Grant H. Smith The History of the Comstock Lode 1850-1920, Geology and Mining Series No. 37, University of Nevada Bulletin: Reno, Nevada, vol. XXXVII. 1 July 1943, no. 3, (revised 1966), Ninth printing, 1980. 305 pp. 1870s, 1860s
[p. 52] "[William M.] Stewart was as able and diligent a United States Senator [from Nevada] as he had been as an attorney and was reelected [by the Nevada legislature] in 1869. One of his early accomplishments was to secure the passage of the first Federal Mining Act, known as "The Law of 1866." He was also the father of the later and more comprehensive mining law known as "The Law of 1872.". . . When his second term expired in 1874 he did not contest with [p. 53] Sharon for reelection, but turned to mining-in Bodie, in the Panamint Range, and elsewhere-always without a success . . .
" . . . .
[p. 137] Chapter XVI The Crown Point-Belcher Bonanza-The Gold to Silver Ratio-The Silver Question.
[p. 142] The Silver Question
[p. 142] "The great flow of gold from California in 1849 and 1850 alarmed the bankers of Europe. Holland and Belgium, in 1850, began to sell their gold and stock up with silver. Other nations followed, especially after the great gold discoveries in Australia, beginning in 1851, and silver rose in price throughout the world. The countries of Europe, with the exception of Great Britain and France, were practically on a silver basis until 1871 when [p. 143] Germany adopted the gold standard after receiving a large amount of gold from France in payment of the war indemnity. Japan and the United States demonetized silver in 1873, and Denmark, Sweden, Norway, France and Holland soon followed. All of those countries threw quantities of silver upon the market, with a resultant decline in price.
" . . .
[p. 58] Chapter VII The Panic of 1865-Comstock Production and Profits from 1859 to 1866-Stock Devilment.
" . . .
[p. 62] "Owing to those unfortunate conditions, and to the vast amount of development work done below the 1,000-foot levels, only five companies, the Con. Virginia, the California, the Kentuck, the Crown Point, and the Belcher eventually paid more in dividends than they collected in assessments. Not less than $50,000,000 was spent in deep mining from 1872 to 1886, when the last pumping shaft, the Combination, closed down.
" . . .
[p. 71] Chapter IX The Comstock Lode-The One-Ledge Theory Prevails-The Ore Bodies
" . . .
[p. 75] The Ore Bodies
[p. 75] ". . . The only great ore body lying on the normal footwall was the Crown Point-Belcher bonanza, which extended on the dip of the Lode from the 1,000 to the 1,600-foot levels . . .
" . . . Von Richthofen . . . was in error in assuming the ore would be of lower grade and that the recurrence of rich bonanzas like the Ophir and the Gould and Curry must not be expected. The Crown Point and Con. Virginia bonanzas were giants by comparison. They produced one half of the total production of the Lode and paid four fifths of all the dividends.
" . . .
[p. 107] Chapter XII The Sutro Tunnel
" . . .
[p. 111] ". . . The [Sutro] tunnel was all but closed down toward the end of 1870; . . . The Crown Point discovery at the end of that year saved the tunnel as well as the Comstock; now there was no denying that great ore bodies were to be found below the 1000-foot level.
" . . .
"In 1873, after the Crown-Point-Belcher bonanza was yielding millions and the Con. Virginia bonanza had been discovered, Sutro went to London and persuaded McCalmont Brothers & Co. to float a bond issue of $7,500,00 to complete the tunnel.
" . . .
[p. 112] "Sutro became a candidate for the United States Senate from Nevada in every election for that office from 1872 to 1880 and did not receive a vote before any of the legislatures, although the money bags of the various candidates were untied. Tom Fitch was recalled by Sharon to make speeches in his behalf in the campaign of 1874. Fitch abused and ridiculed Sutro as only he could. His closing address, delivered in the Opera House on Octover 23, 1874, was a great oration, interlarded with poetry, historical references and flights into the blue. It fills six closely printed columns of the Enterprise of October 24, under the heading "Sutro Annihilated-His Contracts All Violated-His Robberies Exposed."
