Nevada's Bonanza King Revisited

By Fred Wasser

Published November 29, 2018 at 1:49 PM PST

He was known, in his time, as “The Bonanza King.”

In the 1800s, John Mackay was a huge force in Nevada, having amassed great wealth in mining.

So how come we don’t hear a lot about him?

Gregory Crouch is the author of “The Bonanza King: John Mackay and the Battle Over the Greatest Riches in the American West.”

DISCUSSION HIGHLIGHTS:

Why was the Comstock Lode so important?

“The Comstock Lode is essentially the Silicon Valley of the 1860s and 1870s. It was the first mineral discovery outside of California of any great significance and it was of tremendous significance in astonishing quantity of wealth came out of the Comstock Lode in the 1860 in 1870.

It transformed the West and created the American deep hard rock mining industry. Every other mining center in the West had its roots in Virginia City.”

Give us a sense of Nevada at the time:

“Las Vegas essentially didn't exist. There was a few hundred people in the Carson and Eagle valleys and a few miners had been mining in Gold Canyon through the 1850.

The Caucasian population of the what would become Nevada was maybe 800 people.

You had the Sierras on one side and the nearest permanent American settlement was Salt Lake City – 500 hundred miles to the east.”

Was it a dangerous place to live?

“I don't think it was dangerous like they were subject to Indian marauding… but it was totally lawless. Every person was responsible for their own enforcement of the law. It was a very precarious existence… essentially subsistence mining instead of subsistence agriculture.

They were digging up gold almost all of the gold that they dug up or placer mining, washing it out of the stream bed sentiments, went to buy food and provisions to keep themselves alive. That kind of mining you always hope to make a big strike and ‘make a raise’ as miners called it, but most people did not and barely managed to survive.

They suspected great mineral wealth in the region but there was no concrete evidence that there was such a massive lode of gold and silver nearby.”

John Mackay was an immigrant from Dublin, Ireland but was he a prospector with a pan going through the creek bed looking for pieces of gold?

“He had come out to California in 1851. He'd grown up in the Five Points neighborhood of New York, when that was the most notorious slum in the world.

He came out to California at the tail end of the gold rush, mined around Downieville which is about an hour and a half north of Sacramento with no particular success.

The circumstances of his mining would be… exploring the glaciers and creeks looking for what miners called a ‘good location.’

When they found a place that they thought would be worthwhile to mine, they would locate - make a claim -then work the sediments there.

So, when rumors went through the Sierra foothills of this new strike of different material - the gold and silver twinned together - had been found on the other side of the Sierras, Mackay pulled up stakes and abandoned his claim and with his best friend they walked from Downieville to what would become Virginia City because they were too poor to afford a mule.

They walked onto the location of the Comstock Lode a few weeks after its first discovery in the spring or early summer of 1859.”

What was it that motivated him?

“I think it's hope that motivated these fellows.

If you were a common Irish laborer in New York you were going to work for a dollar or two dollars a day for your entire working life and there was virtually no hope of advancing yourself.

Out here in the West, you might not make it. You might struggle to survive but there was hope that you could transcend the pigeon hole of your Eastern existence.

And I think that's what drove much of the gold rush and much of the mining energy of the time was the hope that you could transcend your previous existence.”

Do you think there was something about Mackey's knowledge of mining or was it pure luck?

“A combination of both things. Mackey was extremely focused, and his work ethic was legendary.

I think he probably one of the hardest working Americans of all time and were generally a hard-working people.

When he arrived on the Comstock Lode, he did not have a claim and he didn't have any money literally not a penny. So, he took a job working for somebody else in somebody else's mine for $4 a day. He started working his way up from nothing there, getting his education in this new kind of mining. It's lode mining not placer mining.

He worked as a common miner and he quickly was recognized for his leadership ability and incredible work ethic.

He really did learn his industry and then he started speculating in mines.

One of the very unique things that spring up around the Comstock Lode was stock trading in the mining. You bought shares in these mines. They were divided up into feet.

So, if you are a 400-foot claim, it would have 400 feet representing one-four hundredth ownership of the mine and you could buy and sell feet.

Mackey bought and sold feet and because he was working underground he bought and sold pretty well. He speculated wisely, and they were just like modern stocks you know the expectation of their future value the prices rise and fall.

He gradually worked his way into ownership through those wise speculations. Now, he never claimed to see farther into the mine than the point of his pick. So, you don't know what's down there as a miner. It's one of the reasons that it's such a spectacularly risky business even today. You don't know what's down there until you dig it out and find out. He speculated wisely and he invested wisely and those investments paid off tremendously.

In the late 1870s, he was one of the richest people in the world and he almost certainly had the largest monthly cash flow.”

Give me a sense of his fortune. How lavish was his lifestyle?

“Mackey was a main partner of four Irishmen. The Bonanza Firm that's: John Mackey, James Fair, James Flood and William O'Brien. They dug about $110 million dollars of gold and silver out of two adjacent mines right under the heart of Virginia City in the middle 1870s.

That sum of money in modern terms as an equal share of the total national economy would be the equivalent of digging up about $200 billion modern dollars - in cash - because gold and silver were monetized.

When you're sitting in Virginia City having a cocktail in one of those bars on the center of C Street, you're literally sitting over the heart of the big bonanza. That's what miners called it. There was about 1,000 feet under your feet right there.

Mackey owned the lion's share of the partnership. So, he got the lion's share of the profits.

Mackey didn't have that much ambition of what to do with the money other than to be the master and manager of this massive mining operation, which he had become.

