Mackay and Fair fancied themselves miners, not stock manipulators, and in early December, they did something “hitherto unknown” in Comstock history—they threw the Con. Virginia open to inspection by anybody willing to make the terrifying descent into the mine. Among the first party John Mackay took down were Dan de Quille of the Territorial Enterprise and mining engineer Philipp Deidesheimer, the man who had invented the square-set timbering technique fourteen years before that had made it possible to extract the Comstock’s massive ore bodies.
From the shaft station at 1,500 feet, Mackay led the party east, across the main north-south drift, and into “the California Crosscut,” which went east just 14 feet from the California line. Just over 100 feet past the main drift, the crosscut entered the ore body. De Quille described the first few feet as “moderately rich.” Beyond that, it grew into a pale green chloride ore shot through with streaks and nodules of black silver sulphurets upon which glittered bright points of iron and copper pyrites. The crosscut penetrated 25 feet into the ore body, and the walls, ceiling, floor, and face, all of it, was the same lively, sparkling ore. Like John Mackay, Dan de Quille had been on the Comstock for well over a decade, and the sight stopped his pencil and stilled his tongue. He’d never seen anything like it. Not a pebble in the crosscut was worth less than $600 per ton, and no small sample could be reasonably assayed for fear of grabbing a sulphuret nodule that would run the chunk into the thousands of dollars per ton. De Quille and the other visitors gazed on the ore in quiet awe until one of them broke the silence. “It makes a poor man sick to look at it,” he said.
After a time, they retracted their steps to the main north-south drift. Mackay led them to Crosscut No. 2. (132 feet inside Con. Virginia ground). That crosscut had been driven east 204 feet, “nearly all the way in exceedingly rich ore,” and miners pushing the face of the crosscut still hadn’t encountered the east wall of the vein. Even if the ore in Crosscut No. 2 wasn’t as spectacularly rich as the ore in the California Crosscut, the bulk of it was still worth from $150 to $200 per ton. Halfway down the crosscut, a winze sank to a connection with the 1,550-foot-level drift coming over from the Gould & Curry. The winze was in the same splendid $150 to $200 ore the whole way down. A strong air current passed through the winze, a genuine blessing in the sweltering mine. A section of ground near the winze had caved. To stop the working ground, miners had backfilled the cave with $200 ore. The sight dropped the reporter’s jaw, for he knew what it meant—there wasn’t any waste rock nearby.
Miners on the 1,550-foot level pushed to extend the drift beneath the California Crosscut. The drift ran right through the heart of the ore body, and it ran the entire distance in the same rich ore. A winze sunk from 1,550 feet had just reached 1,600 feet, and it too sank the full distance in “ore of wonderful richness.” The mining men on Mackay’s tour could see that between the systematic array of drifts, crosscuts, upraises, and winzes with which he and Fair had prospected the 1,500-foot level lay vast blocks of proven, untouched ore. Its value beggared imagination. Philipp Deidesheimer did quick calculations and estimated that the mine had $43 million of proven ore “in sight,” and below 1,400 feet, Mackay and Fair’s miners hadn’t yet found the eastern or northern edges of the ore body. Mackay walked his guests north down the main drift across the full width of the California mine to its connection with the Ophir workings. He showed them the beginnings of the crosscuts that would prospect the California, but with Ophir miners extracting similar-in-character ore on the same level close to the California line and his men working the phenomenal ore in the California Crosscut on the California’s southern boundary, it seemed a virtual certainty that the Con. Virginia’s magnificent ore body spanned the entire 600-foot width of the California mine.
The flurry of reports that emerged from the mine described the 1,500-foot level of the Con. Virginia as “simply wonderful” and “surpassing belief,” “extravagant,” “magnificent,” “vast,” “wondrous,” “almost incalculably rich,” “apparently limitless,” “of the richest possible description,” “beyond computation,” and, “if possible,” growing richer. John Mackay hadn’t seen ore that good since he’d been a common miner working the old Mexican chimney in 1860 and 1861 for four dollars a day, and back then, he hadn’t seen but a tiny fraction of the staggering volume of top-quality ore he looked at in December 1874. Every pick stroke added to the “already immense wealth” of the mine.