" . . .
"[Footnote: Fitch was irrepressible. When a Republican convention failed to nominate him for Congress, he rose and said: "Gentlemen: from the bottom of my heart I can now sympathize with Lazarus-I too have been licked by dogs."]
" . . .
[p. 116] Chapter XIII The Hale & Norcross Venture of Mackay, Fair, Flood, and O'Brien in 1869-They Join the Water Company Which Brings Water from the Sierras
" . . .
[p. 120] ". . . The recent discovery of the Crown Point bonanza led men to believe that other great ore bodies would be found below, and Mackay and his associates decided to try to find one in the Con. Virginia, which had been a failure. That story will be told after the Crown Point bonanza.
" . . .
[p. 120] The Virginia and Gold Hill Water Company
[p. 120] ". . . in the fall of 1869, the new firm bought Sharon's interest in the Virginia and Gold Hill Water Company . . . the [Comstock] camp . . . was then in the midst of a depression. Fortunately, the Lode took on new life following the discovery of the Crown Point-Belcher bonanza at the end of 1870, and the energetic owners of the Water Company dared attack the great problem of bringing a new supply from the tops of the Sierras. . . [p. 121] the water was turned into the pipe, July 29, 1873 . . . August 8, the (water) flow came on again uninterrupted.
" . . .
[p. 126] Chapter XV The Gloomy Year of 1870-The Crown Point Revival in 1871-The Boom of 1872-Sharon-Jones Contest for Senate
[p. 130] "It has been estimated that the Comstock profits of Ralston, Sharon and Mills amounted in all to about $20,000,000, although [p. 131] Ralston's speculations and widespread business enerprises broke him at the very summit of success. Sharon's biography says that "before the year 1875, the Union Mill and Mining Company had netted Mills over $2,000,000, and Ralston and Sharon over $4,000,000 each." Their other dividends and profits could not have been less than $10,000,000. Sharon said to George T. Marye, Sr., about 1874, that he, Sharon was the second richest man in California; his associate D.O. Mills being the first. [Footnote: The San Francisco Chronicle of January 4, 1875, boasting of the city's rich men, credits the following with fortunes of $5,000,000: "Lick, Latham, Sharon, Hayward, Reese, Mills, Baldwin, Lux, Miller, Jones, Ralston and Stanford." The wealth of some of these men is understated.] When Sarah Althea Hill sued Sharon for divorce, based on a marriage contract, in January 1884, after he had brought suit to have the alleged contract invalidated, she stated his fortune to be $15,000,000. His sworn answer denied that he was worth to exceed $5,000,000, which may be accepted as a coventional denial.]
"The Comstock knew only Sharon and hated him for his ruthless methods and dictatorial manner; yet he was cock-of-the-walk only on the Comstock. During all of the early years he was subordinate to Ralston and never made an important move without consulting him. After the Crown Point-Belcher bonanza had made them all rich beyond their dreams, Sharon became more independent and, when the Bank of California suspended on August 26, 1875, followed immediately by Ralston's tragic death, he took the lead, and, with the aid of sixty-three loyal citizens, restored the Bank's capital and reopened its doors within six weeks.
". . .
[p. 135] "Newly created Comstock millionaires, with the notable exception of Mackay, almost invariably aspired to a seat in the U.S. Senate, and the campaign of Jones in 1872, Sharon in 1874, and that of James G. Fair in 1880, were said to be characterized by "a saturnalia of corruption." [Footnote: Davis' History of Nevada, pp. 421-423 (1913). "The Battle of the Money Bags for Senatorial Honors," it is termed in Thompson & West History of Nevada, p. 92 (1881). Nevada was often characterized as "The Rotten Borough." Sutro was also a candidate, as he was in every senatorial election thereafter up to and including 1880; and each time he failed to receive a single vote in the Legislature.]
