Last week I spent some time exploring the Black Hills of South
Dakota, an absolutely beautiful part of the country. But aside
from the magnificent vistas, and national monuments such as
Mount Rushmore, the Black Hills region is also significant for its
role in the history of gold. More specifically, the town of Lead
(pronounced “Leed”) is the home of the oldest continuously
operating gold mine in the world, the Homestake mine. What
then evolved into the Homestake Mining Company is equally
important in the annals of Wall Street because Homestake later
became the first mining company listed on the New York Stock
Exchange (1879).
After 125 years of operation, however, the Homestake mine in
Lead is being shut down by the end of this year. Walking around
the town the other day was more than a bit depressing, as you
can imagine the impact on the local economy.
Nonetheless, the history of Homestake gives me a good excuse to
not only delve into the California gold rush of 1849 – after the
discovery of gold at Sutter”s Mill on January 24, 1848 – but also
complete a chapter on the presidency of Ulysses S. Grant and the
episode involving Jay Gould and his attempt to corner the gold
market. But for this week, we are going to spend a little time
looking into the discovery of gold in the Black Hills.
The actual date of discovery is unknown but we do have some
historical records, as supplied by Homestake itself in their
archives, which I explored during my visit.
Captain Seth Bullock, frontiersman and the first sheriff of
Deadwood (the town located directly next to Lead), reported in
his diary that:
“Shortly after the close of the Civil War, Father DeSmet, the
heroic missionary, stated at a dinner party in the home of General
Ewing at Columbus, Ohio, that he had repeatedly seen gold dust
in the possession of the Sioux Indians. They told him that they
got it in the Black Hills and that there was ”heap plenty of it.”
Where and how the Sioux got the gold which they had from time
to time, is a controversial matter.”
Father DeSmet was “around the Black Hills in 1848 and again in
1851, 1864 and 1870.”
An account of the source from which the Sioux may have
obtained gold is contained in the incomplete record inscribed on
a stone tablet, which was found in 1887 by Louis Thoen near the
town of Spearfish. [A beautiful town north of Deadwood and a
potential place of retirement for your editor.] It is a piece of
sandstone, on one side of which has been scratched, seemingly
with a knife, the following: [SIC]
“Came to these hills in 1833 seven of us DeLacompt, Ezra Kind,
G.W. Wood, T. Brown, R. Kent, Wm. King, Indian Crow, all
died but me Ezra Kind Killed by Ind behind high hill Got our
gold dust June 1834.”
On the reverse side was scratched:
“Got all the gold we could carry Our ponies all got by the Indians
I have lost my gun and nothing to eat The Indians hunting me.”
Let”s assume they got him. The year 1834 was fourteen years
before the discovery of gold in California. The stone, which was
found in 1887, appears to be authentic, particularly since it was
found with the grass all grown over near what was the main
Indian trail to Deadwood.
There were others who also touched the Black Hills in the pre-
Civil War days. A fur trader, Jeremiah Proteau, of the American
Fur Company, in 1854 reached the northern Black Hills foothills.
A geologist, Dr. Ferdinand V. Hayden, explored the region in
1855, reporting ten years later to the Dakota Historical Society:
“The lowest Silurian period, or gold-bearing strata, are well
developed in these hills.” And then during the Civil War two
men, G. T. Lee and Toussaint Kensler, claimed separately to
have found gold in the hills.
There are other stories, and evidence, which leads to discovery
long before 1876. In fact one Lt. Colonel George A. Custer
played his own crucial role in 1874.
Throughout this era the U.S. government was signing treaties
with the Indians in an attempt to pacify them, so that westward
expansion of the nation could continue unimpeded. Of course
the Indians got the short end of every deal that was negotiated,
one of which was the Treaty of 1868, which sought to move the
Sioux Indians, in particular, onto reservation lands primarily
around what is today known as the Black Hills and Badlands.
Many of the Sioux and other neighboring tribes refused these
efforts and continued to hunt and attack settlers (on occasion)
outside the designated areas. At the same time, the government
was supposed to honor its promises to keep expansion from
the Indians” lands and we all know how one pledge after another
was broken.