To the Daily Alta California, it was “the great discovery of the age.” When Dan de Quille wrote about it after emerging from the mine, he called it “the richest mineral discovery in the world’s history,” and he coined a beautifully alliterated moniker to describe the ore body—he named it “the Big Bonanza.”
Mackay and his partners had raised more than ninety thousand tons of ore from the Con. Virginia in 1874, from which they’d reduced nearly $5 million, and they’d only just begun to scratch at its contents. In an interview conducted in his modest San Francisco office in early January 1875, James Flood assured the Chronicle that he and his partners had no intention of milking the Consolidated Virginia for speculative purposes. “We are running the mine to the best of our ability,” Flood said, “as if we owned every dollar of the stock.”
Sometime in the first half of 1875, as crosscuts on the 1,500-foot level revealed that the ore body did indeed span the entire length of the California mine, John Mackay must have realized that the Big Bonanza would make him one of the richest men in the world.
• • •
Predictably, the “stupendous mass of ore” provoked a delirium. People’s lust for a chance at something similar loosed them from their senses. Hopeful miners relocated all the old Washoe mining claims neglected since the collapse of the Comstock’s first boom until “every foot of land up to almost the summit of Mount Davidson and Cedar Hill” was incorporated into a mining claim and stock “sold to a people frenzied by prospective fortunes.” Just as they had in the old days, prospectors located silver ledges all over California and Nevada, incorporated mining companies, and foisted stock on people clamoring for a chance at riches equal to those found in the Con. Virginia. Both rock and paper would prove worthless in almost every instance. To settle a bet, a few “sports” assayed a lump of mud “raised” from the streets of Virginia. It returned $9.86 per ton. The boom brought a huckster named Mr. Ai Peck back to the lode from North Platte, Nebraska. With his quicksilver-charged and wonderful ore-finding electromagnetic mineral rod, he’d helped Washoe miners make many worthless locations during the Comstock’s early days and had “succeeded to his own satisfaction” in locating ore in the Bullion mine during an 1871 visit. In 1875, Mr. Peck promised to guide the mines to ore bodies hidden in their lower levels. Nor did he ask for any cash consideration in exchange for his services. All he sought was “a certain amount of stock” once the ore had been struck.III
Mr. Peck wasn’t alone in his desire for mining stock. The market had gone crazy. The same reckless hunger for sudden fortune, which in the early years of the Gold Rush had depopulated mining camps overnight as residents dashed off in pursuit of a rumor, still animated the Pacific Coast. Stocks had been consistently rising since the spring and summer of 1874, and with most of the stock in the Con. Virginia and California mines closely held by Mackay and his partners and a few other early investors, speculative energies centered on the Ophir, which had many more shares loose in the market. As Mackay and Fair’s explorations began to reveal the expanding dimensions of the ore body in the spring and summer of 1874, speculators had begun buying Ophir in the hopes that the Con. Virginia ore body would pitch through the California into the Ophir. Miners raising about fifty tons of ore per day from stopes on the 1,465-foot level of the Ophir made that a reasonable hope. No great leap of imagination was needed to see the Ophir developments as related to the marvelous reports emerging from the Con. Virginia.
Hoping to reprise the strategy he’d used to such good effect in 1871 when he’d bought the Belcher mi
ne betting that the Crown Point discovery would stretch into Belcher ground, William Sharon had begun quietly scooping up shares of Ophir in August. By the end of September, Ophir shares had more than doubled in value, and the Daily Alta California reported many mining engineers expected a “continuous and united ore body at greater depths throughout the whole length of the Comstock.”