" . . .
[p. 137] Chapter XVI The Crown Point-Belcher Bonanza-The Gold to Silver Ratio-The Silver Question.
"From 1870 to 1878, when production practically ceased, the Belcher produced 684,000 tons, yielding $32,118,000, or $47 a ton, and paid $14,876,000 in dividends. Its greatest year was in 1873, when 154,664 tons yielded $10,525,000, or $69 a ton. The dividends that year totaled $6,760,000.
"During the same period, 1870-1878 the Crown Point produced 725,000 tons, yielding $25,877,000, or $35.70 a ton, and paid $10,740,000 in dividends. The mine was at its best during the year ending May 1, 1874, when 145,129 tons yielded $7,307,258, or $51.11 a ton, from which $5,300,000 was paid in dividends.
[p. 138] "That great ore body lasted only four years. By 1877 Belcher ore had fallen to $25 a ton; Crown Point to $18.44. There was [p. 139] no profit to the stockholders from such ore, as mining costs averaged $9.50 a ton and milling $11, in addition to a heavy burden of general expense, including that of deep mining.
[p. 139] "The Crown Point paid its last dividend in 1875 and the Belcher in 1876, and both began to levy assessments in excess of $400,000 a year in order to sink their shafts as rapidly as possible in the expectation of finding other ore bodies at greater depths. Again and again floods of hot water all but overcame them, and the difficulty of ventilating the steaming workings was almost as great. The huge pine pump rods broke repeatedly.
[No payable ore was ever found in either mine below the 1600-foot level.]
" . . .
[[p. 142] The Silver Question
[p. 143] "Silver sold at a premium from 1859 until demonetization in 1873, when it would no longer be coined free at $1.29 an ounce, 1/16 the value of gold. The market price was $1.36 an ounce in 1859, from which it declined slowly to $1.32 early in 1873, although the coinage value was $1.2929 an ounce. During 1873, when silver was demonitized, the average market price continued to decline until it reached $1 in 1886. After that the decline was rapid.
[p. 143] "The long and bitter struggle of the silverites to undo "The Crime of '73" and restore the white metal to its old-time parity of 16 to 1 with gold, was begun in 1876 and became a national issue with the defeat of Bryan for president on that platform twenty years later. Meantime, the Democrats, aided by western Senators, succeeded in passing the Bland-Allison bill in 1878, providing for the purchase in the open market and coinage of not less than 2,000,000 nor more than 4,000,000 ounces of silver per month. . . .
" . . .
[p. 207] Chapter XXI 1877: The Bonanza Terminates on the 1550 Level-Warring Brokers and Speculators-Hard Times in 1877-The Decline Begins
" . . .
[p. 208] Warring Brokers and Speculators
[p. 208] "There were three active stock exchanges in San Francisco during the flush '70s, each with a large membership. Able and daring men gravitated to them by instinct. They were the liveliest places on the Coast and the focus of public attention.
"The big speculators, like Sharon, Flood, Hayward, Jones and Skae had their favorite brokers, who in turn usually employed other brokers to buy and sell on the exchanges. These groups were almost constantly at war with one another. Other large dealers, "Lucky" Baldwin for example, played a lone hand against everybody.
" . . .
[p. 232] Chapter XXIII Life on the Comstock in the '70s-Comstock Millionaires-Notable Comstock Mine Superintendents.
[p. 232] "Life on the Comstock had always been full of interest and enjoyment, but the '70s overtopped all that had gone before. People were not only comfortably housed, a bountiful supply of water had been brought in from the tops of the Sierras, the streets were macadamized with refuse from the old mine dumps and lighted with gas, the city had railroad connections both east and west, people traveled far more than in earlier years, social life took on wider aspects, the Opera House presented a constant stream of dramatic productions . . .
" . . .