His wife, Louise, she knew exactly what to do with the money. Mackay bought for her 9 Rue de Tilsitt in Paris. If you've ever stood on the Arc de Triomphe in Paris, the Rue de Tilsitt is the first circular road that rings the outside of the Place L’Etoile… It's literally the best address in Paris.

She sets up there he put $10 million in bonds on deposit for her. So, it was spitting out this massive monthly income and she was extraordinarily generous to Parisian charities, supporting the arts, the music scene and supporting artists but also throwing these lavish parties for European aristocrats. She was the first American widely accepted in Europe society.”

John Mackay was known as one of the Four Bonanza kings but he didn't like that name.

“He was always a very modest unassuming man and he hated individual attention and did what he could to avoid it.

He was always very popular with his miners. The guys that worked for him. He was essentially living proof that no uncrossed chasm divided a $4 a day miner from a man worth many millions of dollars because he'd come up from their ranks and they all knew it.

He might be known in Northern Nevada but he's not that well known in the south or around the country. Why?

I think that part of the reason is very ironic. He was the fifth richest American when he died in 1902. That puts him in Mark Zuckerberg territory in the modern economy. He and his wife were extraordinarily charitable. They gave away immense sums almost always anonymously.

But Mackey late in life had no PR problem. He was one of the most widely admired Americans. He didn't feel the need late in life to found a university or eponymous philanthropic organization like Stanford or Rockefeller or Carnegie or Vanderbilt. All these other incredibly rich people. He didn't have a PR problem and they did.

They were among the most reviled Americans and rightly so. Those were the capitalist robber barons of the era. They go out and found these universities and philanthropic organizations that literally spend the next hundred years rehabilitating their family names and it worked.

That's what we remember them for by and large. They were reviled, and Mackey was admired when he died.”

John Mackey made investments and formed businesses that stand even today:

“He always stayed active in mining, but after he dug out the big bonanza he was looking for diversification and he ended up targeting Jay Gould's transatlantic telegraph monopoly.

The transatlantic telegraph cables had fallen under the control of Jay Gould and in the 1880s, he was the most feared and hated businessman in the world.

Gould was ruthless to the extreme and Mackey formed a company the Commercial Cable Company and laid two direct rival transatlantic cables and sparked a price war that lasted for five years before Gould essentially surrendered and matched Mackey's lower rates.

The Commercial Cable Company operated profitably after Mackay’s death and his son ran it into the 1930s and then it was absorbed by AT&T.”

He also was a banker:

“The Nevada National Bank. They formed in San Francisco in the 1870s. When you made one of these stupendous mining strikes, that's what you did - you went and formed a bank.

His partner James Flood was the banker in the crew and then when Flood got unhealthy and died in the late 1880s and early 1890s. Mackey didn't have a big calling to banking so he sold his majority interest in that bank to a group around a banker named Isaias Hellman, who was a Southern California banker. The bank operated successfully in 1905 it absorbed a bank called Wells Fargo.”

How are you drawn to John Mackay?

“My last book was a World War II flying story. I only do narrative, non-fiction. [It] took place in China and India during the Second World War. Fascinating story with one crucifying problem, every time I wanted to visit a location it was on the far side of the Pacific.

When it came time to find a new story, I [said] there's got to be something closer to home. I live in the Bay Area. I was ferreting around in the early history of San Francisco and kept running across all these connections to the old Comstock Lode, which if you know how to look, San Francisco, is filled with them.

Most of the books were either kind of dry and academic or they'd fallen in love with the whiskey and the “Gunsmoke” and the hooker-with-the-heart-of-gold story neither of which struck me as being the best telling of the Comstock Lode.

I thought there was room in there to tell the story of the Comstock Lode and when I once I'm on I've got that idea that I need a main character and that search leads quickly to John Mackay.

You know he was the seminal figure in the history of the Comstock Lode and likely the seminal figure in 19th Century Nevada as well.”

Do you think there would be much of a Nevada today or would we be greatly different without his discovery?

There's no question that the Comstock Lode created Nevada. You know it was the western Utah territory and largely ignored by everybody before the Comstock Lode was discovered.

This massive rush of miners over the Sierras from California after the discovery made Brigham Young willing to get rid of the western half of Utah because he was in danger of losing his ballot box dominance of the territory.

So, he was willing to let Nevada become its own territory so that he would still have Utah and the miners could have Nevada.

Nevada becomes a state a couple years later and Virginia City was absolutely the dominant settlement in the state through you know the 1860 and 1870 into the 1880s.

Reno didn't exist until 1868. So, Virginia City was ten years old when Reno got its start when the railroad first reached what was then the Truckee Meadows.

John Mackey had this really interesting friendship with Mark Twain. Mackey's office was in Virginia City. Twain was a reporter for the Virginia City newspaper called The Territorial Enterprise.

Twain was famous for doing these quaints, which were sort of comic sketches, and I think probably wanting fodder for one of them. He asked his friend John Mackey who is the superintendent of the Milton mine at the time an obscure mine in Virginia City. If he could change jobs with him for a week. He probably looked at Mark Twain and thought about his job and thought that he didn't want to trust his mine and his miners to this reporter who didn't know a pickax from a stick of dynamite.

He was a subtle guy so he asked Mark Twain what was the salary of his job and Twain said $40 a week I think. Mackay thought about it and then said, ‘Well, I've never swindled anybody in my life and my job's only worth $25 a week so you stay with what you've got and I'll stick with mine and they stayed friends through their whole lives.

In the 1880s and 1890s, when they were both aging men and among the most famous Americans, they would hang out regularly in New York and reminisce about old times.