Mining Tycoons in the Age of Empire, 1870–1945

Entrepreneurship, High Finance, Politics and Territorial Expansion

Raymond E. Dumett

• Publisher: Routledge
• Year: 2016
• Print ISBN:
  9780754663034
• eBook ISBN:
  9781351917322
• Topic: History
• Subtopic: World History
• Index: History

The years of the late nineteenth and early twentieth centuries, aptly described by Mark Twain as the 'Gilded Age' witnessed an unprecedented level of technological change, material excess, untrammled pursuit of profit and imperial expansion. Within this dynamic and often ruthless environment many colorful characters strode across the world stage, among them the great mining tycoons, who with the thousands of prospectors, diggers, shift bosses, timbermen, 'blastmen' and 'muckers' in mining enterprise constituted one of the major spearheads of global capitalistic expansion and colonial exploitation. This volume, which carries the epic story to the mid-twentieth century provides a truly international perspective on the role of mining entrepreneurs, investors and engineers in shaping the economic and political map of the globe, in testing management techniques and in setting a vogue for extravagant displays of wealth among the world's rich. Each chapter is loosely focussed on a biographical account of a particular mining tycoon that allows for broad and comparative accounts to be made about the individuals, their business interests, the technologies they employed and the national and international political considerations under which they operated. Furthermore, this structure also allows for consideration of the effect that these tycoons had on the countries and territories in which they worked, particularly the often long-lasting impact on indigenous populations, the environment, transport links and economic development. By approaching the subject matter through this stimulating mix of cultural, social, economic, business and colonial history, many intriguing and thought provoking conclusions are reached that will reward any scholars with an interest late nineteenth and early twentieth century history.

1
The Rise and Fall of Horace Tabor, “Colorado’s Silver King”

Figure 1.1 Portrait of Horace Tabor (Property of Duane A. Smith)

Duane A. Smith

For the greater part of the second half of the nineteenth century, Colorado reigned as the pre-eminent mining area in the Rocky Mountain region of the American West. Spaniards were the first Europeans to cross into this area north of the Rio Grande, and Coronado searching for the fabled “Seven Cities of Cibola” was the first, but not the last, to seek gold. Some Spaniards mined there in the eighteenth century. In the early nineteenth-century history of the United States the region was associated with the names of several explorers, including Zebulon Pike, who, assigned to map sections of the Louisiana Purchase, traced the Arkansas River into Colorado (1806), and reported gold being found. Major Stephen Long explored the valleys of the South Platte and the Arkansas rivers and branded this as part of the “Great American Desert,” unsuited for European settlement. During the late 1820s and 1830s several forts and trading posts, used by “mountain men” in the fur trade with the Indians, were built along the Arkansas and Platte Rivers. And in the early 1840s the first covered wagons carrying settlers overland via South Pass to the Pacific Coast began to pass near the region.¹

Rumors of mining riches in Colorado had circulated in the eastern United States as early as Pike’s report, but these led to nothing until 1858, when prospecting parties arrived in the Pike’s Peak area. The Pike’s Peak gold rush of 1859, which is said to have attracted more than 100,000 from the East Coast and Midwest,² turned Colorado into the major Rocky Mountain mining territory. Mining camps, supply towns, mines, farms, and wagon roads soon marked the advance of colonization. But this mineral boom, like most others in history, was accompanied by much unprofitable hard work, failed hopes, and suffering.³

The boom turned bust within two years and large numbers of unsuccessful miners returned East to their original homes or journeyed on to other Rocky Mountain mining districts. For nearly two decades the region struggled to find rich investors and to develop successful mining, milling, and smelting methods, along with better transportation.⁴ Politically, Colorado was first organized under the provisional title of “Jefferson” in 1858, but became a territory in its own right in 1861. The creation of new settlements resulting from mining, farming, and improved transportation played a part in the movement towards statehood, but the process was long and tortuous. One of the early territorial governors, John Evans, tried to get the first transcontinental railway to pass through Denver, but this effort failed, as the directors of the Union Pacific preferred the easier and flatter route to the north through Wyoming. Evans was successful in getting a branch connection between the transcontinental line and Denver, but railways south and west to the mountainous mining districts were slower in coming.⁵

Mining also impacted Colorado politics. After earlier failures, in 1867, the Republican party, which, over the years, was closely allied with major Colorado mining interests, again put forward a bill for statehood in the U.S. Congress; but President Andrew Johnson vetoed the bill, ostensibly because the population of Colorado was not yet large enough, but largely because the Colorado delegation to Congress opposed his more lenient Reconstruction policy for the defeated South after the Civil War.⁶ It took another nine years before these and other problems were finally overcome, and the territory became the “Centennial State” in 1876.