[p. 234] "The Comstock continued to be Mid-Victorian in dress and manners. To be a gentleman or a lady was the ideal. The good women were held in highest esteem, although more prominently in the life of the community than in earlier years. They even took a hand in politics when striving to bring about social reforms. Upon their insistence State laws were enacted prohibiting minors in saloons, and requiring gambling to be carried on behind closed doors. They labored for years to make gambling unlawful, without success.
"The men foregathered in the clubs and in the halls of the many fraternal and other organizations. Every military and volunteer fire company had its headquarters, the German their Turn Verein, and the Miners' Union its own hall and library. The various races had their gathering places.
[p. 234] "But it was the saloon that contributed most to the good fellowship of the camp. Nothing puts men upon a friendly footing more quickly than to drink together. Views were exchanged and not a little important business transacted at the bar. The reverse of that picture is the fact that heavy drinking was the curse of the Comstock. Some men drank as much as a quart of hard liquor a day, in many small drinks, and carried it off for years. The saloons were of all grades, like the population; from first-class places where the price of a drink or a cigar was a quarter, to the lowest dives. As a rule the various elements sought their own kind. Virginia City was the "good-time town" [p. 235] of the region. Men came from miles around after payday and contributed not a little to the sporting life-to which the many visitors from San Francisco added their share.
[p. 235] "The stock market was the nerve center of the region, and the reports from the San Francisco exchanges, which came morning and afternoon, invariably gathered crowds in front of the brokers' offices. Nearly everybody had stocks and all wanted to know how the market was going. Copies of the reports were posted at the heads of the shafts in the principal mines for the information of men coming off shift. . . .
" . . .
[p. 236] "The Comstock lived well. one looks back upon the '70s with some surprise at the time and thought given to food. Those who could afford it, and especially the men about town, lived on the fat of the land. The markets were well supplied as those in San Francisco, and the restaurants equally as good. Thick, juicy steaks and roast beef headed the list in popularity; men often ate steaks for breakfast. Oysters, Eastern and California, were almost a staple. Fish and game were abundant; trout from the Truckee and Lake Tahoe, caught by the Indians.
"All kinds of fish came from the Coast. Sagehens and ducks and grouse were Nevada products in season. California provided the quail, chickens, and turkeys. The restaurants often featured a large live sea turtle. Fruits of all kinds from California were items of daily fare, as well as an abundance of fresh vegetables. There was hardly any kind of food that could not be obtained, even to foreign delicacies. The bakeries were first class; only a few of the housewives baked their own bread. Milk from the insanitary dairies perhaps helped spread typhoid fever.
" . . .
[p. 237] Comstock Millionaires
[p. 237] "Comstock millionaires were far fewer than is generally supposed, and all were created in the '70s. In the early '60s, the Ophir and Gould & Curry bonanzas did not create a single millionaire. The fortunes of George Hearst, John O. Earl, Robert Morrow, A.E. Head, Andrew B. McCreery, and Charles N. Felton had their beginnings in the Gould & Curry and the Savage, although none of them acquired a million dollars there.
"The Crown Point-Belcher bonanza brought millions to John P. Jones, Alvinza Hayward, William Sharon, William C. Ralston, and D.O. Mills.
"The Con. Virginia bonanza created a longer list: John W. Mackay, James C. Flood, James G. Fair, William S. O'Brien, General Thomas J. Williams, David Bixler, Robert N. Graves, and Edward Barron.
E.J. "Lucky" Baldwin sold his stock in the Ophir to Sharon in November 1874 for $2,500,000. Robert Sherwood and Johnny Skae got rich during the "Sierra Nevada Deal." Sutro's wealth came from the sale of his stock in the Tunnel. Archie Borland and William M. Lent were miners and speculators, and incidently from mines and mills.
[p. 238] "Nearly all of these millionaires retained their wealth, in part at least. During stock excitements prospective millionaires in San Francisco and on the Comstock were as plentiful as blackberries, but the inevitable decline left them as poor as winter.
". . .