Sharon also still nurtured senatorial ambitions. When Nevada senator William M. Stewart announced that he wouldn’t stand for reelection in the 1874–75 elections, Sharon declared for the open seat. (Although in his autobiography Stewart said that “disastrous” mining operations prompted him to step down, knowing that Bank of California and Central Pacific Railroad support would swing to Sharon may have affected his decision.) On the Comstock, Sharon’s influence remained strong in the Gold Hill Daily News. To neuter the enmity of the Territorial Enterprise, which had done so much to derail his 1872 campaign, Sharon bought the newspaper outright, paying a large premium on its actual value. With nineteenth-century elections to the United States Senate contested in state legislatures, to win, Sharon needed the support of the candidates running for those offices and the party apparatus behind them. According to persistent historical rumor wholly consistent with the nature of nineteenth-century political contests, Sharon curried favor by liberally distributing Ophir shares among Republican party operators and men standing for the state legislature. Heavily involved in industrial expansions, stock speculation, and construction of an enormous hotel in San Francisco, Sharon’s wealth wasn’t entirely liquid. Passing around the largesse of Ophir stock certificates while presumably retaining their proxies would have allowed Sharon to increase enthusiasm for his Senate candidacy while still accumulating power in the fight to control the Ophir. Nevada voted in the general election on November 3, 1874, and although a national wave returned the House of Representatives to Democratic control for the first time since the Civil War, the Republican Party did well in Nevada. The populace sent a Republican to the House and installed a solid Republican majority in the state legislature pledged to support the party’s candidate for the United States Senate—William Sharon. The Nevada legislature wouldn’t convene and formally vote for the Senate seat until early January 1875, but absent a massive scandal or major political earthquake, their pledge to Sharon wasn’t easily forsaken. Alf Doten, a staunch Sharonist and the editor of the Gold Hill Daily News, shook Sharon’s hand the night of November 3 and congratulated him on his victory. “Nevada enjoys the distinction of vast silver wealth,” said the San Francisco Chronicle, “why should she not send some of it to the Senate.”
Although Sharon had likely acquired more than 34,001 shares of the Ophir by the date Nevada voted in the general election, the mine had 108,000 shares. Sharon’s slice of ownership didn’t yet suffice to control the mine’s upcoming election, and a succession of small-lot purchases would only further inflate the stock price in a contest he could still lose. A “cold and selfish and calculating” old San Franciscan who had operated in real estate and mining stocks since the early days named Elias J. “Lucky” Baldwin owned the only outstanding bloc of Ophir stock large enough to swing control of the mine. Sharon pried him loose from his 20,000 Ophir shares only by paying him $135 per share when the mine’s open market price hovered around $80. A cool $2.7 million closed the deal, likely sometime between November 12 and November 16.
The Bank of California combination of Sharon, Ralston, and Mills moved aggressively into the boom. They were not alone. It seemed such a good time to buy. Everybody bought mining stocks, and few paid their full value in cash. Most people bought on margin, paying cash for only a fraction of a stock’s total value and accepting a broker’s or a bank’s loan to make up the difference. They paid interest on the loan, but the risks and costs seemed trivial as stock prices soared. Expert assessments of the Comstock’s glorious future appeared in all the newspapers. Picking a winning Comstock mine required no special expertise—they all rose. The Mining & Scientific Press described most women in Nevada as “interested in mining stocks.” Many four-dollar-a-day miners bought stock during the boom, and by January, they fancied themselves millionaires. “They bought fine clothes, expensive jewelry, and talked loud” about the pleasure trips they’d take to New York and London when the weather turned.
John Mackay could scarcely move about the streets of Virginia City or San Francisco during those heady days. Everywhere he went, people buttonholed him for stock-buying advice.
He told them all the same thing: “Go and put your money in a savings bank.”
Most who received the advice stared at him agog, surprised, if not outright resentful, that such an eminent miner wouldn’t share his opinions.
Mackay’s seemed like lousy, miserly advice in early January 1875. William Sharon’s mining experts had postulated the existence of $300 million in the Big Bonanza after their December inspections. Philipp Deidesheimer made a second and then a third visit to the Con. Virginia around Christmas and the New Year and pinned the Big Bonanza’s value at $1.5 billion, an estimate that received wide play in the press. A “free and easy talker” with a thick German accent and an odd idiom, Deidesheimer told of the many men made rich by following his advice. He advised people to buy and hold. People who owned the bonanza stocks were doing exactly that. During the first week of 1875, the price of Con. Virginia rose to $705 and the California to $780, but only 1,615 of their combined 216,000 shares changed hands, less than 1 percent of the total ownership. Ophir touched a high of $315.
