S]

for a decade or more. Even though some workers had won the battle for eight-hour shifts, an eight-hour shift for 25 to 30 days a month, month after month in the underground, had to take a toll There is evidence that workers stayed employed for six to 12 months and perhaps longer, although they often changed mines or classifications during those months. The documentation is available to study tenure patterns up to three or five years but is tedious to analyze, involving, as it does, monthly accounts and hundreds and hundreds of names. (A ready-made PhD dissertation.) Any notion that the labor was so grueling that turnover within a mine’s work force was frequent and massive should be tempered in light of the statistics for duration of employment in the mines of Consolidated Virginia and California, two mines with intense daily production regimens. People came to the Comstock to work in the mines not because the jobs were easy and mines were safe, but rather because the pay was high. It was also a gamble (in a state that hitched its economy to gambling) that they could survive and perhaps luck out by becoming a locator or discoverer. Many became and remained miners (as my father did) because they found some almost inexplicable satisfaction in doing just that. More than one observer commented on the capacity of the Comstock miner to perform their tasks well.

A more difficult question to answer is, with the hazards of the jobs and the goals of the companies, how well did management and labor get along? There are documented periods of strife and outbreaks of violence (mainly confined to the early years), and even after a partial rapprochement that institutionalized certain features such as wages and hours, a war of words could break out over any number of issues, some covered by contracts and other because of circumstances. Still, one cannot in any way describe relations as persistently hostile and disruptive. The work of the mines (and the mills) got done. Underneath the diatribes and outbursts was a general civility based, it would appear, on the economic and financial interests of both parties. Employers counted on a stable, reliable labor force and workers on a steady, predictable daily compensation. It should not be assumed that everyone who wanted work could find it or everyone who wanted to change his job could do so. But based on a small sample more of the labor force showed up month after month for work than those who disappeared. Although not the subject of this study mine workers perhaps more so than mine owners became a part of the fabric of the community. The Comstock social historians have found ample evidence workers joined community organizations (fire departments, local militias) because they were needed. They organized and managed their own benevolent societies and cared about schools, hospitals and churches. In short, this was a community in spite of the opportunity for friction that more or less worked for most of the quarter century after its founding. Of course as the mines became exhausted the friction grew, the community suffered and the disruption was far worse for the worker than the owner. Had the workers wanted to do battle with the owners at this stage, there was little in fact to fight over.

How should the Comstock be viewed in light of the economic transformation of America in the late nineteenth century? Of course, it played a role, but how important was that role? It is an historical event that merits mention in most textbooks – after all two presidents visited Virginia City and Mark Twain began his career here – but it is not

11

THE COMSTOCK [S]

accorded a prominent place in the historical annals. Towns founded for extractive industries were like supernovas – extraordinarily bright before burning out. Mining camps sprung up out of nowhere, grew into towns with thousands of people and dozens of businesses and then simply disappeared. They are often the ghost towns that people love to visit and explore. Some mining towns, even after the flash was gone continued to support a minor extractive industry, and other mining towns hung on not because of mining but because of governmental and commercial functions that any surviving permanent population needed. Towns founded on extractive industries no matter how great the strikes had a feature of impermanence but perhaps more devastating to their historical significance they seldom could transform their economic structures in such a way as to insure future growth, good jobs and stable prosperity. No town or city, regardless of its economic foundations, can guarantee permanent, prosperous existence. But mining towns rose and fell with greater alacrity than most.

Let there be no doubt that the Comstock was a big event with big economic ramifications. The Comstock discoveries came a decade after the California gold rush. Some of the gold was extracted from large underground quartz mines, but most of it was lifted from surface veins or from shallow riverbeds. What distinguished the Comstock from California and other similar mining episodes was scale. In an age when American business was in transit from small-scale to large-scale producer size became the defining characteristic of the economic system. American entrepreneurs set out to create large corporate entities that by amassing investment capital could employ the latest mechanical improvements to enhance production and productivity and eliminate the inefficiency of competition. The emergence of monopolistic or near monopolistic enterprises became a troubling component of the economic transformation for Americans to deal with. The perception was that the economic power of these corporate monsters with operations in different cities and states, labor forces in the thousands and an unlimited appetite for control of the marketplace left some Americans bewildered. On the one hand they enjoyed lower prices that stretched their meager wages further, but on the other hand they had to accommodate to a new economic order that featured the emergence of powerful national corporations that disregarded the accepted market ground-rules. Small firms that had served local or regional markets continued in existence along side of the corporate giants for many decades, but the struggle for market share and financial survival tended to favor the national corporation. A policy of laissez-faire (as exemplified in the writings of Eliot Lord) dominated economic thinking with somewhat paradoxical results. Letting the market decide how best to allocate resources with little or no guidance from government resulted in an economic system of monopoly and oligopoly that limited the opportunity that the system was supposed to engender and protect. The industrializing of America, which began in the 1840s and continued into the twentieth century (with Comstock mining a participant), contained mixed messages. The transformation may have made Americans better off, statistically speaking, (although some scholars would disagree with that assertion), but at the same time it may have made them more vulnerable to vicissitudes that the changes engendered. The tension that resulted from the new economic order was evident to some degree on the Comstock.

