THE COMSTOCK ERA:

May 10th of 1869 marked a historic day in United States history. On that day, a celebration of national import took place in Promontory, Utah to commemorate the joining of railroad tracks from the eastern parts of the country with tracks from the far western parts. Construction of the Transcontinental Railroad was finished. To mark the occasion, representatives from the two corporations responsible for building the railroad took turns driving a spike into the adjoining rails. The Golden Spike was cast from pure California gold. It has always been a widely recognized symbol of one of the most grandiose achievements of nineteenth century America. Lesser known is the silver spike that was also presented at the event. The Silver Spike was forged from solid silver excavated from the mines of the Comstock Lode, located in the fledgling state of Nevada. The symbolism of the two spikes was clear: California gold and Nevada silver were essential elements in providing the impetus to connect the West with the East. Over time the legacy of the Comstock Lode has taken a back seat to the legacy of the Gold Rush. However, the Comstock Lode was crucial to the economic and industrial success of the Far West, most pronouncedly in California, with San Francisco as its financial and commercial center. The intent of this essay, then, is to demonstrate the various ways in which the Comstock inspired the development of California during the 1860s and 1870s, and to illustrate historical importance. Although not nearly as well known as the Gold Rush outside of academic circles, the Comstock era was of equal importance regionally, nationally, and internationally.

In order to fully understand the Comstock Lode’s indelible contribution to California, an overview of the Gold Rush era is required. When gold was discovered in January of 1848, California’s non-native population was roughly 10,000 inhabitants.1 Yerba Buena, which had recently changed its name to San Francisco, was an unassuming town of only 812 inhabitants.2 By 1849, news of the discovery had spread globally, and immigrants in search of golden riches swarmed the region. By 1850, the population of California had rapidly risen to 92,597.3 It should be noted that as the number of new arrivals greatly increased, the Native American population tragically decreased. 150,000 native inhabitants in 1848 dwindled to 30,000 by 1860 due to disease, “displacement,” and “slaughter” by the new migrants.4 Wave after wave of innovative and determined individuals—primarily males—made their way westward into California by land routes over the Sierra Nevada Mountains or came by ships to San Francisco. From San Francisco many continued to the foothills of the Sierra with simple tools for placer mining in hand, while many others stayed in the fledgling city. Placer mining consisted of individuals “panning” for surface gold in and around rivers and streams. Miners often formed joint stock companies—groups of individuals who pooled their resources together and shared in profits and costs—in order to make working their claims easier. Placer mining was the easiest and least capital-intensive form of searching for gold. But due to the sheer number of gold seekers, by 1851, surface gold became less and less easy to find. A few enterprising men involved themselves in the business of quartz mining—digging into the earth to extract gold from quartz veins. They raised sufficient capital through short term bank loans and by incorporating. At first, these entrepreneurs were successful in raising enough capital to open mining operations; 1851 and 1852 saw a boom in quartz mining investment.5 San Francisco iron foundries and metallurgy shops developed equipment to work the mines, while individual laborers left the placer mines to become part of larger labor forces needed to meet the demands of corporate mining. But the investment excitement was short-lived as mining equipment and techniques proved too rudimentary to profitably extract the precious metals. As placer mining waned, investment in quartz mining began to dry up as well.

By 1855, the California economy faltered and banks shuttered their doors in rapid succession. An economic depression followed in 1857. Investment ceased, companies folded, and many miners left the young state. San Francisco’s economy was at a standstill; so stagnant that banker (and future Civil War General) William Tecumseh Sherman declared, “The whole town is for sale and there are no buyers. Everybody seems broke… Tallant & Wilde, Fretz & Ralston, Wells, Fargo & Company have nothing worth having. Their rooms are silent and deserted… Why San Francisco should remain thus, I can’t conceive.”6 Economic depression languished in California for the remainder of the 1850s. Although San Francisco’s population had rapidly increased, during the Gold Rush, to roughly 35,000 by 1852, it slowed to a trickle by 1860 (only increasing to 56,802) as the number of departures from the city and state offset the number of new arrivals.7

