412      THE HISTORY OF NEVADA

CHAPTER XVIII.

BY SAM P. DAVIS.

            After the first rush to the Comstock, miners found themselves with accumulations of rich ore and no machinery at hand to extract the values. To meet the demand the "patios process" was first utilized. It was the most primitive of methods. The ore was placed in a pit and crushed beneath the feet of a drove of mules. Where ore ran into the thousands the miners felt that they could not wait for machinery, and it is said that in some instances the hoofs of the poor animals were worn almost to the fetlock stamping the ore to a pulp preparatory to having it treated with quicksilver. The charge for this work was $20 a ton as an average, but at times it went higher, depending somewhat upon the richness of the ore and the anxiety of the owner to convert it into money.

            Next came the Mexican arastra, with a stone dragged over the ore to crush it, and later the large, heavy wheel moved round in a circular box containing the ore, which was crushed beneath the wheel. The profits in treating ore were enormous, and presently mills sprang up on the Comstock on all sides and several earned as high as $1,000 a day net profit.

            The scarcity of reduction works and the high prices paid for crushing ore, in the early days on the lode, tempted many men of moderate fortune to build what were known as custom mills—that is, independently of any ownership or control of mines, but to do work for such mining companies as might choose to patronize them. Owing to the excessive cost of nearly everything, most of these parties had exhausted their means before the mills were completed and were forced to borrow. From the time of the establishment of its agency in Virginia City, in 1863, the Bank of California had stood ready to accommodate them, at a high rate of interest, to an amount of from one-sixth to one-tenth of the value of the property. There does not appear to have been any ulterior motive in these loans at

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the start. It was strictly in the line of legitimate banking business, with a view to developing the mining industry.

            But this innocent and benevolent phase of affairs was soon changed. The extraordinary decline of the ore yield in 1865-6 brought most of the independent mill owners to hard straits, and the bank began foreclosing and taking in the mills at the mortgage rate. At a first glance it may look as if the bank was getting the worst of it by being compelled to take over a lot of non-paying properties ; but there is a vast difference between ownership without a pull and ownership with a dead sure one. And there is where the iniquity began. If the scheme had not been thought of before, the acquisition of these mills suggested a plan by which the whole Comstock lode could be squeezed like a lemon. The operation was not to be for the benefit of the stockholders in general, but only for those who became familiarly known as the Bank Ring. Early in 1867, the Union Mill and Mining Company was incorporated to relieve the Bank of California, at cost, of the seven mills which had fallen into its hands up to that date. The charter members were D. O. Mills, William Sharon, W. C. Ralston, Alvinza Hayward, Thomas Sunderland, Charles Bonner, Thomas Bell and William E. Barron.

            Perhaps others were interested, but if so it was unnecessary, for that list represented the control of the Bank of California, and the bank at that time practically controlled every producing mine on the Comstock. The working of the scheme can readily be inferred. The seven mills of the new company were fed to their utmost capacity while the outside mills were starved. Independent mill owners offered to reduce ore and return as high a percentage of its assay value at one-half the price charged by the company, but not a pound of rock could they get to crush. So inexorably was this policy pursued that within two years ten more mills fell into the hands of the cormorant company at a mere fraction of their cost.

            But the freezing out of independent mill owners was not the greatest wrong of which the Union Mill and Mining Company was guilty. At times, and especially as the number increased, the company found it difficult to get enough pay ore to keep all its mills running. Then the plant superintendents of the mines under its control were instructed to mix waste rock with the ore, and to such an extent was this method practised that some of the largest and richest deposits were exhausted without ever paying more than the expense of mining and milling, and in some cases the stock-

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holders were actually assessed to make up the deficit in working a body of rich ore.

            In addition to this deliberate robbery, the power to thus regulate the net yield of mines was used as a means to milk the stock market. A showing would be made sufficiently promising to key up prices and tempt investors, and then down would go the returns, and purchasers would be caught as in a trap. Everybody was at the mercy of the unscrupulous combine. So powerful was it and so complete its hold upon the Comstock that people despaired of ever escaping from its relentless grasp. Yet, thanks to a few bold insurgents, this monster monopoly in a few years went to pieces like a house of cards.

            The insurgents were men comparatively unknown at the outset, but their names became familiar enough before long, John W. Mackay and James G. Fair were the first to raise the standard of revolt. They had been on the Comstock since 1860, and knew the lode from one end to the other. After working for some years as a common miner, Mackay had become superintendent of the Caledonia and afterwards of the Bullion mine, while Fair was given the superintendency of the Ophir in 1866. By a code of courtesy always recognized on the Comstock, the superintendent of a mine was allowed access to any other mine he might desire to inspect.

