Tuesday, February 7, 2023

The Bonanza King by Gregory Crouch

Source of book: I own this.

 

Last winter, we took a trip up to the Reno area to visit with my in-laws, and got a week filled with snow and road closures and other fun. Among other things, this meant a couple days in Reno, unable to get north to where my in-laws live, and some time to kill. 

 

Fortunately, one of the best things about Reno is Grassroots Books. If you are ever in the area, I highly recommend a visit. They have an interesting rotating variety of new and used books, and the prices are always lower than you expect. 

 

At that time, this book, which came out in 2018, was all over the Reno area bookstores, on varying degrees of discount. I don’t know the story of why, exactly, although one could speculate on over purchasing or perhaps a local benefactor? In any event, the book is definitely about the Reno area - specifically Virginia City, which still exists, and is a fun place to tour. The book was well reviewed, and seems to be selling at the usual prices elsewhere. 

 

While Barnes and Noble had it at a discount, it wasn’t nearly as deep as the one at Grassroots. I grabbed a couple of copies, since my brother also likes interesting local history. 

 

Broadly, the book is about the Comstock Lode, that incredible vein of silver ore below Nevada City, which was to have a truly profound effect on everything from the course of the Civil War to the Free Silver movement. More narrowly, however, it is about the life of John Mackay, arguably the most forgotten of the multi-millionaires of the Gilded Age. 

 

The reasons for Mackay being forgotten are actually kind of ironic. Mackay was the extremely rare person who could claim to be a “self-made man.” Born in Ireland, raised in a New York City slum, orphaned at a young age, he worked as a teen in the shipbuilding industry before heading out west for the Gold Rush. After middling to poor success in California, he moved to Nevada just as the discovery of silver occurred. 

 

But he didn’t simply stake a claim and strike it rich - quite the contrary. He got a job as an ordinary miner, worked insanely long hours at multiple shifts, and insisted in getting part of his pay in “feet” - that is, an interest in the mine itself. His incredible work ethic combined with a brilliant mind, and he was soon known as a genius at the important technology of modern (for then) mining - how to design and build the complex scaffolding to support large ore chambers, how to keep mines ventilated and the equipment safer, and how to determine where to dig and which leads to follow. 

 

His combination of working, saving, and eventually investing led him and some partners (longtime friends with similar skills) to gain control and eventually ownership of two of the most profitable mines in Virginia City. 

 

Later, he would found the Bank of Nevada as a competitor to the Bank of California - a cartel that controlled not just finance, but many of the mines, the railroad, water, and timber - and eventually won that battle. 

 

Still later, after the mines mostly played out in Virginia City, he took on Jay Gould in a war over the transatlantic cables and the telegraph industry. And won, in the way that truly mattered to him: he forced Gould to lower rates due to the presence of a competitor he couldn’t destroy or absorb. 

 

So, why was he largely forgotten? 

 

Well, a few reasons. As the author points out, the Robber Barons were hated because of the predatory business practices they engaged in. (And the Bank Ring guys were very similar, as this book details.) They forced competitors (particularly the small ones) out of business, slashed wages, spread misinformation to manipulate stock prices, created monopolies and then price gouged, and so on. 

 

John Mackay wasn’t like this. He refused to cut wages for his miners - as a former miner himself, he believed that a fair wage was a human right. Mackay directed his financial machinations not against small shareholders, but against the Bank Ring - punching up and not down. He was widely respected as an honest man. His temper was perhaps his worst vice, but the average person knew he always gave a fair shake. 

 

Perhaps because he lived by a code of ethics, he didn’t feel the need to “rehabilitate” his image by naming institutions after himself. (Examples here would be Leland Stanford and Collis Huntington and Andrew Carnegie.) He gave generously, but not in visible ways or to famous institutions. He had intended to engage in further philanthropy, but never quite got the ball rolling before his sudden decline and death after his son was killed in a riding accident. 

 

The only things that he has named after him are a building at the University of Nevada, Reno (for the school of mines, naturally) and the tiny town of Mackay, Idaho, where he owned mining interests later in life. (We drove through there on the way back from Glacier National Park last summer. Since it was before I read the book, I didn’t make the connection at the time, but remembered the name.) 

 

It is that weird twist of fate that a man admired, respected, and loved during his lifetime left too little hatred and self-aggrandizement behind to linger in the public consciousness. 

 

Overall, this book is well written, extensively researched, and tells a compelling tale. 