While economic uncertainty hovered over California, placer miners east of the Sierra Nevada made a fateful discovery of gold in the elevated hills of western Utah Territory (later to become the state of Nevada). These miners were remnants of the early years of the Gold Rush, self-dependent individuals searching for placer deposits of gold with simple tools: rocker, pan, pickaxe, and shovel. They represented a romantic ideal of bygone days, rugged individuals who depended on nothing but the basic survival gear and skills that they personally retained. They embodied a time when, as contemporary San Francisco journalist Henry George described, capitalist and laborer were one entity, in which a person reaped the earnings that he himself sowed.8 They labored in a pre-corporate economy. But the placer miners were a vanishing breed, and their discovery in 1859 in those high hills of Utah Territory would all but ensure their demise in the region. The gold they excavated at the base of a peak they called Sun Mountain was mixed with a bluish-black substance that gummed up their rockers and caused general consternation. However, an assay of the blue-black substance revealed it to be silver valued at $3,000 per ton.

Word of the incredible discovery spread quickly, attracting ambitious entrepreneurs from the California side of the Sierra Nevada to the site that would soon adopt the name “Comstock Lode.” These businessmen saw firsthand that the gold and silver which descended down to unknown depths of this massive lode would reap huge profits. They wasted no time in buying out the original placer claim holders, ultimately replacing their operations with a new phase of mining—capital-intensive hard rock mining. Neither joint stock companies nor small groups of outside investors would be able to provide the funds necessary to successfully extract the precious metals from so deep within the earth. Massive industrial equipment was needed for extraction, ventilation, and pumping out the water which constantly flooded the mines. Milling operations required complex apparatuses to separate the precious metals from the rock and to render them into their purest form. A new level of innovation was imperative for successful hard rock mining, as this sort of deep earth excavation was unknown in the United States prior to the Comstock Lode. With this new type of mining came a new episode in the Far West, a post-Gold Rush epoch that could rightfully be termed The Bonanza Age, or The Comstock Era, which lasted roughly from 1859 to 1880. It was a part of the larger period in United States history deemed by historians as the Gilded Age. The consensus amongst historians, however, is that the Gilded Age began shortly after the Civil War. The new capitalistic age in California commenced prior to the war, beginning with a robust stock market that allowed for giant industrial wheels to turn.

Once the heavy snows covering the Sierra Nevada began to melt early in 1860, a rush for the silver mines ensued. Californians—a large number of them San Franciscans—headed over the Sierra to stake claims on the Comstock Lode. But many returned dejected. Mining for silver was much different than panning for gold. Hard rock mining required techniques and tools beyond the capabilities of a group of miners, let alone an individual. The industrious few who remained on the Comstock, set to work on raising the capital necessary to fund large industrial projects. They looked to San Francisco financiers—bankers and wealthy investors—to pool resources. Banks could, and did, provide short-term loans, but ultimately incorporation proved to be the most lucrative method of raising an ongoing river of funds towards extensive mining operations. At that time, a majority of corporations throughout the nation were formed by state charters, although this type of business entity was frowned upon by the general public as too risky.9 In the Far West, however, the gambling spirit associated with mining and a get-rich-quick mentality opened the doors wide to such business practice, and in 1860 alone, 37 mines incorporated on the Comstock, which encompassed a surface area of less than three miles long and one mile wide. The fervor of silver mine incorporation in turn reactivated investment in gold mines. Over 1,000 incorporations in California quartz mines occurred that year, although those corporations continued to struggle in the quest for gold.10

By 1862, demand for Comstock mining shares (referred to as “Comstocks”) reached new heights, resulting in the opening of the San Francisco Stock & Exchange Board to efficiently handle the large volume of Comstock transactions. The year 1863 witnessed the peak of incorporation with the formation of 2,933 mining corporations alone. A practice that had been just a short time before, confined to a small number of wealthy investors trickled into an ever-widening circle of speculators, and an organized stock exchange encouraged the general public to get involved in share trading. It was the birth of the first stock market in the history of the United States in which securities traded across socio-economic lines.11 The Mining Scientific Press, a San Francisco publication, noted that:

The market extends everywhere; the buyers and sellers of stock include the millionaire and the mendicant, the modest matron and the brazen courtesan, the prudent man of business and the gambler, the maidservant and her mistress, the banker and his customer.12

By the early 1860s, mining—aided by the rapid growth of agriculture—lifted California out of its economic depression. The extraction of natural resources once again dominated California’s economy. But, in contrast to the 1850s, the flow of capital between silver mining and other industries was extensive and enduring. Money went to San Francisco foundries and metal shops, which concentrated on creating technical innovations that could also be transferred to other areas such as farming, manufacturing, and transportation.13 Finances poured into construction and craftsmanship, most noticeably in the rapid development of San Francisco commercial and residential housing. It was, as historian Earl Pomeroy described it, a “self- financing frontier.”14Historical geographer Richard Walker in his essay “California’s Golden Road to Riches: Natural Resources and Regional Capitalism, 1848-1940” argues that California’s success lay in its focus on reinvesting money back into itself, rather than being dispersed to investors or enterprises outside of the region, or succumbing to a “take the money and run” mentality that was standard in many other parts of the American West.15 “Big capital was itself thoroughly devoted to regional development as a way to making more money.”16 It should be noted that another feature of the Comstock era that differed from the Gold Rush was that in the earlier epoch many placer miners had indeed left California to return home with their gold earnings, and many profits had left the state to reimburse investors from the Eastern United States and Europe.17 The 1860s saw banks above all prosper from Comstock activity, which allowed for reinvestment in California infrastructure to begin in earnest. Banks’ role in this regard was largely due to the efforts of an ambitious entrepreneur and banker named William Chapman Ralston.

William Chapman Ralston settled in San Francisco in 1854, at the tail end of the Gold Rush. He had been a riverboat clerk on the Ohio and Mississippi rivers, and used his experience to gain skills in banking while situated on the Pacific coast of Panama in the early 1850s. Upon arrival in San Francisco, he immediately set forth to involve himself with prominent capitalists of the Gold Rush city. In 1861, Ralston partnered with bankers Joseph Donahoe and Ralph Fretz in San Francisco to form Donahoe, Ralston, & Company, which included banker Eugene Kelly in New York. Their banking firm was more heavily involved in managing Comstock related finances than any other bank, which culminated in enormous profits. Kelly in New York and Donahoe in San Francisco were adamant about investing returns in the East Coast. Ralston wanted otherwise; he believed that profits made in California should remain in California. His disagreements with his partners about where money should be reinvested—East Coast versus West Coast—led to the dissolution of Ralston’s banking partnership and the emergence of his West Coast-centric bank, the Bank of California.

Ralston knew that in order to handle the rapidly expanding pool of capital in the West, any new bank that was to successfully open its doors would need to be grandiose. To address this concern, Ralston opened the Bank of California in 1864 with two million dollars in capital funds, making it the largest bank in the West (and one of the largest banks in the United States).18 Ralston then set forth with his vision of making California a paragon of American success, and San Francisco at its center, as one of the great metropolises of the world. Through the Bank of California, Ralston invested in silver mines, gold mines, agriculture, viticulture, railroads, irrigation, and manufacturing. He daily kept his office open to listen to any entrepreneur with a potentially lucrative idea.19 But the bank’s solvency greatly depended on a healthy Comstock Lode. At the first signs that the silver mines were sputtering, Ralston sent his agent William Sharon to the Lode to assess the situation, an action that would ultimately lead to a new phase in capitalist culture of the American West: vertical and horizontal monopoly.