12

THE COMSTOCK [S]

The industrializing of America quite naturally focuses on manufacturing. Other economic sectors were changing as well, but according to statistics provided by Robert Gallman, the sector known as “manufacturing, mining and hand trades” grew from 17 percent in 1840 to 24 percent in 1870 and then to 31 percent in 1900 with respect to the sectoral distribution of the Gross National Product. Reorganization of industry (in general) and heavy reliance on mechanization to effect productivity gains began before the Civil War but made great strides in the decades after the Civil War. One driving force behind the growth and change in this sector was the exploitation of mineral resources: “…other features of the extraordinary U. S. environment were being exploited: enormous reserves of minerals of all sorts were discovered and technologies to put them to use.”5

Another aspect of the sectoral growth underscored by Gallman was the regional matter. In 1840 the West “generated less than one-fifth of the total income…whereas in 1920 this figure had risen to 54 percent.” In explaining the redistribution that was taking place in the second half of the nineteenth century Gallman highlights economic opportunity: “the west clearly had superior agricultural resources, and as time passed, new resources were discovered in this treasure house – coal, iron, lead, copper, petroleum, silver, mercury, gold. Each discovery led to a boom, some modest, some enormous, as was the California gold rush.”6 And one might add the Comstock in Nevada.

In trying to fit the Comstock into the industrializing of nineteenth-century America, several problems have to be considered. The most obvious difference between mining of gold and silver from other minerals and from manufacturing in general was the end-product. Gold and silver did not become products that manufacturers bought to produce other product (except for small quantities that had industrial or artistic applications) or consumers bought to use in their daily lives (except for jewelry or art). Gold and silver had commercial, financial and official uses, and as more gold and silver were produced they enlarged the available money stock both in the United States and across the world, and that contributed to increased capital flows to the very sectors that were helping to propel the American economy forward. A second matter has to do with pricing. Governments fixed gold and silver prices by determining how many coins could be minted from a unit of gold or silver. There was also a market price for both. The value of gold, because it was the most sought after metal seldom declined, but the price of silver did decline as more was produced. One could argue therefore that as the precious-metal mining industry became more efficient in mining and milling gold and silver ores, it could affect the market price by ratcheting up the supply of a metal. A final matter was that while costs played a role as to whether or not a mining site was to be exploited, a mining company might continue in operation even as the losses mounted in the anticipation that new deposits would be found and gains would quickly overcome losses. Precious-metal mining companies generally pursued a strategy of investing heavily in

5 Gallman, “Economic Growth and Structural Change”, in Engerman and Gallman, eds., The Long Nineteenth Century, Cambridge Economic History, 2:49-50. Table I:14 (p. 50) shows distribution by sectors, and although mining is included in manufacturing data from precious-metal mining are not included in the dataset from which the percentages were derived. The minerals included in the dataset were coal, iron ore, copper but not gold and silver. The point to be made is that the sector most closely related to business of the Comstock grew substantially during the period of the Comstock.6 Gallman, “Economic Growth and Structural Change”, in Engerman and Gallman, eds., The Long Nineteenth Century, Cambridge Economic History of the United States, 2:51.

13

THE COMSTOCK [S]

exploring for ores and once found in removing as much as possible as quickly as possible. In a sense the end-product, gold and silver coins or ingots, always had a value and always had a market. Creating markets, as manufacturers had to do, and then allotting and pricing the factors of production in such a way as to realize a gain from that market was the reverse of what precious-metal mining companies did. The market for gold and silver was heavily regulated so that strategies to affect the price of the precious metal even in times of great strikes were less important than strategies to affect the cost of the extraction, reduction and transportation. If mining and milling operations could be made highly efficient, then regardless of the fixed price at the end point the mining company could make a profit with moderately rich ores. When one looks for the effects of an industrializing economy in precious-metals mining, one must mainly focus on operational performance.