 

Here are some highlights:

 

The description of San Francisco in 1851, when Mackay arrived, is fascinating. Then, as now, California was a place where dozens of languages were spoken, with immigrants from around the world. This is something that Red State America either fails to understand, or just outright hates. California has been a melting pot since soon after the first Europeans set foot there, and long before we were part of the United States. 

 

Also interesting is that in 1851, a mere twenty percent of the population of San Francisco was female. It was the most male place in the world. Even crazier? That was twice the percentage of women as just the year before.

 

A surprising fact that I had no idea about before this book was that California had an imbalance of men and women not just then, but all the way until…..1950. How crazy is that? 

 

There is another connection to our travels over the last decade. In 2018, we camped in the Tahoe National Forest with my in-laws, and my older kids took a crazy mountain bike ride with a friend and their uncle, from Sierra Buttes down to Downieville. I ran shuttle, which meant time to explore the town a bit, from the tiny local museum to the infamous bridge where the only pregnant woman ever lynched in California met her sad demise. She killed a man in self-defense after he tried to rape her, but because she was Mexican, the white residents of the town murdered her. 

 

The docent at the museum tried to recruit me to move to the town, despite the fact that as it was, the only lawyer there worked only part time due to the lack of work. The high school class that years was, if I recall, a mere three students. It is a dying town - too far to commute, and the mines have long since closed. Tourism is it, and not much of that. And also giant Trump flags and still - a century and a half later - open anti-immigrant hate. 

 

Mackay spent some time in Downieville, but perhaps more importantly, his future wife grew up there. 

 

The book has a lot of detail about mining practices back in the 19th Century, all of which is well explained in an interesting way, so that it never seems to overwhelm. For example, the book talks about the switch from manual labor to the use of an Ericsson Caloric Engine to pump water from the mines. 

 

One line that better than any other describes who Mackay was is this one:

 

Mackay acquired a reputation for exacting competence. He took pride in honest toil. To him, all work was honorable, and a job was sacred. What he did, he did right, and he impressed men with his upright manner and steady judgment. 

 

This theme recurs throughout the book. Mackay would often be found underground personally supervising work in the mines he owned, or inspecting milling equipment, or otherwise getting dirt on his hands. He apparently commanded loyalty from his workers (and other blue-collar sorts) his entire life, even after he got obscenely rich. 

 

The first big strike on the Comstock coincided with the start of the Civil War, and played some part in it. Right now, I am watching David Blight’s outstanding Yale course on the Civil War and Reconstruction, and have learned a lot about the way the California Gold Rush became a key precipitating event leading to secession. 

 

The silver rush served to provide much-welcome wealth to the North during the war, although the flood of currency later caused financial instability as countries around the world grappled with the implications of silver and gold prices that no longer were linked to each other. 

 

Crouch doesn’t candy coat any of this - one thing I appreciated about the book was his modern progressive instinct toward true candor about the effects on minorities that all the events had. He ties in contemporary history well, so that the mutual influences the war and the bonanza had on each other is not forgotten. I do have to quote the statement of Mississippi given when it voted to secede from the Union. 

 

“Our position is thoroughly identified with the institution of slavery - the greatest material interest in the world.” 

 

I grew up adjacent to a subculture that sought (and still seeks) to deny that the Civil War was about slavery. Fortunately, my parents (at least back then) knew better, and made sure we knew the truth. The key thing to understand here is that slavery was (and likely still would be now) an insanely profitable enterprise. On the eve of the Civil War, the economic value of enslaved humans was greater than the entire factory output of the country, the entire agricultural output of the country - in fact every asset in the entire nation except for land (which value couldn’t be accurately estimated) - COMBINED. Mississippi had it right: enslaved humans were the “greatest material interest in the world.” The South was fighting for its wealth, which just so happened to consist of enslaved human beings. 

 

One other incident in the book was an example of Crouch’s refusal to euphemize history. In 1960, there was a brief war between the Native Americans in the area, and the white residents. Our whitewashed history books tend to gloss the incident that sparked it, mentioning only the fact that two of the three brothers who ran a disreputable trading post east of Virginia City were killed by Native Americans. 

 

What you don’t get taught about this is that the three brothers had kidnapped two girls, who were probably around twelve years old, and were keeping them bound and gagged underneath the floor of the post. They were almost certainly raped. The so-called “massacre” would have been considered justified retaliation had the races been reversed. In fact, as Crouch points out, it is even possible that had the facts been known, the war would not have occurred. But the surviving brother made sure that the truth didn’t come out for some months after the battles. 