Vertical integration is defined as the combining of manufacturing operations with the source of materials and/or channels of distribution under a single ownership or management especially to maximize profits.20 As the stock market reeled in 1864 from lack of rich ore and legal fiascos on the Comstock Lode, the Bank of California decided, under the assessment of William Sharon and the approval of William Ralston, that vertical integration was the only way to financially stabilize the complex workings. Their decision led to total control of a majority of the Comstock’s mining operations. Their takeover of mines, ore-crushing mills, water, timber, and transportation culminated in the formation of the Union Mill & Mining Company in June of 1867.21 In addition, through their connections with major mining shareholders, the representatives of the bank took control of multiple silver mines as well, creating horizontal integration of the Comstock. The complete monopoly of hard rock mine workings indeed brought financial stability back to the Far West, but it also led to corruption on a massive scale, potential future economic devastation, and a growing economic inequality.22 Monopoly was the final phase of the developing capitalist culture in the Far West, a course that would define 19th century capitalism. The Bank of California’s monopolistic practices are a prime example of the emergence of the industrial economy—as described by Alfred Chandler in his study of entrepreneurs of the 19th century—throughout the United States.23

Ralston’s control of the Comstock Lode and his position as leader of the Bank of California allowed him to greatly expand his influence. Regionally, through the auspices of the bank, he invested heavily in the Central Pacific Railroad, the corporation responsible for building the Western half of the Transcontinental Railroad in the 1860s, making the enterprise his “most favored customer.”24 Nationally, he pushed to cement monetary standards. By the early 1870s such an abundance of silver was being extracted from the mines of the Far West that it destabilized the American monetary system. As a result, the Coinage Act of 1873 was passed by Congress, which discontinued the minting of silver dollars, and limited silver coinage to a subsidiary status (to be used as half-dollars, quarters, and dimes only). Although Ralston profited handsomely from mining silver, he firmly believed that stability of the United States economy lay in monometallism (gold standard; as compared to bimetallism, in which both the silver and gold dollar were used as the monetary standard unit).25 Ralston also reached out internationally, looking to the Far East as an avenue for exportation of silver dollars. New relations with China and Japan had opened up in recent years, and Ralston saw an opportunity for San Francisco to be at the epicenter of commercial affairs between the United States and Asia-Pacific countries.26 Thus California went beyond regional interests into national and international influence.

The power wielded by Ralston and his “Bank Ring” attracted challengers to their reign. Control of the Comstock was chiseled and then wrested away by a group of four Irishmen: John Mackay, James Fair, James C. Flood, and William O’Brien. “The Firm”—as they called themselves—secretly bought up controlling shares of unproductive silver mines and then redeveloped them, ultimately earning the moniker “Bonanza Kings” by digging up unrivaled amounts of silver and gold from deep levels of the Lode. Their success involved risk, ingenuity, and luck, but ultimately lay in modeling their enterprise on the same structure already in practice by the Bank of California: vertical and horizontal integration. They consolidated existing mines, incorporated, and formed the Pacific Mill & Mining Company. Now, the Bonanza Firm controlled not only the means of production, but also the means of supply and distribution. As the 1870s unfolded, their operation became the dominant force on the Comstock, and they entered the ranks of wealthiest individuals in the United States. In 1875 they further intensified competition with the Bank of California by opening their own bank, the Nevada Bank of San Francisco.

Through the banks, the flow of Comstock wealth into other commercial avenues led to San Francisco becoming the world-class metropolis that it longed to be since the pioneer days of the Gold Rush. It was an icon of opulence and elegance “with a population as large and architecture surpassing all that Paris could show after a thousand years of progress.”27 Its inhabitants referred to their city as the “Queen City of the Pacific,” physically rivaling such other great cities of the world as New York, Paris, and London. Despite an arid climate and sand-shifting terrain, work had begun on a massive green urban park necessary to put San Francisco on par with any other important industrial city of the Victorian nineteenth century. The challenge of building on top of San Francisco’s formidable hills was solved by the mechanical ingenuity of the cable car, which effortlessly transported passengers and supplies to all parts of the rapidly developing urban center. The Comstock “paid for the dizzy excess of Victorian architecture.”28

Of all the Comstock’s interworkings the ultimate economic driver was the stock market, led by the San Francisco Stock & Exchange Board. Feverish involvement in speculation permeated all levels of society; it was the rare San Franciscan who did not own Comstock shares. As one contemporary author pointed out:

San Francisco owes its prosperity to the mines of California and Nevada. Her rapid growth, in a commercial way, is due in a great measure, to them…but the prime motor in the whole complication has been the mining stock market. Capital has made a San Francisco.29