In the years that followed, as the century drew to a close, almost all of Colorado’s governors and United States senators, as well as many other elected officials, were mining men. As the price of silver declined, as shall be seen, it became the major state political issue of the 1880s and 1890s. Mining did more than launch political careers. The development of agriculture, the transportation network, and urbanization all followed mining. Unlike earlier slow-growing agricultural settlement, mining’s rushes produced instant urbanization with its camps and towns. Colorado and mining were locked together.

Silver Discoveries and the Rise of Horace Tabor

Horace Tabor (1830–99) was originally a stone cutter from the State of Vermont, who in 1855 at the age of 24 migrated west to Kansas to take up a new life as a homesteader and farmer. But finding that farming was relatively unremunerative, he like many of his contemporaries made the risky decision to seek more rapid wealth in the Pike’s Peak gold stampede of 1859. Unlike them, he and his hardworking wife Augusta were determined to make a go of it in Colorado and so decided to stay on as a general store merchant and postmaster in Oro City in the heart of the Rockies, where placer gold mining prospered in California Gulch in 1860. The next year, Tabor migrated across the mountains to a booming district and camp, Buckskin Joe, then back to Oro City in 1868. Horace, always the merchant and mining man, was worth, by 1876, approximately $15,000. Of “Oro City’s most prominent merchant”, an agent of R.G. Dun of New York went on to observe “[he] is a very shrewd businessman and not liable to lose money, has a good chance to make money as he has no competition.”⁷ Both man and wife were regarded as honest and hard working citizens in a rough frontier environment.⁸ Tabor’s was no lucky rags-to-riches story.

Still, this district in central Colorado in the heart of the Continental Divide remained an economic backwater until 1877–78, when a metallurgist, Alvinius Woods, found that the local sands in California Gulch and some nearby hills were made up of carbonate of lead with an unusually high silver content.⁹ The news spread rapidly and within the year thousands of prospectors were pouring into the area. A new town, not far from Oro City, named “Leadville,” sprung up near the mines. With its location at 10,200 feet above sea level and surrounded by high peaks, Leadville became the highest incorporated community in the United States. As early as January 1878, just before the first large silver discovery, the community set up a town government and elected Tabor, with his reputation for honesty and fair dealing, as the first mayor. Leadville gained over 10,000 miners and others in less than a year. From a mere hamlet of about 200 in 1877, Leadville mushroomed by leaps and bounds to become Colorado’s second largest town, with a population of an estimated 20,000 at the height of the mining boom.¹⁰ All seemed wonderful, but trouble was brewing.

Bimetallism and its Relation to Silver Mining

The United States became one of the world’s largest silver producers about 1860. And it remained second among the producing nations of the world for the next forty years. But a problem emerged: the United States stopped coining the silver dollar in 1873 which led, along with increased silver production, to a decline in the metal’s price. The famous Bland-Allison Act of 1878 again legalized the coinage of a set quantity of silver per month as a means of propping up the price of the metal. It did not, however, give the silver interests the other thing they wanted, a guaranteed price of $1.25 per ounce. With gold established at $20 per ounce, this bought forth the emotional cry of “16–1,”or sixteen ounces of silver equaling one ounce of gold.

Internationally, the Americans led the way in the movement towards acceptance of silver as a currency, but, despite an evenly matched international debate, pro and con, and a number of publicized conferences over the next twenty years, it proved difficult to get all the major monetary powers of the world to agree on a worldwide “bimetallic standard.”¹¹ It is only against this background of direct federal government subsidization that we can fully understand the rise of silver mining as a major U.S. industry during these decades.