[p. 238] Notable Comstock Mine Superintendents 1859-1871 and 1871-1886
"Both Lists include: J.P. Jones-Kentuck; Crown Point.
" . . .
[p. 241] Chapter XXIV Miners' Wages and Hours-Heat and Ventilation-Giant Powder, Burleigh and Diamond Drills-Lumber and Firewood-The V Flume.
"Ten hours was a shift during all of the early years, but, as conditions underground became more intolerable, the hours of men working in such places were reduced to eight. In 1867 the constitution of the newly formed Miners' Union provided that all men working underground should receive $4 for an eight-hour shift. That rule was not enforced, it appears, but became uniform after John P. Jones, then candidate for the U.S. Senate, ordered that on and after April 1, 1872, the eight-hour day should apply to all men working underground in the Crown Point mine. The other mines, most of them were controlled by Sharon, who was also a candidate, quickly adopted the same rule, which thereafter prevailed on the Comstock. [p. 243] "The Miners' Union grew into a benevolent institution.
[Footnote: The Miners' Union had its own building and the largest general library in the State, 2,000 volumes.
"There were no ceremony attached to joining the Union. When this writer went to work in the mines he merely enrolled at the Secretary's office and received his card. On payday his dues were deducted from the check.
"The average wage paid to common miners in California in 1874 was $1.50 to $2 per day, says the Mining and Scientific Press of February 2, 1875, which prints a list of all sorts of employees. "No wonder the Comstock miners were the pick of the world."]
The mines would not permit any man to work underground who was not a member, and deducted the monthly dues of $2 from each man's pay. In return, the Union cared for sick and disabled miners, although the companies usually contributed. It was the custom when a man was killed for each miner to contribute a day's pay to the family.
[p. 243] "After the first few years the number of foreign-born miners increased steadily. Lord (pp. 383, 384) gives statistics for the year 1880: 1,996 miners, of whom 394 were Americans, 691 Irish, 543 English, 132 Canadians, and the rest from everywhere. The average age was 35, average weight 165 pounds, average height 5 feet 9 inches. The majority were married.
"Shinn overstates the standard of living enjoyed by the miners: "Every observer of the Comstock in its palmy days noted the universally high standard of living. Not only the necessaries, but the luxuries of life formed the daily fare of the miners." That is true of the unmarried miners who boarded at first-class restaurants, but this writer well remembers many hundreds of small homes in which there did not appear to be room for the large families of children. They lived well but simply.
"Death lurked eveywhere in those mines, but there was no fear, only constant watchfulness, coupled with an element of fatalism. At times one man was killed or fatally injured every week and one more or less seriously injured every day. Accidents were deemed risks of the employment, and it does not appear that the companies were sued for damages.
[p. 243] "The shafts were among the most dangerous places in the mines, notwithstanding skillful timbering and the perfection of hoisting machinery. Individual deaths from falling and otherwise were not infrequent, and more men were killed on the cages at one time than in any other accidents below. Three of the worst occurred within one year.
"On December 2, 1879, when 17 men were being hoisted in the Union Shaft, the engineer pulled the wrong lever, and the cage [p. 244] and the skip containing the men, instead of stopping at the collar of the shaft shot with lightning speed into the sheaves at the top of the 40-foot gallows frame, crushing the cage and spilling the men all over the floor of the hoist house. Two were killed outright and seven permanently injured. The escape of the others from death was little short of miraculous. Luckily none fell down the shaft.
" . . .
[p. 244] Heat and Ventilation
[p. 244] "The problem of ventilating the mine, that men might live and work, became as important as the extraction of the ore. Miles of drifts, crosscuts and raises were driven for no other purpose. The mines were connected on many of their lower levels chiefly to promote the circulation of air. The main shafts became the chief means of ventilation. An automatic circulation was created by the fact that some of them stood at higher elevations than others. Ten of the upper shafts were used as "upcasts," drawing the steaming fetid air from below, while six shafts, standing on a lower line, became "downcasts," carrying great volumes of fresh air to the lower levels. Clouds of steam rose constantly from the mouths of special shafts. Doors were placed at various points underground to regulate air currents. Revolving fans, called blowers, were installed in many places, driving the air forward or sucking it out, while air compressors supplied remote workings.