The points where the evolution of Comstock mining agreed with the industrializing of America were several. First, as mining companies pursued consolidation in the extracting and the milling of ores, size became a predominate feature. Although scores of claims were laid out along the Lode at the time of discovery, the ownership pattern that emerged over the next quarter century was that a small group of owners came into control of the major ore assets. The pattern was reinforced by the fact that the small coterie of mine owners were also the mill owners, even though milling operations were sprung off as separate entities. By the middle of the 1870s with the Consolidated Virginia and California bonanzas Mackay and Fair and their associates owned or controlled most of the mines on the northern end of the Lode along with a dozen or more mills plus aforementioned ancillary companies. In the new corporate world that America was creating it was not unusual for companies to try to erect a vertical monopoly by controlling all of the operating units from the source of the product to its final sale through various legal entities created for that purpose. (John D. Rockefeller’s Standard Oil, for example.) A similar force was at work on the Comstock. Comstock mining and milling companies remained local operations. Their owners did not try to expand their control to other mining camps in Nevada or in other western states. Controlling the precious-metal market was less the objective than controlling the inputs that produced the precious metals. Once the Comstock ore gave out, the companies went out of business or reorganized under new owners. Successful Comstock miners seldom staked their financial future on strengthening or diversifying the local or regional mining economy. They sought instead to organize their enterprises in such ways as to exploit the local wealth quickly and efficiently if possible, to transfer their gains to other places and investments (mainly San Francisco) and to abandon the Comstock when its primary assets, the ores, had been exhausted. Mining companies may have touted the long-term prospects of a rich-ore-bearing lode, but in reality they existed for the short or intermediate term. Recall that Mackay and Fair prize creation, The Firm, was gone in less than a decade after its founding. To a degree size was driven by the location and quality of the ores. As the ores became more widely dispersed at greater depths the investment in these underground explorations and operations grew accordingly. There can be no doubt, however, that successive generations of miners thought in terms of bigger corporate entities.

14

THE COMSTOCK [S]

Organizing ever-larger business enterprises required a vision that served only a handful of miners well. If, as Eliot Lord, Dan DeQuille and Grant Smith have described, early mining companies squandered their gains through profligacy and greed, their successor, no less avaricious, manifested a sense of discipline and order. Early Comstock history is difficult to recover because the primary evidence (reports, accounts, letters) is missing. The general histories of this period seem to agree, however, on the basic outline that portrayed the industry acting like kids in a candy store than businessmen with financial acumen and managerial skill. As the riches of the Comstock became more widely understood, the helter-skelter approach gave way (probably earlier than assumed) to investors and managers who had sharpened their pencils. The excesses were never completely washed out, but removing the ores economically and rapidly required organization and capital. William Sharon left an indelible mark in this regard even though others had probably already begun the makeover. Sharon was more a banker and lawyer than the miner, but he had an astute sense of what had to be accomplished and how. For better of worse his goal was to dominate mining (and milling) on the Comstock and by so doing to make money for himself and his partners. His was not the only model for accomplishing these goals, and yet once the industry started down the path of consolidation and control there was no turning back. The grand entrepreneurs did not eliminate the competitive forces that not only drove them to launch new (sometimes bizarre) strategies to outwit their rivals, but they also understood the need for cooperation and compromise (although not always with the most altruistic motives). Dozens upon dozens of the earliest claims proved to be unprofitable if not barren operations, and that certainly opened the door for the emergence of oligopolists like Sharon, Ralston, Heywood, Jones, Mackay and Fair. The stakes were much too high to permit a competitive jungle irrespective of the prevailing theories.7

The stakes were high because the business of mining was costly and risky. The vast underground network could not have evolved without mechanization. This should be understood broadly. New products and processes made efficiencies possible on a scale never known before, but without transportation the Comstock would have been left on the sidelines. The Virginia and Truckee Railroad, controversial as its financing was, had the effect of opening the Comstock to the manufacturing world. Importing goods from raw materials to finished products for the purpose of making mining and milling more efficient could not have happened as cheaply and quickly as it did without inexpensive transportation. Nor could a quality of life, as social historians have written about, ever developed in Virginia City. It is difficult to imagine Comstock deep lode mining without the components fabricated from iron and steel and shipped thousands of miles even from overseas. That William Sharon like the great railroad barons connived to make the public pay for the VTRR does not diminish the importance of the railroad system itself to the