But after the financial panic of 1873 (see archives for more
details), the economy of the U.S. was in dire straits, the books for
the federal government were in disarray, and gold was seen as a
way to shore up the finances. Knowing that the metal was
somewhere in the Black Hills, General Phil Sheridan (a Union
Civil War hero) authorized an expeditionary force to be headed
up by Custer in June 1874 to explore for it.
But this was no small venture, as some 1,000 soldiers left Fort
Abraham Lincoln (near present day Bismarck, North Dakota)
and headed southwest. Accompanying the men were six-mule
teams drawing 110 wagons, followed by 300 head of beef. In
addition there were two geologists as well as newspaper
reporters, the latter brought along so that the vain Custer could
receive his proper due in the press.
Needless to say, when the Indians saw this army traipsing all
over their lands, in violation of the Treaty of 1868, they weren”t
too happy. Custer was already well known in the region, as the
Indians had given him the name “Long Hair,” so the expedition
was known as Long Hair Custer”s and his Long Knives (rifles).
And the sacred ground that Custer trampled on was called the
“thieves trail” and Custer the “chief of the thieves.” Also, gold
wasn”t the only reason for exploring the territory. Sheridan
wanted to seek out a site for a new fort to keep track of Indian
movements.
Historians disagree as to the exact date, whether it was late July
or early August, 1874, when Horatio N. Ross, one of Custer”s
geologists, found gold along French Creek in the central Black
Hills. Even before this fact was published, however, the rush
was on, so that by 1876 thousands were scouring the hills.
During this time “placer” claims (mining rights) were staked on
practically every creek in the Northern Black Hills. By the end
of 1876 some were producing significant quantities of gold,
including the Wheeler Claim from which approximately
$100,000 was panned during the season of 1876.
The operation of placer mining, i.e., washing the gold from
coarse gravel of the creek beds, was soon replaced by
“bewhiskered” individuals with pick and shovel in hand. The
stage was set for mining of the hard rock.
Even by the summer of 1875, a number of hardy sorts, among
them Moses and Fred Manuel, were investigating the quartz
lodes. On reading of Custer”s expedition (see, Long Hair”s PR
campaign worked), Moses Manuel left Portland, Oregon, for the
Black Hills, picking up brother Fred along the way in Helena,
Montana. They reached the town of Custer – named after Long
Hair, south of Lead and Deadwood, and also having nothing to
do with the location of Little Big Horn – in 1875. Finding
nothing in this vicinity, the brothers headed north a bit and on
April 9, 1876, discovered gold on the Homestake Ledge, so
named because it was an actual ledge or outcrop of ore, which is
also called a “lead.” During the spring of 1876 they built a crude
mill and took out $5,000 worth of gold.
[Note: Within a year of the discovery over 15,000 miners had
flooded the Black Hills, giving President Grant the excuse he
needed to make sure the Indians were rounded up and placed in
their reservations. This led to Custer getting his at Little Big
Horn in the summer of 1876. And to share another personal
moment, I visited Little Big Horn National Park last week as
well and it is as good a historical site as you will ever see.]
In June 1877, L.D. Kellogg, an experienced miner from
California, representing a group of California mining men
(including George Hearst, the father of William Randolph
Hearst), came to the Black Hills to investigate the promising
reports and paid $70,000 for the Homestake and Golden Star
claims. Soon Kellogg was buying up all claims (of which there
were about 1,000 in this area alone) and took up their
development. The holdings were then reported as The
Homestake Mining Company in California on November 5,
1877. Then in January 1879, the New York Stock Exchange
accepted Homestake shares on the open market. And now you
know.the rest of the story.
Next week we”ll go back to 1848-49 and the California Gold
Rush.
Sources:
“History of Homestake Gold Mine,” author unknown, as well as
exhibits in the town of Lead, South Dakota.
“The Lance and the Shield,” Robert Utley
“America: A Narrative History,” Tindall and Shi
Brian Trumbore