Maureen Jung, in her essay “Capitalism Comes to the Diggings,” demonstrates that in 1874 alone, Comstock mines were producing over $22 million in gold and silver, California mines were producing over $17 million in gold, but the San Francisco Stock & Exchange Board was transacting over $260 million in sales of securities.30 According to Richard Walker, “For a few wild years, before the speculations collapsed and the silver ran out, it was the largest stock exchange in the world.”31 Walker makes an astute observation: no matter how gangbusters the economy appeared while the stock market was strong, it came crashing down once the market imploded. In fact, throughout the 1860s and 1870s, California development was subject to a constant boom and bust cycle.32

The economic engine managed to chug along in California for the first half of the 1870s, even after the rest of the nation fell into a devastating depression. In 1873, financial hardship in Europe caused the United States’ economy to descend into a downward spiral. California remained unfazed largely due to the strength of the stock market revolving around the Comstock Lode. That same attribute proved to be its greatest weakness. The discovery of the Big Bonanza in 1874 brought speculation to new heights, but perception that good ore was “pinching out” led to a speculative crash that enfeebled the larger economy. In 1877 Comstocks sagged further, and California succumbed to the national economic crisis. Although the mines of the Bonanza Firm continued to extract large amounts of silver and gold throughout the 1870s, the finances of the populace had been largely wiped out.

Where there should be universal prosperity and happiness, there is widespread poverty and suffering. Thousands of comfortable homes and many millions of dollars earned by the patient toil of the industrious masses, have been swept away by disastrous investment in mining shares. Undoubtedly the stock market has been a chief factor in producing the present destitution of the people. Its baneful effects have been felt in every neighborhood and almost every family in the state.33

The crash that came with stock market devastation unleashed massive unrest in San Francisco. Unemployment was rife, with agitation by the unemployed and underemployed occurring on a daily basis in the empty sandlots around city hall. Their ire was aimed at the wealthy and the Chinese. In the late 1870s, common perception by white laborers—which had existed since the Gold Rush—held that the Chinese were in California to take away that which was rightfully theirs, jobs. Anti-Chinese rallies were commonplace in 1877, and in July of that year riots broke out against them. Subsequent anti-Chinese laws were passed by the state government, and California agitation made its way to the federal level by the early 1880s. In 1882, the United States Congress passed the Exclusion Act, which, amongst other things, barred Chinese laborers from immigration into the country. The Chinese Exclusion Act, through a series of extensions, was not lifted until 1943. This episode, albeit a dark and unforgivable low point in United States history, is a prime example of the Comstock era’s influence in global affairs.

The heyday of the Comstock Lode subsided with the depletion of its rich ore. By the early 1880s speculation in mining stocks had all but disappeared. The dramatic era of constant boom and bust was over, but the legacy lived on. Institutions that had strengthened after the Gold Rush and were instrumental in shaping California and the Far West, but were dependent on the ebb and flow of a stock market economy, which stabilized and excelled once California pulled itself out of its economic depression by 1882. Enterprises that William Ralston and the Bank of California had heavily invested in during the 1860s and 1870s—such as wheat, wool, wine, ironworks, and railroads—succeeded and continued long after Comstock silver and gold outpourings ended. The innovative industrial and entrepreneurial spirit that had begun during the Gold Rush met its technical and financial aspirations in the Comstock era. In turn, that same spirit found the opportunity to affect its environment on a grandiose and permanent scale, sometimes for the better and sometimes for the worse. A deeper awareness and understanding of the forgotten Comstock era’s historical importance to regional, national, and global affairs is essential.