 

This isn’t even the only story in the book about women being treated as chattel. Mr. Comstock, who the lode was named after, never managed to cash in on the wealth that was under his feet. He appears throughout the book until his eventual suicide somewhere in Idaho. He never did manage to succeed, always selling out too early or buying too late, and often both. 

 

He appears in an incident in 1962, when apparently, he “took a fancy” to one of the wives of a Mormon man recently arrived from Utah. The man offered to sell her to Comstock, who in turn demanded a bill of sale to prove his title. The author notes that this sounds absurd, but it was documented by the newspapers of the time. Apparently, she wasn’t happy about the transaction, and ran away several times, eventually escaping for good before turning up married to a miner-turned-beer-seller in Sacramento. 

 

The villains of this story are the Bank Ring guys, primarily William Ralston (you see that name around plenty), whose profligate ways eventually brought the bank down and led to his own suicide; and William Sharon, the man most involved with the Comstock, and one of the most conscience-free men of the era. 

 

Sharon’s brutal financial tactics are still in use today. Once he controlled the mills (before Mackay became a competitor), he would dilute ore, put mine owners in debt, then foreclose on the stock. You still see this in sub-prime lending, and in buy here pay here used car lots, as well as payday lending concerns. 

 

It is, therefore, kind of thrilling when Mackay manages to pull the rug out from under Sharon and the Bank Ring. 

 

An eyewitness described how it went down. Sharon makes assumption that he still owns the mills, only for Mackay to respond that he had already made other arrangements. Sharon has a rare flash of temper and tells Mackay, “I’ll make you pack your blankets out of this camp yet!”

 

Mackay, who struggled all his life with a stutter, swallowed his fury, and replied, “You will? W-well, I can do it. I packed ‘em in.” 

 

That’s a great mic drop right there. 

 

Sharon didn’t go away, of course, but he never did get Mackay to leave, and in the end, Mackay out-mined him. Sharon turned instead to what he was best at: financial manipulation at the expense of gullible and inexperienced investors. I will say, as much as Sharon was an asshole, it is difficult to feel bad for the investors chasing obscene profits. Sharon did have a great response to accusations that he wasn’t “supporting” the stock in his mines. 

 

“Well, sir, it’s all comprised in a nutshell. When you blow up a bubble beyond its capacity, it’s pretty sure to burst, ain’t it? They accuse me of pricking the bubble. That’s not so. The overstrained concern wouldn’t hold any more wind; that’s all.” 

 

There are several truths contained in that statement. First, bubbles happen over and over again. We know this. They always burst, because inflated values are not sustainable. And when they do, the investors who lose make the claim that someone (media, politicians, company management, any convenient target) “popped the bubble.” But really, it was going to burst anyway, and should have before it did. 

 

How big was the bubble? Well, at one time, the value of the stock in the 31 best mines on the Comstock was an incredible $262 million. I can’t find exact numbers for what that would be now, but well into the tens of billions of dollars. 

 

But incredibly, that was $70 million MORE than ALL the real estate in San Francisco. That’s a stupid-huge bubble, and one that had to burst spectacularly at some point. 

 

At one point, newspaperman Dan de Quille (pen name of William Wright, who, along with Mark Twain was one of the leading journalists of the Comstock for years) asked Mackay about the crash. His response was, again, perfect. 

 

“It is no affair of mine. I am not speculating in stocks. My business is mining - legitimate mining. I see that my men do their work properly in the mines that all goes on as it should in the mills. I make my money here out of the ore. Had I desired to do so, I could have gone down to San Francisco with ten thousand shares of stock in my pocket, and, by throwing it on the market at the critical moment, I could have brought about a panic and a crash, just as has been done. Suppose I had done so and had made $250,000 by the job - what is that to me? By attending to my legitimate business here at home I take out $500,000 in one week.”

 

This is why Mackay is as likeable as a rich dude can be. The author notes his advantages: he was in the right place at the right time, mining was and is an environmental catastrophe, he was white and thus had opportunities others didn’t, he had luck to go with his skill. But the fact remains that he worked his ass off, played square, and actually worked rather than speculate. It is hard to dislike that about him. 

 

I also have to relate a legal case in the book that warmed my heart. So, Mackay married Louise, maiden name Hungerford (related to minor aristocracy in Europe, and possibly related to someone I know), who is a widow with a small kid. Her first husband was a respected doctor when she married him, but he became addicted to opium and booze, and spiraled down until his eventual death from all his demons. Mackay was socially awkward, particularly around women, but after being set up with her, they married. It is hard to know how she felt about him, other than that it must have been a relief after her disaster of a first marriage and the crushing poverty that enveloped her after his death to have incredible wealth and a husband who, by all accounts, was a kind and gentle man to her, and good to her child. 

