by H. W. Brands
In time Hearst’s Ophir began to play out, prompting him to seek opportunity elsewhere. He dabbled in San Francisco real estate, an occupation that proved mildly profitable—and far more attractive to Hearst’s wife, Phoebe, than the rough existence of mining camps—but ultimately unsatisfying to the Boy (now Man) The Earth Talks To. Hearst was never happier than in the field, breaking rocks with his hammer and filling his saddlebags with specimens. One trip took him to the geologically confused region where the Wasatch and Uintah Mountains collide, just southeast of Salt Lake City. A prospector there had grown frustrated trying to develop a claim that had seemed promising at first but now failed to produce. Hearst saw more than the owner did, and bought him out for $30,000. The mine, called the Ontario, yielded mostly silver, and that only with difficulty. Yet Hearst was a master of difficult rock, and although developing the property nearly drained him—he spent a million dollars before making a nickel—in time the Ontario returned $75,000 per month.
Another man—one less confident of his mining acumen, or less addicted to the gamble of mining—might have rested on the stunning success of the Ontario. (Phoebe wished he would, especially as she had no desire to live among the Mormons. Consequently, while George directed the development of the Ontario, she decamped for Europe, where she spent many months enjoying all that George’s wealth could purchase in the way of culture for her and education for their ten-year-old son, William Randolph.) But Hearst always had to search farther, to listen to what the earth was telling him.
In the 1870s the earth called him to the Black Hills of Dakota. A reconnaissance expedition under Colonel George Custer had discovered gold in the Black Hills; this set off a rush to the region, which provoked resistance by the Sioux, who considered the Black Hills sacred, and who had been promised the region as part of the settlement William Sherman encouraged by threatening the utter destruction of the Sioux nation. Custer led a contingent against an Indian army headed by Crazy Horse and Sitting Bull; at the Little Bighorn in June 1876, Custer met an annihilating defeat.
Yet the Sioux couldn’t keep the miners out of the Black Hills any more than the Yosemite Indians had kept miners out of the Mother Lode; and Hearst joined the rush there. According to family lore, Phoebe was getting terminally tired of his chasing after new discoveries, and particularly of his habit of gambling everything they had on his latest find. “George,” she said, while he was packing for Dakota, “if you find a good mine, let’s have it as a homestake.” “Puss, we will,” he agreed. “We’ll call it the Homestake mine.”
Phoebe was right to worry that the Black Hills would swallow most of Hearst’s money, for within months he and a partner had bought some 250 claims, covering an area of 2,600 acres. The ore was very poor by Sierra or Comstock standards, averaging less than four dollars of precious metal per ton. But the veins were hundreds of feet thick, and could be quarried rather than mined. The scale of operations dwarfed anything in California or Nevada; eventually 600 stamps were employed to crush the ore, manned by the workforce of a company town that sprang up to service the Home- stake.
The returns were commensurate with the investment. The Homestake turned a profit in 1879; during the next twenty years it yielded $80 million. At the beginning of the twentieth century it was the heaviest producer of gold in the United States, and remained so for several decades. It continued to produce gold until the beginning of the twenty-first century, when it was finally closed.
ALTHOUGH HEARST COULD have been forgiven for forgetting it, especially after the gold of the Homestake made him one of the wealthiest men in America, all that yellow metal wasn’t really wealth, but merely a marker for wealth. King Midas knew the difference, but, human nature being what it is, his hard-won insight was often forgotten.
