At the Grand Hotel, on August 12, Louise gave birth to a son, John William Mackay, Jr. His parents called him “Willie.” Birth announcements appeared in several California newspapers. Although fortune, intelligent speculation, and more of the hard work that had brought him so far from the squalid slums of New York and the rough diggings around Downieville would make John Mackay master of the two richest mines on earth in the years ahead, nothing in the world would ever make him prouder than his first-born son.
• • •
Willie came into the world at a harrowing time for the Comstock Lode. The Yellow Jacket discharged a large number of men in the weeks after his birth. The prices of many mine stocks sagged into the single digits, and the Daily Alta California considered the Comstock’s prospects “not very encouraging.” The last half of 1870 was the worst time on the Comstock Lode since its discovery. In that respect, the lode’s fortunes mirrored those of its namesake, Henry Comstock.
Most likely, Henry Comstock worked the Sweetwater mines through 1869 and the first half of 1870. None of his endeavors in the Wyoming Territory met with enough success to hold him, however, and when the opportunity to explore new country arrived, he joined an expedition that prospected the Big Horn River basin on the west side of the Big Horn Mountains.
Nearly three months later, Henry Comstock turned up in Bozeman City in the Montana Territory, one of the thirteen members of the expedition who hadn’t backtracked. They’d traversed more than four hundred miles of hostile wilderness and found nothing of value. Poking around in the dirt outside Bozeman City, Comstock must have ruminated on the eleven crucifying years that had passed since he’d sold his slice of the lode that had carried his name to all corners of the United States, to Europe, and beyond. He’d washed dirt in eastern Oregon, crushed quartz in the Idaho Territory, grubbed through gulches and ravines in the western Montana Territory, shoveled gravels and picked at quartz veins in the Sweetwater mines, and while he’d done it, for subsistence wages, through unimaginable hardships, sweltering summers and frigid winters, innumerable dangers and crushed hopes, more than $100 million worth of gold and silver had been raised from a lode he’d done much to prospect, discover, and open.II All he had to show for it was the endless humiliation of a famous name. On September 27, 1870, somewhere outside Bozeman City in the Montana Territory, Henry Comstock clenched the barrel of a revolver between his teeth and pulled the trigger.
• • •
As if in mourning, the fortunes of the Comstock Lode sank to a low ebb in the months following Henry Comstock’s suicide. Of the twenty-odd Comstock mines raising ore in late 1870, only the Chollar-Potosi, the Yellow Jacket, and the Hale & Norcross paid significant dividends, and by year’s end, managers of all three companies understood the finite nature of their ore bodies. Bullion returns for the year ebbed to about half the annual return of the boom years in the early 1860s. The stock market slumped until the aggregate capital value of all the Comstock mines hovered around $4 million.
In an interview he gave ten years later, William Sharon said that at the end of 1870, the Bank of California had $3 million invested in the mines, mills, and towns “directly dependent upon the continued productiveness of the Comstock Lode.” If the lode failed, Sharon said, the calamity would have endangered the bank’s existence. “Only the few directly acquainted with the condition of the bank will ever realize the anxieties which beset its management at the close of the year 1870,” he said.
With the lode waning, many miners wandered off to try their luck in new camps. “Virginia is dying,” a visitor told the White Pine News.
• • •
In one of the many vain searches for ore Crown Point superintendent John Percival Jones directed in 1870, he had his miners run a crosscut east from the mine’s 1,100-foot level. Jones and his foreman Hank Smith drove the crosscut completely through the Comstock vein, through the hanging wall, and out into the country rock beyond until they were 800 feet east of the shaft. They found nothing of value. The Mining & Scientific Press and the Territorial Enterprise could have described the mine in November with the same phrases they had used in February—“exhibits no change for the better,” “drifting about in porphyry,” and “no signs of pay ore.”
Many shareholders stopped paying assessments and abandoned their shares. Unsalable and carrying the negative value of unpaid assessments, the shares returned to the company treasuries, which threw an increasing proportion of the costs of deep-level exploration on the mining companies themselves—and on the Bank Ring and the Bank of California that stood behind them. With expenses mounting and income declining, mine managers began considering halting lower-level prospecting.
At the morning session of “the Big Board” in San Francisco on November 11, 1870, twenty shares of the Belcher mine immediately south of the Crown Point sold for $2.75 per share. A trifling ten shares of the Crown Point changed hands at $2.50, making it worth $57.50 per foot, an appalling decline for a mine that had been worth more than $1,000 per foot exactly four years before. The market was as flat as one of Nevada’s dry lakebeds. Management planned to run one last puffing operation to allow insiders to ditch their stock at a slightly advanced rate and then stop the pumps and abandon the mine. From a point 360 feet east of the shaft in the mine’s long eastward crosscut, Superintendent Jones and Foreman Hank Smith chose to drift south at 1,100 feet, along the lode’s footwall—about the only place they hadn’t looked. No ore had been found on the footwall since the west stratum ore had terminated against it more than 600 feet above. However, the southern portion of the Crown Point hadn’t been explored much below that level. The drift went 200 feet south in hard, gray, barren porphyry—at significant expense. Then the character of the rock changed. The color of the porphyry lightened. The vein matter became more shattered, crumbly, and streaked with reddish lines of rust. Stripes of quartz and clay began cutting the porphyry. Two hundred and thirty-nine feet south of the eastward crosscut, the drift encountered a “well-defined clay seam.” Hank Smith summoned Superintendent Jones from San Francisco to view the development. Beyond the clay wall, the miners broke into a body of crumbly, creamy white quartz containing pockets of ore. Jones reassigned the miners who’d made the find to other parts of the mine and replaced them with more tight-lipped men. He stopped admitting outsiders to the mine.