[p. 244] "Exposure to sharp changes in temperature was another danger [p. 245] when men were hoisted from stifling levels to perhaps a snow-storm on the surface.
[p. 245] "Miners commonly worked in temperatures ranging from 100 to 125 degrees, but observers agreed that owing to their superiority they accomplished as much as men in other camps working under normal conditions.
[p. 245] "No other mines in the world have encountered such heat and such floods of scalding water. The highest temperatures of any considerable quantity of water (170 degrees) was recorded by the flood on the 3,000-foot level of the New Yellow Jacket shaft in November 1880.
" . . .
[p. 245] " . . . Water at 150 to 167 degrees termperature will cook food, and men died from a brief submergence.
". . .
[p. 247] Lumber and Firewood-The V-Flume
[p. 247] The Sierra were devastated for a length of nearly 100 miles to provide the 600,000,000 feet of lumber that went into the Comstock mines, and the 2,000,000 cords of firewood consumed by mines and mills up to the year 1880. In the early days, after the piñon pines had been cut on the Virginia and Como Ranges, the supply came from convenient timber on the lower slopes adjacent to Washoe and Carson Valleys. Gradually the lumbermen worked up to the crest of the range, then over to the west side. The magnificent forests surrounding Lake Tahoe constituted the major supply for years. No later visitor could conceive of the majesty and beauty fed into the maws of those voracious sawmills.
"A large supply came also from the forests on either side of the Central Pacific Railroad after its construction, from what were known as Hobart's mills. The headwaters of the Carson River, 100 miles southward from the Central Pacific provided much of the firewood and some timber, which was floated down the river during the spring freshets.
"The great invention of the V-flume for conveying lumber and firewood down the mountainside was devised by J.W Haines, who was lumbering in Kingsbury Cañon, back of Genoa, in 1866. It occurred to him to float the lumber down, and he made a box-flume for that purpose. The following spring he devised the very simple V-flume by nailing two planks together on their lower edges in V-shape, as men had been doing for centuries in smaller form to carry water. Haines patented the invention in 1871 and brought suit against Sharon and associates for infringement. The court held, however, that the patent was invalid because the device had been in common use for two years prior to the filing of the application.
[p. 247] "These flumes, planed on the inside, half-filled with water, and [p. 247] on a fairly steep grade, carried a large quantity of lumber or firewood-as much as 500 cords of the latter in one day. When wood or lumber was thrown into the flume the water filled to the brim and the load floated free. A large number of such flumes, some of them many miles in length, were in use along the Sierras for years.
[p. 248] "The Bonanza Firm, in a quarrel with the Sharon interest over the price of lumber and firewood, bought a large tract of timber on the east slope of the mountains seven miles south of Steamboar Springs, built sawmills, constructed a V-flume 15 miles long, and supplied its own mines and mills. On the Comstock the lumber company was known as Mackay & Fair's. The Enterprise of March 31, 1875, reports that "Mackay & Fair's new wood flume at Huffakers on the Truckee Meadows will be completed about July 1." The net profits of that enterprise were only $645,030, but the effect was to reduce substantially the price of lumber and firewood.
"The correspondent of the New York Tribune, [September 16, 1875] told of a visit to the lumber mills and surroundings with Flood and Fair, and of a fearsome thirty-minute ride down the fifteen miles of flume in what was called a "boat," which consisted of two twenty-inch boards nailed together in V-shape to fit into the flume, closed at the back and open in front, with strips of board 2 1/2 feet long nailed across the top for seats. Part of the time the flume was near the ground, but much of it was on the top of high trestle-work in order to keep the flume as a fairly even grade. Water sprayed on them from front to back. There were nothing to cling to but the seat and nothing but the blue sky above. "Flood said he would not make that tripa again for all the silver and gold in the Consolidated Virginia."