In 1776, the same year that the father of Mariano Vallejo helped Junípero Serra establish the presidio at San Francisco, Scotland’s Adam Smith published a book entitled Inquiry into the Nature and Causes of the Wealth of Nations. Smith wrote during an era of official amnesia regarding the Midas insight; the conventional wisdom of Smith’s day equated national wealth, and the power wealth could purchase, with stockpiles of gold and silver. British imperial policy sought to secure for the mother country as much precious metal as possible, even at the expense of Britain’s colonies (especially at the expense of Britain’s colonies, it seemed to Thomas Jefferson, who penned the other landmark manifesto of that pregnant year: the American Declaration of Independence). Smith contended that this mercantilist thinking was wrong. National wealth, he said, consisted not of gold and silver but of goods and services people could actually use. The wealthiest nation wasn’t the one with the fullest coffers, but the one with the most productive people—people busy producing (and consuming) bread and beer and boots and books and bonnets and (the example dearest to Smith’s heart) pins. If gold helped a nation become productive—that is, if gold stimulated commerce—then it served a beneficent purpose. If it strangled commerce, it might better be thrown into the sea.
Smith’s ideas required time to take hold in Britain. Not till the middle third of the nineteenth century did the British government abandon mercantilism in favor of free trade. (One of those responsible for the conversion was John Bright, the uncle of the frustrated buccaneer who partnered with Asbury Harpending.) Britain’s embrace of free trade was an essential element in the ascendancy of its empire during the long Victorian period, a time when the small island attained astonishing sway over a remarkably large patch of the planet. British merchants penetrated nearly every market; British industrialists led the world into the modern era of urban plenty. (Urban poverty existed alongside the plenty, as Charles Dickens and many others noted.)
Yet Britain’s new free-trade power rested on gold fully as much as its old mercantilist power had, albeit in a different way. The British hewed to a gold financial standard, largely because in an otherwise uncertain world the solidity and stability of gold offered crucial reassurance to the deep- pocketed investors who were being asked to send their wealth to the far corners of the globe. Britain’s initial adherence to the gold standard had been a bit of an accident, the result of one of Isaac Newton’s few miscalculations. As master of the royal mint, Newton in 1717 set the price of silver too high, thereby prompting people to hoard their silver coins and pay their debts with gold. Silver gradually disappeared from circulation. Eventually Newton’s error came to seem inspired, and in 1821, Britain’s de facto gold standard became de jure.
Other countries were less intrinsically enamored of gold, but as British trade expanded, so did the reach of the gold standard. Germany followed Britain’s example in embracing gold; as one of the architects of Berlin’s new policy explained, “We chose gold not because gold is gold, but because Britain is Britain.”
Germany also chose gold because the discoveries in California and elsewhere made such a choice possible. The purpose of money is to lubricate trade: to allow bakers and brewers and chandlers and hostlers to do business with one another without having to resort to barter. For trade to increase, the money supply has to increase. (Otherwise prices fall, discouraging producers from producing.) In modern economies, central banks adjust money supplies to suit the needs of commerce. Under the regime of the gold standard, however, adjustments were essentially fortuitous, dependent on the world supply of gold. The gold strikes in California and Australia and elsewhere greatly augmented the world’s available gold supply: credible estimates asserted that in the quarter century after Coloma, more gold was mined around the world than had been mined in the previous 350 years. All this gold amply lubricated world trade and allowed other countries to join Britain on the gold standard.
The United States gravitated toward gold for the same reason Germany did. Much of the money for America’s industrial expansion—including the construction of the Pacific railroad and other rail lines—came from Britain. British investors insisted on receiving their payments in gold; this encouraged those American individuals and group
s soliciting British investment to insist on receiving their payments, from their domestic customers, in gold as well. The only way to guarantee this was to have the government make gold the basis for the American dollar.
But gold wasn’t as beloved of the rest of the population as it was among the bankers. Bankers, being creditors, benefit from a strong dollar, one that can purchase at least as much on repayment as at the time of lending. Debtors, by contrast, prefer a weak dollar, one that is worth less at repayment than when borrowed. Farmers are typically debtors, needing loans for land, equipment, seed, and workers’ wages; and the large portion of farmers among the American population in the nineteenth century tended to favor a weak dollar. (If a farmer borrowed $100 when a dollar bought one bushel of corn, he had to grow 100 bushels to repay his debt. If the dollar grew stronger, for example to where it bought two bushels, he had to grow 200 bushels to redeem his debt. If the dollar weakened, to where it bought only half a bushel, he had to grow just 50 bushels.)