Those prices valued the Con. Virginia at about $106,500 per foot and made each foot of the California worth an even more astounding $140,400. The capital value of the Con. Virginia stood at $75.6 million and the California at $84.24 million. Combined, they almost touched $160 million. The Firm’s share of that paper wealth probably amounted to somewhere between $100 million and $120 million, for property they’d gained control of and developed for around $400,000. It was paper wealth, but if those figures were accurate, John Mackay’s share ranged between $37.5 million and $45 million, and that sum did not include the Firm’s holdings in other mines, its milling property, or the value of the massive lumber company it had incorporated to supply timber and fuel to the mines. Nor did that wealth exist only on paper: Virginia City shipped ten tons of bullion to San Francisco that week, valued at half a million dollars, the vast majority of which had been raised from the Consolidated Virginia mine.
The total capital value of the Comstock’s leading thirty-one mines exceeded $262 million—$70 million more than the assessed value of all the real estate in the city of San Francisco.
An urge to sell hit at the end of the first week of January—“a reaction after the long rise,” according to the Daily Alta California. Two weeks of choppy trading followed. At the end of the Saturday session on January 23, the market closed “firm.”
Monday opened firm, too, but toward the end of the session someone launched two thousand shares of Ophir upon the market and started a panic. For a while, “pandemonium . . . reigned supreme.” Stock plungers held the general belief and general resentment that William Sharon and “that damned pawnbroker on the corner”—meaning the Bank of California—were unloading, even though both in San Francisco and Virginia City they had advised “their friends” to buy and hold. “If the individuals composing that powerful ring did not cause the break, they certainly did nothing to stop it,” squawked the Chronicle. The newspaper accused the Bank Ring of an “iniquitous” and “heartless” conspiracy intended to “destroy the market value” of Ophir stock and rain widespread misery, poverty, and ruin on the people of California and Nevada. The Belcher and Crown Point fell to their lowest prices in three years. In all, it was a “horribly glum day on California Street.”
Tuesday was worse. At the open, one broker threw out twelve hundred shares of Ophir and recommenced the slaughter. Large declines uncovered many margins. Brokers sold out speculators who couldn’t produce “mud” to cover their margins, precipita
ting larger declines and another round of uncovered margins, a repeating, reinforcing cycle as the failure to procure more mud precipitated the sacrifice of another round of stocks “owned” on exposed margins. Continuing declines assailed the market through the last days of January.
Nor had they yet had the worst of it. The “whole bottom” fell out of the market in the first week of February. Calls for “more mud” went unheeded, and margin holders had their stocks swept away by the steep declines “like leaves from trees in autumn.”
The beautiful bubble disintegrated into mist, leaving but a few gleaming shards and a bitter wasteland of disappointment. The final slaughter came in early February. Ophir fell to $64, Con. Virginia to $385, and California to $50, which wasn’t as utterly horrible as it appeared since the mine had split its stock five shares new for every one share old, but represented a still painful value of $250 old shares. Six weeks before, people who’d bet their savings on the Comstock were “rolling in imaginary wealth.” By the end of the first week of February, they were “sparring for a square meal.”
The market bounced on the bedrock in mid-February. The Mining & Scientific Press considered the worst feature of the catastrophe to be that “in the majority of instances, the losers [were] people of small means.” But not all. One of William Ralston’s earliest biographers claimed Ralston lost at least $2.5 million in the Ophir disaster, although considering that Ralston and Sharon operated in partnership in their stock dealings, it seems hard to credit one being harmed without the other. Six months later, a San Francisco Chronicle article reported the “rumor” that the bank crowd had been “badly hurt” by the tumble.
The Bonanza King Page 42