7 For a good summary of the role played by monopolies in America’s post-Civil-War economy, see Stanley Engerman and Kenneth Sokoloff, “Technology and Industrialization, 1790-1914,” in Engerman and Gallman, eds., The Long Nineteenth Century, Cambridge Economic History of the United States, 2:382-394. One can observe that the way in which monopolies came into existence in manufacturing and related industries did not absolutely apply to precious-metal mining. The essential difference was that the early claim lines had to be respected. Even though claim-holders could acquire adjacent properties, they usually did so in connection with discoveries of ore deposits rather than to assume ownership and control of the whole Lode.

15

THE COMSTOCK [S]

mining industry. The multi-strand cables of several inches thick, weighing thousands of pounds that raised and lowered multi-tiered cages, also weighing thousands of pounds, were not produced locally or even regionally. Europeans may have produced the highest-grade cables, and certainly James Fair negotiated with European companies for these and other products. Even though rail transport was the cheapest and quickest mode for getting these products from factory locations or ports of entry to the Comstock, he implored his supplier to keep transport costs as low as possible and specifically reminded them that since his companies received rebates from VTRR (even though his rival’s creation), it should be used to transport goods to the Comstock. Turn this upside down and think of the difficulty and expense if not the impossibility of moving capital (and consumer) goods by wagons and teams. Fans, pumps, drills, tracks, wheels, cages, pans and boilers, just to mention a few items, arrived by rail year after year. And railroads, of course, made it possible for the manufacturers of these products to be in business in the first place. The history of the VTRR and of the newly completed transcontinental (with a depot in Reno) its economic impact on the Comstock mining industry remains to be written.8

The mining companies for which accounts and records exist understood the importance of mechanization. Underground work still depended heavily on human labor, but human labor supplemented by mechanical support. What mechanization supported was greater output per worker. In the mining industry this simply meant that more ore per worker could be recovered and processed more quickly and more efficiently as more equipment was added to the operation. In the manufacturing world output was usually measured in man-hours, and higher output (productivity per worker per man-hour) helped lower the cost to produce the product and the price to sell the product. In the mining world, the volume of ore produced had little effect on the value of the bullion. Thus, for mining companies cost became a dominant issue. If the speed by which a cage could be elevated from or lowered to the diggings or the ore could be milled and amalgamated or the bullion could be shipped to the mint or the bank could be improved, it could have an immediate impact on the company’s bottom line. Mechanization cost money, and the richer the mine’s assets the more likely the company was to invest in mechanization. One revelation from the 1880 census that asked questions about machinery and equipment was how many of the less productive mines had invested in a degree of mechanization.9

One sure sign of the industrializing of America and the Comstock was the organization of the companies and in particular the bookkeeping and record-keeping procedures. Business accounting has evolved into an almost mysterious realm, and what was practiced in the late nineteenth-century was less mysterious. Still it required persons with bookkeeping or accounting knowledge. Since many of the new industrial companies were public companies with stockholders, annual reports based on certain accounting standards had to be prepared for the stockholders. Comstock companies were public

8 Scores of boxes of documents on VTRR and other rail connection exist in Special Collection of the University of Nevada at Reno Library, but I did not make it a subject of this mining history.9 The Sutro Tunnel Project stand as an exception because even though mechanization made it possible to complete the project, the delays and disputes made the tunnel obsolete before it was finished. Had it been finished in several years, unlikely given the distances and depths, it might have added to the efficiency of the mines by providing a much-needed drainage system. Not everything that embraced the new mechanical world necessarily resulted in more efficiencies. Some became wasted investments.

16

THE COMSTOCK [S]

companies with stockholders and issued annual reports. The annual reports for Comstock companies that have survived went through their own evolution. The reports that basically listed receipts and disbursements were supplemented by reports that showed assets and liabilities, inventory accounts, cash flow and stockholder equity. These annual reports were drawn in the case of some companies from voluminous financial records. The surviving financial archives of The Firm of Mackay, Fair et al. are probably the most extensive of any company doing business on the Comstock. But impressive archives for Savage, Ophir and several other mining companies have survived as well.10 In addition to the printed annual reports the Nevada Controller and Mineralogist often published in their biennial reports sections from the annual reports or from company accounts. The enactment of the Felton Act by Congress in 1877 required companies to keep records on certain aspects of their mining operations. All in all the extant Comstock financial archives are indeed substantial. One has to be impressed with the cost analysis that the Sutro Tunnel Company undertook as it weighed the advantages and disadvantages of changing from horse-drawn locomotion to steam or water even though the company had so little business and was sliding into bankruptcy. On the other hand, the accounting put forth in several versions of the distribution of the assets held by Mackay and Fair in the Pacific Milling and Mining Company was more sloppy than precise. More records did not necessarily eliminate bad record-keeping.