From Merchant to Mining Man to Millionaire

Certainly, good luck, as well as perseverance and hard work, played a part in Horace Tabor’s rise to wealth and fame. While building up a solid income from his general store, he had long been on the lookout for a good mining property, and he had “grubstaked” dozens of prospectors over the years without success. Shortly after his election as mayor, he provided a grubstake worth a rumored $24.00 to two inexperienced German prospectors, George Hook and August Rische, both of whom were shoemakers by profession. That grubstake of food and supplies resulted in the “Little Pittsburg” discovery on Fryer Hill, the first rich Leadville silver mine. Soon Tabor’s fortune and fame took wing. The Little Pittsburg quickly was producing $20,000 worth of silver ore per week. Tabor and Rische then purchased Hook’s interest in the mine for $100,000.

After a year Tabor, having already earned over half a million dollars on his original grubstake, decided to sell his interests in the mine for $1 million to two Denver financiers, David Moffat and Jerome Chaffee, who amalgamated the Little Pittsburg with other nearby mineral bearing properties to create a new company, in which Tabor held founder’s shares. When the value of these shares ascended from $5 to $30, Tabor earned another one million dollars.¹² Within one year he was a millionaire more than twice over. There was as yet no railroad to Leadville. It is difficult to imagine how the heavy and complex metal parts required for the installation of deep depth mining and smelting machinery could have been transported up narrow and circuitous rocky mountain roads in wagons pulled by mule trains. Such, though, were the profit-making attractions of a silver bonanza. Stagecoach lines and freighting companies appeared on the scene almost with the first prospectors. The booming mining camp evolved into a boom mining town almost over night.

Tabor’s Early Partners and Investing Allies

What we see here is Tabor’s early recognition of the need to widen his circle of business associates in order to bring large-scale investors into Leadville. Tabor had attracted two of Colorado’s best mining promoters and financiers in the Denver banker David Moffat and ex-senator Jerome Chaffee. Chaffee probably knew the intrigues of the mining game as well as any man, having been speculating in Colorado mineral lands since the 1860s. The continuing relationship with Moffat and Chaffee gave Tabor the additional support and entrée he needed for access to outside investors and capital. As in many another mining rush, legal trouble would develop with competing neighboring mining claim holders. (For often at deeper levels, the deep exploration of one mining company penetrated into or under the tracts of surface land controlled by another.) But in a sequence of complicated moves, Tabor and his allies avoided time-consuming and costly lawsuits with these rivals through a series of strategic land purchases and sales. The result was the Little Pittsburg Consolidated Mining Company, incorporated by Moffat, Chaffee, and Tabor at $10 million.¹³ For about seven successive months in 1879 the mine paid out $100,000 a month in dividends to shareholders. The partners controlled what was proclaimed as a true bonanza mine.¹⁴

The years 1878 and 1879 were the turning points for Horace Tabor and for Leadville. Leadville replaced Nevada’s Comstock as America’s most exciting silver mining district, and during its heyday, it ranked as one of the two or three most important mining towns in the United States. Leadville did not have to undergo a costly period of experimentation. Thanks to the foresight of two metallurgists, August Meyer and James Grant, both trained at the German University of Freiberg, several refining smelters were already in place when silver mining began in 1877–78. Despite the fact that no railroad to Leadville had yet been built, Leadville mines were at the forefront in the introduction of some of the latest mining machinery and technology to the Rocky Mountain West.¹⁵ And because its silver ores (replacement deposits in limestone) were comparatively easy to reduce, its smelting industry also moved forward in effective production methods quite...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Table of Contents
• List of Maps
• List of Figures
• Notes on Contributors
• Modern Economic and Social History Series General Editor’s Preface
• 1 The Rise and Fall of Horace Tabor, “Colorado’s Silver King”
• 2 Edwin Cade and Frederick Gordon: British Imperialism and the Foundations of the Ashanti Goldfields Corporation, West Africa
• 3 Cecil Rhodes, De Beers and Mining Finance in South Africa: The Business of Entrepreneurship and Imperialism
• 4 John T. North, the Nitrate King, and Chile’s Lost Future1
• 5 Whitaker Wright, Speculative Finance, and the London Mining Boom of the 1890s
• 6 Frank Morrill Murphy, 1854–1917: Mining and Railroad Mogul and Developer of the American Southwest
• 7 Claude Albo de Bernales—‘Wizard’ of Australia’s Golden West1
• 8 Copper Kings of the Americas— The Guggenheim Brothers
• 9 Alfred Chester Beatty: Mining Engineer, Financier, and Entrepreneur, 1898–1950
• Select Bibliography
• Index of Subjects
• Index of Persons
• Modern Economic and Social History Series