 

Louise hated Nevada, for good reasons, so she lived first in San Francisco, then eventually in Paris, where she felt the children (her daughter and the two sons she had with Mackay) would be in a better environment than the still rowdy West. 

 

As men with money tend to do, Mackay attracted grifters. In 1872, a lawsuit was filed against him by a man who claimed Mackay had slept with his wife. 

 

Like many grifters, this one failed to do the necessary research first. During the entire time that Mackay was alleged to have done the deed, he was, beyond the shadow of a doubt, in Europe with his wife. The grifter and wife later spent time in prison on an unrelated fraud charge. 

 

The Mackays lived pretty large in Paris. They collected art, and enjoyed the company of the rich, even though they were never accepted as “old money,” and looked down on as coming from “common” stock. The book recounts one party involving James Gordon Bennett Jr., one of the real characters of the era. Bennett had the connections to hire Johann Strauss Jr. (the Waltz King) and his orchestra for a party in Mackay’s honor. I mean, if you are going to live ostentatiously at least hire an orchestra, right? 

 

The end of the book, like many biographies, is a bit sad. Not so much for Mackay, who lived to age 70, but for Louise, who outlived him by 26 years. One of their sons, as I mentioned, died young in a riding accident. Her other child with the doctor died in infancy, possibly after being injured by her own father. 

 

His step-daughter Eva married a Spanish prince, who was as big of a piece of shit imaginable. He spent through her income gambling, beat her, called her a “common American” that he owed no duty of love to, and slept around constantly. 

 

Given the laws of the time, the prince would have gotten custody of their children, and had to be bought off with the equivalent of a half million a year for the rest of his life. Eva died in her late forties of influenza during the 1919 epidemic, while caring for other flu victims. So, poor Louise outlived three of her four children. 

 

There are some other interesting connections that are discussed in the book. 

 

First is the Bank of Nevada. That institution still exists today, although not under that name. The Wells Fargo stage coach business had established its own bank, and later sold out to the Bank of Nevada in a merger in which the Bank of Nevada was the purchasing party. However, the Wells Fargo name was adopted as being less regional. One has to think that Mackay would be appalled by the unethical concern that Wells Fargo has become as of late - the practice of opening accounts without permission, in order to harvest fees, is something William Sharon would have done, not Mackay. 

 

Second is the fun drama involving Mackay’s granddaughter. The one surviving Mackay kid to carry on the line was Clarence, who took over his father’s businesses, which by that time involved significant telecom stock. 

 

His daughter, Ellin, was headstrong in a number of ways, but most notably in choosing to marry against her father’s wishes. Clarence, like many (probably most) white people of his era, was antisemitic. Ellin fell in love with a dashing but not particularly wealthy Jewish man, who had been most tragically widowed - his first wife probably caught a deadly infection on the honeymoon and was dead within a month of their marriage. Ellin thought this guy had some promise, though, and she eloped with him. Clarence disowned and disinherited Ellin, and they never saw each other again. 

 

The marriage, on the other hand, lasted over 50 years, until her death followed soon after by his at age 101. By that time, he had become one of the most beloved songwriters of all time, the legendary Irving Berlin. By all accounts, they were devoted to each other their entire marriage. 

 

The opening of the last chapter perhaps summarizes Mackay’s life the best. 

 

In his day, John Mackay’s was the most beloved rags-to-riches story in America. His outlandish mining success and his victory over Gould’s Atlantic cable monopoly fascinated people in the last decades of the nineteenth century and the turn of the twentieth. The strength of his character commanded their admiration. He’d risen from the infamous Five Points, the world’s most notorious slum. When Mackay sailed from New York in 1851, he’d had no name, no money, and not a single influential friend on earth. He’d possessed nothing but strong arms, a clear head, and a legendary capacity for hard work. From there, he’d done it the American way - he’d earned it. In the eyes of the times, his road to riches had made no man poorer, and few begrudged him his success.

 

That last line in particular stands out. Unlike literally every one of the Robber Barons, Mackay had earned his wealth without taking others down. I’m no fan of wealth or the wealthy, but Mackay is one of the few that had truly admirable character. 

 

There is a lot more in this book than a brief review can discuss. Crouch makes this fascinating story compelling and thoroughly readable. If you enjoy history with a human face, this book is a great choice. 

 

No comments:

Post a Comment