Industrialization had to be financed, and the change in financing was almost as revolutionary as the change in manufacturing and mining. Building industrial American required huge capital–investment pools that often exceeded the resources of conventional local banks. Investment banks and stock exchanges became important sources for underwriting industrial ventures including mining. The earliest investors in Comstock mining were Californians (mainly from San Francisco), and Comstock financing remained linked to Bay Area. Adolphe Sutro charted a different course by trying to arrange for financing through European investment banks. Indeed it has been estimated that in the last half of the nineteenth century hundreds of western mining companies were nominally capitalized with British capital in the hundreds of millions of dollars. Except for Sutro direct European financing of Comstock companies is certainly difficult to document. Perhaps Europeans invested through stock purchases and other conveyances. Being American or European made little difference with respect to outcomes. According to some surveys perhaps one in ten of these projects paid any dividends. British investors not unlike American investors “had fallen victim to ‘gold extraction with a vengeance’”. To quote the Economist “there is a pretty general belief that the profits were never honestly made; that, as a matter of fact, the ore bodies which yielded the dividends were planted by human hands and not by nature.”11 Mining company stocks traded on various exchanges, and companies used stock issues to raise capital for new undertakings. Speculation in mining stocks was rampant, and outside of the principal owners stockholders were often stock-exchange traders and speculators. The main banking facilities in Virginia City were extensions of the mining companies. Sharon and Ralston 10 Most of these archives are in Nevada or California, but the bulk of the Savage Archive is in the Beinecke Library, Yale University.11 Quotes from Lance David and Robert Cull, “ Capital Movements, Markets, and Growth, 1820-1914,” in Engerman and Gallman, eds., The Long Nineteenth Century, Cambridge Economic History of the United States, 2:759-760.

17

THE COMSTOCK [S]

set up the Bank of California, which they used to collect an array of mining and milling properties by advancing loans that borrowers could seldom repay. Mackay, Fair et al. decided that instead of doing business with Sharon and Ralston, once their great bonanza began, established their own Bank of Nevada. Mining companies used these banks to borrow funds, to issue drafts and transfers, hold ores (an underground vault can still be visited in Virginia City) and to manage accounts. Local banking has not yet (to my knowledge) been thoroughly studied, but annual stockholders’ reports often indicated that companies kept deposits in local banks. Weekly reports by mine officials also referred to transactions with local banks. One obvious question about local banks was how much if at all they served the banking needs of ordinary citizens. Under the contract mine workers were to be paid in gold coins (and silver for small coins), and while banks may have supplied coins to companies to meet payrolls, mining companies had another source – the federal mint, which could provide coins from their own bullion. What is unknown is how much consumer (retail) banking local offices engaged in. Banking on the Comstock would appear to be mainly devoted to the needs of the mining and milling companies.

Western mining earned special privileges because the land where the ores were usually discovered (certainly true of the Comstock Lode) belonged to the federal government. The assignment of mineral rights came under the purview of the national government, and even though states would eventually be organized out of the territories legal questions relating to mineral rights remained deeply embedded in federal authority. Federal oversight in mining was generally light and tended to favor the interests of the companies over the citizenry at large. In time some federal regulations evolved including some concern for health and safety, but the laissez-faire attitudes that pervaded American economic life tended to dictate a hands-off policy. The State of Nevada succeeded in asserting its legal right to assess and tax mining operations (not something that owners ever fully acknowledged) and to impose minimal safety standards. But Legislature was more often than not (as was true in other states) more attuned to the needs of the properties and entrepreneurial classes, and even though the Nevada Legislature and Governor as well as some local officials stood up to the powerful mining interests from time to time, the companies reigned with relative impunity.