" . . .
[p. 249] Chapter XXV Fire in the Stopes-Low-Grade Operations in the Bonanza Mines-The Comstock Milling Monopoly-The Last Washoe Process Mill-Losses in Tailings-Tailings Reworked
[p. 253] The Comstock Milling Monopoly
[p. 253] "The costly and unprofitable mills of the Ophir, the Gould & Curry, the Savage, and the Mexican during the early '60s caused these mines to send much of their lower-grade ore to custom mills. But those mills ran into debt during the lean years, chiefly to the Bank of California. When the time was ripe Sharon's Union Milling Company took them over and a new system was created whereby the productive mines ceased to own their own mills, except in small part, and had their ores reduced in mills belonging to the men in control of the mines. [p. 253] Thereafter, throughout the later history of the Comstock, the example set by Sharon was followed by Jones and by the Bonanza Firm, who controlled the producing mines which were not in Sharon's hands. The latter's milling rates were excessive as a rule, while those of Jones and the Bonanza Firm were moderate. Sharon and Jones, however, were not content to take their toll from profitable ore; when that failed they milled over 700,000 tons of low-grade ore during the '80s and '90s for the sole advantage of their mills. "Everything is arranged to suit the mills," wrote a correspondent. "The abuses are notorious, yet the local papers say nothing. Poor ore is mixed with good ore to increase the tonnage to the mills and there is little or no check on the sampling. Until the same respect is paid for mine stockholders as is now given to the mill stockholders your readers can expect no dividends from the Comstock mines."
[p. 253] "The system of milling ores in the private mills of insiders came to be regarded as a matter of course, if not of right, not only by the participants but by the general public although after the San Francisco Chronicle and Dewey began their attacks there was widespread public criticism. Sharon and Jones took the precaution to have the names of others appear as trustees of their mines and their private milling companies, while Mackay and his associates acted openly and became members of the boards of their concerns.
[p. 253] "The Bonanza Firm adopted the system when it took control of the Hale & Norcross in 1869. Mackay and Fair had two idle mills at the time, which they wanted to put in operation. Additional mills were acquired as more ore was developed, and, when that mine began to fail, the Firm took a gamble on the Con. Virginia, partly in the hope of finding some low-grade ore in the old upper workings for their idle mills That hope was not realized, but [p. 253] the lucky discovery of ore of moderate grade on the 1200 level soon put their mills to work. As the bonanza developed more mills were built or purchased, with the result that all of the bonanza ores were worked by the Firm, chiefly in large low-cost mills.
[p. 254] "The charges for the high-grade ore was so moderate and the recovery so satisfactory that a court, under the rule adopted in the Hale & Nircross case, would have held the contracts reasonable. Nevertheless, the point remains that large profits would have been paid to the stockholders in dividends if the companies had owned their own mills, in which case the firm, as the largest stockholder, would have received not less than one half of such dividends. [Footnote: It may be said that the milling system was merely the exercise of a questionable official prerogative when compared with the iniquitous practice of the railroads in granting secret "rebates" and "drawbacks" to the Standard Oil and other favored shippers in the '60s and '70s, as set forth in Mark Sullivan's Our Times, 1900-1925, Vol. 2, pp. 284-292. The latter "system," he says, was "characteristic of the current philosophy," and "in this state of business ethics of the time lies the chief justification of Rockefeller and his associates in the South Improvement Company."]
[p. 254] "We have an exact statement of those profits in a private memorandum made by J. Minor Taylor, the efficient office manager in Virginia City, to Messrs. Flood and Fair on September 11, 1881, which turned up in the Mackay and Fair files at the Mackay School of Mines. Taylor explains in detail the milling accounts from 1873 to the date of his report, which shows a net profit of $9,070,726.47. Fair was withdrawing from the Firm and they were having a settlement among themselves of the affairs of the Pacific Mine & Milling Company, which had carried on their milling business. Fair wrote back concerning some small items, which Taylor explained in a letter dated September 28. The expense for quicksilver is enormous, and the construction account is charged with $2,260,387.50.