            Availing themselves of this privilege, Fair and Mackay kept close watch of the progress of mining affairs all along the lode, and particularly of the development of an ore body in the Hale and Norcross. So satisfied were they of its value that they determined to gain control of the mine. But they could raise only $160,000 between them—Mackay $120,000 and Fair $40,000. To get more capital, as well as assistance in handling the market end of the project, they laid the plan before two old friends—James C. Flood and William S. O'Brien—who were keeping the Auction Lunch saloon in San Francisco. Flood and O'Brien thought favorably of the venture and put all the money they had—$60,000—into it. Thus, with a combined capital of only $220,000, but which was soon to swell to almost as many millions, these first obscure insurgents went up against the giant Union Mill and Mining Company.

            Their first attempt to secure control of Hale and Norcross, in 1868, did not succeed, though they came so close to winning that the Bank Ring was forced to pay $7,100 a share for the few outstanding shares that decided the contest. But they held to their purpose, and when in a few months

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the stock fell to the neighborhood of $40, they picked enough of it up to ensure their success at the next election. At a meeting of stockholders in 1869, after Mackay's party had elected its board of trustees, Sharon walked over to where he was sitting, congratulated him, and then said, patronizingly:

            "Of course, Mackay, all you care about is the glory of winning the fight. You don't know anything about managing a big mine, and you have no facilities for working the ore. We are willing to take all the trouble off your hands and keep right on with the management."

            Mackay thanked him, but said he would try to learn what he didn't know about running a mine, and that he thought the new management could get along without help. And it did. A pending assessment was rescinded, and the Hale and Norcross straightway began paying dividends, which were continued until the ore body was worked out.

            That was the first thrust at the Union Mill and Mining Company. It was annoying and provoking, but the Bank Ring seemed to regard it as an impertinence rather than a menace, and went right along on its high handed way, little dreaming that it should eventually receive a fatal stroke from the same quarter.

            The next was a harder hit—treacherously dealt, it was claimed, by one of its own members. Crown Point had been one of the best yielding mines on the lead, but with the walling-up of nearly all that remained of the ore body to confine the great fire of 1869, its productiveness came to an end, and in the course of a year the stock fell to as low as $2 a share, and was a drug on the market at that. In 1870 a slight prospect was struck on a lower level. It disclosed itself with an exasperating irregularity, presenting a promising appearance one week and almost vanishing the next. But John P. Jones, the superintendent, felt an unfaltering faith in it. He had no money himself, but he had what was just as good —a fast friend who was a moneyed man. Alvinza Hayward, whom he succeeded in inspiring with his own enthusiasm regarding the prospective development and inducing him to buy the stock on joint account. Hayward picked up nearly 5,000 shares at an average of about $5, and as the stock began to soar he bought 1,000 more shares from Charley Low at from $90 to $180. This was in May, 1871. The company election was near at hand. There were but 12,000 shares in the mine, and it was known that Hayward already had nearly one-half of the stock.

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            Sharon, as the representative of the Union Mill and Mining Company, had 4,100 shares, and it was up to him to decide whether a fight should be made for enough more to control the election. Bitterness of feeling, engendered by Hayward's course, turned the scale. Thinking the chances were that the development would not prove so very great or rich after all, Sharon resolved to break Hayward's back by unloading the 4,100 shares of stock on him at a high figure ; so he offered them to him for $1,400,000—a little over $340 a share—and to his surprise Hayward at once accepted and drew a check for the amount.

            It wasn't merely that the ore body developed in Crown Point was so big and high grade as to send the stock to $1,825 a share that proved to Sharon and his associates the folly of having sacrificed their stock and lost control of the mine without a contest. Instead of breaking Hayward's back, their false step had gone a long way toward breaking their own; for from that development sprang a formidable rival, the Nevada Mill and Mining Company, while the prestige of it temporarily sidetracked Sharon's political aspirations and sent John P. Jones to the United States Senate.

            But the stroke which should forever destroy the power of the Union Mill and Mining Company and leave scarcely more than a memory of it on the Comstock was yet to come. With the exception of two or three tunnels that pierced the lode at barren points, the ground between the Ophir and the Gould and Curry had for many years lain unprospected.  In 1867 the Virginia Consolidated Mining Company was organized by the Bank Ring and acquired that part of it known as the White and Murphy and the Dick Sides claims. The work of sinking a shaft and prospecting the different levels was carried on for several years without disclosing anything but a few scattered seams of ore. The stock, of which there were only 10,800 shares, dropped as low as $2 in 1871. So discouraging was the outlook that the management became careless of its tenure, and Fair, Mackay, Flood and O'Brien quietly obtained control of the mine.

            The members of the Union Mill and Mining Company did not regard it as much of a loss at the time, but when the big bonanza was struck soon afterwards they discovered too late that they had not only thrown away the richest prize ever found on the Comstock, but had lost the mastery of the lode and become a third-rate power, for thereafter it was only by the tolerance of the two great insurgent combinations that they were able to retain control of any mine.