In the last week of November, Crown Point shares rose from three to six dollars per share, on small volumes. Action churned hotter in other mines. On the last day of the month, volume rocketed to 1,020 shares and for some of the sales, prices pushed as high as eight dollars per share. Word leaked on December 1. Mary Jane Simpson, the San Francisco Chronicle’s lively “Lady Correspondent” in Virginia City, reported “the discovery of ore upon the 1,100-foot level of the Crown Point, south of the shaft, and toward the Belcher.” Simpson noted the unexplored nature of the ground in that section of both mines, but she’d long since lost faith in mines managed by what she called “the Sharon dynasty”—“purchasers of the advanced price will probably lose their money,” she added.
Mary Jane Simpson didn’t know the exact details of what had happened underground, few did, but a crosscut on the 1,100-foot level revealed a 14-foot quartz body that contained “a vein of fine ore nearly two feet wide.” Small “stringers of rich ore” spiderworked the rest of the quartz mass. To Jones and Smith, the small detached veins displayed a tendency to unite as the drift went south. Crown Point stock almost doubled again on December 1, to thirteen dollars, and more than 3,000 of the mine’s 12,000 shares changed hands. Traders bought and sold another 4,000 Crown Point shares over the next two days and the price climbed to sixteen dollars.
Through the next week, Crown Point prices fluctuated on contradictory rumors from “above.” One said there had been “no strike in the mine to justify the excitement.” Someone “supposed” to be in the know described the discovery to the Territorial Enterprise as “likely to prove of permanent value.”
As Mary Jane Simp
son explained in her next letter, written on December 8 and published three days later in the San Francisco Chronicle under the headline “Virginia Gossip: How the Stockholders of the Mines Are Robbed,” she thought the whole thing was a put-up job by the Bank Ring designed to gull the unsuspecting public into paying the Crown Point’s most recent assessment. Her next letter from Virginia City described James Fair’s wife, Theresa, “a handsome brunette” wearing pink satin trimmed with pointed lace, a diamond necklace, and “other ornaments,” as the belle of the annual Bachelor’s Ball, before she delivered another jeremiad against the “swindlers” aiming to deceive the public into buying mine stock.
According to Mary Jane Simpson, William Sharon and his Bank Ring cronies had made “the very name of Nevada stink in the nostrils of honest men all over the world.” However, in this case she’d misread the tea leaves, or been misinformed. The deep strike in the Crown Point promised so well that it had motivated Crown Point superintendent Jones to betray his Bank Ring masters and bid to seize control of the mine.
Jones had chosen not to share the immediate details of the strike with William Sharon—or, it goes without saying, with any of the Crown Point’s common stockholders. (He’d likely deceived his foreman about his intentions, too; Hank Smith would remain in Sharon’s employ.) Instead of telling William Sharon, Jones had bought every Crown Point share he could afford, likely in the last days of November. He wasn’t a moneyed man, however. The shares he acquired barely dented the Bank Ring’s control, which the ring had maintained without interruption since 1867. Jones went to San Francisco and related the mine’s promising development to a cadre of carefully chosen speculators. They bought on Jones’s promise to bear all losses in exchange for one-half of all profits. Jones also told his brother-in-law, Alvinza Hayward. (They’d married sisters.) A successful mine investor since the early days of the Gold Rush, Hayward was an original incorporator of the Union Mill and Mining Company. He kept large deposits at the Bank of California, and he’d served as a trustee of many Bank of California operations, among them the Crown Point, the Kentuck, the Savage, the Hale & Norcross, and the Gould & Curry mines, the California Steam Navigation Company, and the White Pine Water Company, but despite Hayward’s wealth and influence and years of service, he hadn’t cracked the innermost circle of the Bank Ring—that remained a Mills-Ralston-Sharon triumvirate. That may have created a wellspring of resentment. Hayward had almost certainly provided the influence that first opened Comstock opportunities to John Percival Jones. On Jones’s advice, Hayward made massive purchases of Crown Point stock, likely starting in the first days of December 1870.