[p. 254] "As they had milled 809,275 tons from the Con. Virginia, 589,196 tons from the California, and 83,836 tons from the Ophir, Union and Sierra Nevada-1,482,307 tons in all-the net profit, including milling and the recovery from tailings, was $6.12 a ton. [footnote: The average milling charge paid by the Con. Virginia was $12 a ton, that of the California, which came into production later, averaged $11.]
[p. 254] "Mackay gave close attention to the mills, which were efficiently managed by D.B. Lyman, one of the ablest millmen on the Comstock. Fair, who was not given to praise, but always to exaggeration, said Lyman, was the only honest millman on the Lode.
[p. 255] "The values left in the tailings have been misrepresented and misunderstood, owing to the Comstock method of reporting mill returns. . . . [There was] high recovery on ore of that grade.
[p. 255] " . . .
[p. 255] "Mackay testified in the Hale & Norcross case in 1892, in which he had no interest, that he had sold a large quantity of bonanza tailings at $5 a ton. He never could be convinced that a stockholder had a right to complain of a milling charge so long as it was reasonable and a proper recovery made. Despite the earlier Dewey suits and criticisms, he again milled the low-grade ores extracted fro the bonanza stopes from 1885 to 1895, in association with James L. Flood and J.P. Jones. Mackay's idea that a director has the right to deal with his compay if the contract was fair is now the law in California, by an Act passed in 1933.
[p. 255] "Lord enters into an elaborate discussion of the Comstock milling system with especial reference to the Bonanza Firm, which includes: "If the managers had the lion's share of the profits, they had also the lion's share of the risk and labor. These facts should be bourne in mind in any fair criticism or censure of their conduct as trustees."
" . . .
[p. 291] Appendix Table of Production of Comstock Mines from 1859 to January 1, 1882. Notes on Table. Comstock Production and Profits from 1859 to 1882. Table of Production of the Comstock Mines from 1882 to 1919, Inclusive.
[p. 293] Crown Point (1864-1878) 842,552 tons; $29,814,507 yield; $35.39 yield per ton; $11,588,000 dividends; $2,623,370 assessments; last dividend, 1875
[p. 294] Notes on Comstock Production from 1859 to 1920
[p. 294] "The foregoing statement of the production of the Comstock mines is as close an estimate as can be made. The production during the '60s and '70s is fairly dependable . . .
" . . .
[p. 295] "The production up to 1871 was approximately 60 percent silver and 40 percent gold. Thereafter the Crown Point and Con. Virginia bonanza changed that by returning a slight excess in favor of gold. After 1880, silver fell rapidly in value and the total value production of the Comstock may be stated at 55 percent silver and 45 percent gold.
" . . .
[p. 295] Comstock Production and Profits from 1859 to 1882.
[p. 295] " . . .
". . . [estimates based on] the sale value which increases the yield of the bonanza mines and of the Crown Point and of the Belcher by about $10,000,000.
". . .[estimates of the value of recovery from tailings] "worked by various private mills" ought to be $23,765.000 . . . The Bonanza Firm alone produced about $12,000,000 from tailings, up to 1881, and Sharon and Jones as much more.
[p. 296] " . . .
"Lord's estimate of private profits is $2,000,000, whereas the Bonanza Firm alone made $9.070,728 from milling contracts, including profits from tailings and Sharon and associates, and Jones and associates in like manner, gathered in an additional $10,000,000. (It was not considered "good form" at that time to refer to private profits.) The total of private profits was not less than $20,000,000. Expenditures by nonboard companies (referred to as "private companies"), and by individuals, from which no returns were had, may be placed at $11,000,000.
" . . .