Title Photo Courtesy of Library of Congress

McCone, Michael, and Orsi, Richard J. Preface (A Golden State, Mining and Economic Development in Gold Rush California, Edited by James J. Rawls and Richard J. Orsi, University of California Press, Berkeley and Los Angeles CA.,1999), ix.
Fracchia, Charles A. When the Water Came Up to Montgomery Street, San Francisco During the Gold Rush, The Donning Company Publishers, Virginia Beach, VA, 2009, 36.
www.census.gov/history, U.S. Census Bureau, January 2018
https://calisphere.org/exhibitions/2/native-americans-19th-century/, University of California; Starr, Kevin. California: A History Random House Publishing Group, New York, 2005
Jung, Maureen. Capitalism Comes to the Diggings, From Gold-Rush Adventure to Corporate Enterprise (A GoldenState, Mining and Economic Development in Gold Rush California, Edited by James J. Rawls and Richard J. Orsi, University of California Press, Berkeley and Los Angeles CA., 1999), 62.
Letter from William Tecumseh Sherman, February 1858, (published in Clarke, Dwight L. William Tecumseh Sherman: Gold Rush Banker, California Historical Society, San Francisco, 1969), 337.
California State Census of 1952. (microfilm, M/F 144, 6 rolls). Sacramento, California: California State Library; Cherny, Robert W., and Issel, William. San Francisco 1865-1932: Politics, Power, and Urban Development, University of California Press, Berkeley, 1986, 15.
George, Henry. What the Railroad Will Bring Us, The Overland Monthly, Vol. 1, Oct.1868, No. 4, 9.
Jung, Maureen. The Comstocks and the California Mining Economy, 1848-1900: The Stock Market and the Modern Corporation, PhD dissertation, University of California, Santa Barbara, 1988, 16-17.
Jung, Maureen. Capitalism Comes to the Diggings, 69.
Jung, Maureen. The Comstocks and the California Mining Economy, 73.
hinn, Charles Howard. The Story of the Mine, as Illustrated by the Great Comstock Lode of Nevada, D. Appleton & Company, 1897, 145.
Cherny, Robert W., and Issel, William. San Francisco 1865-1932: Politics, Power, and Urban Development, University of California Press, Berkeley, 1986, 28.
Pomeroy, Earl as quoted by Robert Cherny in conversation
Walker, Richard A. California’s Golden Road to Riches: Natural Resources and Regional Capitalism, 1848-1940 (Annals of the Association of American Geographers, Blackwell Publishers, Malden, MA, 2001), 169.
Ibid, 170.
Brechin, Gray, in conversation
Lavender, David. Nothing Seemed Impossible: William C. Ralston & Early San Francisco, American West Publishing Co., Palo Alto, 1975, 178.
Makley, Michael J. The Infamous King of the Comstock: William Sharon and the Gilded Age in the West, University of Nevada Press, Reno, 2006, 17.
www.merriam-webster.com, Merriam Webster Since 1828, online dictionary
Makley, Michael J. The Infamous King of the Comstock, 33.
Cherny, Robert, in conversation
Chandler Jr., Alfred D. Scale and Scope. The Dynamics of Industrial Capitalism, First Harvard University Press, USA, 1990
Lavender, David. Nothing Seemed Impossible, 274.
Van Ryzin, Robert R. Crime of 1873: The Comstock Connection, Krause Publications, Iola, WI, 2001, 59.
Lavender, David. Nothing Seemed Impossible: William C. Ralston & Early San Francisco, American West Publishing Co., Palo Alto, 1975, 325.
Wadsworth, Charles. A Sermon Delivered on Thanksgiving Day, Printed by John H. Carmany & Co., Book & Job Printers, San Francisco, 1868, 15.
Brechin, Gray. Imperial San Francisco: Urban Power, Earthly Ruin, University of California Press, Berkeley, 1999, 39.
Lloyd, B.E. Lights and Shades in San Francisco, San Francisco, 1876, 43.
Jung, Maureen. Capitalism Comes to the Diggings, Table 3.2, 70.
Walker, Richard A. California’s Golden Road to Riches, 184.
Cherny, Robert W., and Issel, William. San Francisco 1865-1932: Politics, Power, and Urban Development, 28.
Assembly Committee on Corporations, “Majority Report,” in California Legislature, Appendix to the Journals of the Senate and Assembly, vol. 4 (Sacramento: State Printing Office, 1878), 8. As recounted by Maureen Jung in Capitalism Comes to the Diggings.