The Crown Point’s stock price marked time through the rest of December, trading between $13 and $17.25. Aiming to accumulate as much of it as possible, Jones did everything he could to retard development of the strike. Sometime in December or early January, Jones told the speculators who’d backed him that his son, a consumptive, was “dangerously ill” in the eastern states. Since a telegram might summon him to his son’s bedside at any time, he asked them to close out the shares they’d held on his account. He needed the money, he said. To prove it, Jones sold some of the Crown Point shares he held in his own name. Although Jones professed confidence in the Crown Point, his partners-of-opportunity received the story with raised eyebrows. “Jones’s sick child” became a catchphrase among them. They took it as a fiction concocted to justify his stock sales and assumed the truly ailing patient was the Crown Point mine. Most sold out, turning a large profit both for themselves and, under the terms of their profit-sharing arrangement, also for Jones.
Many of Jones’s now former partners took short positions against the mine. Jones plowed his gains into buying as many Crown Point shares as possible. The mine’s price continued to rise, and Jones paid for his share of the mine “out of the pockets of the unhappy shorts.” The only one of Jones’s initial backers who maintained faith in Jones’s representations of the Crown Point mine through the “sick child” affair was his brother-in-law, Alvinza Hayward.
The stock eked above $20 in early January, then leaped to $40 on rumors of $400 rock in a massive ore body. The next day, the San Francisco Chronicle reported that Alvinza Hayward owned four thousand Crown Point shares, and although the paper claimed to appreciate the significance of a Comstock ore body farther below the Gould & Curry croppings than any ever discovered, it also persisted in reporting, “The body of ore upon which the rise in Crown Point is based is said to be small, and although of fair grade is by no means sufficient to warrant the heavy advance in the stock.” In a letter sent from Virginia City a few days later, Mary Jane Simpson offered a mock biblical parable about an Assyrian king who had foisted stock in a barren mine on an unsuspecting public before the last, final crash. To her, it was all “sharp practice to fleece the flats.” Crown Point stock sank back into the mid-$20s. The acid dripping from her pen clouded her judgment. She didn’t appreciate the significance of what she herself had already reported—Superintendent Jones “had bought stock for himself without notifying his superior officer of his discovery.” A crack had appeared in the Bank Ring.
For reasons likely having much to do with Jones and Hayward’s treachery, William Sharon was slow to cotton to Crown Point developments and to understand that two trusted associates had broken ranks to operate on their own account. Nor did Sharon occupy a strong position from which to fight back, for unknown to outsiders, the Bank of California was in serious trouble—and had been since the summer of 1869.
The bank’s difficulties had much to do with the profligate habits of its cashier, William Chapman Ralston. In a land famous for boosters, California never had another one like Billy Ralston. Outgoing, positive, and gregarious, he believed in the Golden State’s glorious future with all his heart and he backed that belief with cash money. Ralston was tremendously popular in California, a major celebrity. None of the vitriol that clung to William Sharon or Darius Mills ever stuck to Billy Ralston, although beneath the bonhomie he was every inch as much the monopolist and schemer as his associates. Nor did Ralston draw much distinction between his own personal finances and those of the Bank of California. In many ways, William Ralston was the Bank of California, and he splashed money about supporting all manner of projects.
Ralston involved himself and the bank in sugar refining, woolen mills, carriage making, a watch company, Alaska seal fisheries, a dry dock facility at Hunter’s Point on the bay shore south of San Francisco, massive wineries and vineyards, a colossal hydraulic gold-mining operation at the North Broomfield mine, quicksilver mines throughout the Coast Range, tobacco cultivation south of San Jose, railroad-building ventures both small and large, the manufacture of rolling stock, advancing capital to wheat speculators and exporters, assaying and gold refining for the San Francisco Mint, sponsoring the ornate and extravagant California Theater on Bush Street, and in his pet New Montgomery Street real estate development project. Ralston spent wildly on his Belmont mansion twenty-two miles south of San Francisco and entertained with legendary opulence.
While the California economy expanded during and after the Civil War, things had gone well for the Bank of California, but a series of hammer blows beginning in the spring of 1869 seriously stressed what for years had been the coast’s leading financial institution—the loss of the Hale & Norcross to Mackay and the other Irishmen; the deadly fire that stoppered the output of the Crown Point, Yellow Jacket, and Kentuck mines; gold currency gushing out of California to meet overseas and eastern demands; and most painful of all, the economic depression that had arrived with the railroad. The confluence of hardships shoved the bank toward the cliff edge. Only a dodgy overnight exchange Ralston perpetrated with two associates in which they physically carried more than two tons of unminted gold bullion in the vaults of the Bank of California in relays to the mint and returned with an equal gross value of coined $20 double eagles kept the bank solvent in July 1869. Less than two months later, the bank staggered through the turbulent afterm
ath of New York speculators Jay Gould and Jim Fisk’s attempt to corner the nation’s gold market—Gould and Fisk had furthered their schemes by corrupting crucial members of the Grant administration. Impacts of the “Black Friday” collapse of the gold corner reverberated through the economy for months. Eastern competition slammed Ralston’s manufacturing investments. Ralston lavished enormous sums on the New Montgomery Street development while the San Francisco real estate market sank to death’s door. Ralston faced personal ruin, and since the people of California so closely associated him with the Bank of California, any collapse of William Ralston had the potential to crater public confidence in the entire institution.
The Bonanza King Page 35