Even though I have chosen to end this study in 1885 when Comstock production fell to the lowest level it had known since the early 1860s, I am fully aware that mining did not end in that year. In the second half of the 1880s a more optimistic outlook in the future of the Comstock could be detected in investment activity and newspaper reporting. Dan DeQuille published a small pamphlet-like reprise entitled A History of the Comstock Lode and Mines in 1889 in which he wrote of “The New Departure”. The two greatest bonanza mines – Consolidated Virginia and California – had been consolidated through re-incorporation as Consolidated California and Virginia with work resuming in the upper stories “where small streaks of low-grade ore…formerly…passed by led to deposits of fair milling ore.” Other deposits were found after the fire that had smoldered since 1881 and produced carbonic acid gas. The new company reported ore worth about $8 million and actually paid dividends of $2.5 million. Yields were in the $20 to $35 per ton range, and enough ore was lifted to keep several mills in operation. In fact, DeQuille asserted that more mines “were producing paying ores” than anytime in the history of the

18

THE COMSTOCK [S]

Comstock. Most of those he listed were mines that had enjoyed small to large bonanzas in the previous quarter century. The point to be emphasized is that in this late mature cycle more mines were being worked but new bonanzas did not materialize. The assessments reveal that production rose from over $2 million in the early 1880s to between $5 and $6 million in the late 1880s and then it began to slide until it bottomed out at less than a half million dollars by the end of the century. The new ore bodies found in the old mines that inspired DeQuille’s optimism a well as others simply did not pan out. Mining had a way of deceiving and deluding: “In working these small bonanzas are sure to be encountered – scattered plums in the pudding – which will assist in sending up the average.” And almost as an after-though with new processes and new technologies “Present expenses will shortly be still further reduced.”12

And the search has continued down to the present day. In an ironic twist, as Roland James has pointed out, the Houston Oil and Mineral Company began large-scale excavations in the late 1970s on the edge of Gold Hill. Over a period of several years the company created a huge open pit, the edge of which bordered on the old municipal boundary of Gold Hill. The irony is that “this new departure” (to borrow from DeQuille) was a form of surface mining, not lode mining, and was closer to how the Comstock began. The dimensions of the “hole” were almost as staggering in their own way as the Comstock true bonanzas were a century earlier: 450 feet deep, 800 feet wide and 1,600 feet long. This was dug at a time that gold was selling for $600 an ounce, and mining companies like Houston thought that they could make a profit from small rivulets of ore. They could not make a profit, and in the early 1980s the project with abandoned followed a tiny reclamation effort. The hole, although overgrown, remains.13 As I write this final chapter, gold has once again reached $800-$1,000 per ounce with market mavens predicting $2,000 per ounce. Silver falls in the range of $14 to $15 per ounce. Will that be the launching pad for another “new departure” on the Comstock? Or has the Lode, often described in terms of infinite riches, come to its final repose?

The story of the Comstock stands as one of the extraordinary mining experiences in the American West and even in the New World. The Comstock was not the richest or the biggest strike, but to make the strike as big and rich as it was required that deep lode mining be pushed to a scale unknown before. Occurring at the time that it did the Comstock embodied the triumphs and excesses of an age driven by venture capital, mechanical and technological change and business concentration. For better or for worse Comstock miners extracted a third to a half a billion dollars in gold and silver (in many billions today) in a quarter of a century. The personal testimonies of the capitalist, the worker and the citizen defied the odds that a mining camp could create a mining economy that built a mining city that was as wealthy and cultured as any city in the West. But mining economies can exact a toll. Ore defined creation and growth, personality and behavior and accomplishment and power; ore would also define the demise. The exhaustion of the ore ended the economic system that the ore had spawned and endowed

12 DeQuille, A History of the Comstock Lode and Mines…. (Virginia City, NV: F. Boegle, 1889), 92-93, 94-96.13 James, The Roar and the Silence, 269-270 with photograph on p. 270.

19

THE COMSTOCK [S]

future generations with environmental burdens that in nominal dollars may exceed what was removed.

APPENDIX

Several datasets used in the analysis of the Comstock can be downloaded:

Go to https://home.comcast.net/~richardgarner09/databank.htm l [ctrl-click]

Important: Users should take time to read explanatory notes attached to data files. I have rearranged the way in which the annual data are assembled.

• Nevada Survey-General's Biennial Report, 1867

• Bullion Records, Consolidated Virginia Mining & California Mining Cos., by Mills, 1873-1881

• Story County Ore Assessments, 1875-1885

Nevada Controllers' Biennial Reports:1867

• 1869 • 1871 • 1873 • 1875 • 1877 • 1879 • 1881 • 1883 • 1885 • 1887

20