Much of American politics of the nineteenth century turned on the struggle between debtors and creditors for control of the currency. Creditors acclaimed gold as the only honest money, as the currency God Himself had ordained by making it rare and therefore beyond the manipulation of mere mortals, including that subspecies of mortals so tempted to corruption: politicians. Debtors decried gold as the money of the rich and the chains of the poor. Money was made for the people, they said, and not the people for money. God was no banker, and even if He was, He had also created silver and paper to supplement gold when His children required them.
Whichever side God was on, before 1848 gold was simply too scarce in America to serve as the sole currency. Silver circulated under federal law (as did gold); paper notes were issued by state governments and privately owned banks. The result was a financial hodgepodge, with gold and silver being favored or shunned depending on their comparative availability, and paper being discounted for the distance and unreliability of the issuer.
James Marshall’s strike in California, however, marked the beginning of the ascendancy of gold. The boom in the world gold supply eased demands for resort to silver and paper. The Civil War interrupted the trend, as the Union government felt compelled to issue paper currency to cover the cost of the conflict, but within a few years of the end of the war, gold reasserted its centrality. (It was during the period of readjustment that Gould and Fisk launched their raid on the country’s gold supply.) The Coinage Act of 1873 neglected to mention silver at all, essentially placing the United States on a gold standard.
But in certain respects, gold did its work too well. Trade and industry expanded during the Civil War and for the next three decades. Production in all sectors increased, outstripping the growth in the (gold) money supply and thereby pushing prices down. Again debtors clamored for relief. Better organized than before—first in the Farmers’ Alliance, then in the Populist party, and finally in the Democratic party—they called for the remonetization of silver. Their rhetoric was often overheated and under- cooked. The Coinage Act was dubbed the “Crime of’73.” The advocates of gold were said to be the minions of a sinister conspiracy that aimed to rule the world from headquarters in London, a conspiracy controlled by a cabal of Jewish bankers linked to the Rothschilds. William Jennings Bryan climbed to somewhat higher but no less impassioned ground at the Democratic convention of 1896, when he declared defiance to gold and all who served it:
If they dare to come out in the open field and defend the gold standard as a good thing, we will fight them to the uttermost. Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests, and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns! You shall not crucify mankind upon a cross of gold!
Bryan won the Democratic presidential nomination with this speech, but he subsequently lost the country. His inclusive phrases were too generous: most of the commercial and laboring interests of America sided with gold against silver. And why not? Despite a recent depression, the material standard of living of the average American had risen a great deal during the decades the country had been on gold. One didn’t have to be a banker to appreciate this, or to desire that the favorable trend continue.
Although Bryan lost to William McKinley, the candidate of gold, in 1896, he didn’t discourage easily. He ran again in 1900. By that year, however, his opposition to gold wasn’t simply a minority viewpoint but an anachronism. The depression was over and the country was riding another wave of expansion, this one driven by the new discoveries of gold in South Africa and the Yukon, and by new methods of refining gold (which employed cyanide, rather than mercury, to wrest the gold from the surrounding quartz). This latest addition to the gold stream increased the money supply even without silver, setting the United States more firmly on the gold standard than ever. The Gold Standard Act of 1900 made things official.
18
American Dreamers
Jessie Frémont lived long enough to see Republican McKinley elected a half century after her husband John had been the Republican party’s first presidential nominee. She doubtless took some satisfaction in the event, although the memory of that earlier contest was bittersweet, for, as things happened, John’s nomination for the presidency in 1856 proved to be the high point of his public career, and in certain respects the high point of both of their lives. Several months after the election they encountered serious trouble on the Mariposa, where, among the frustrated placermen forced to take employment in Frémont’s quartz mines, there developed great resentment that one man—even one as famous as John C. Frémont—should monopolize so much of the gold. He didn’t dig the gold; he hadn’t even discovered it. By right and justice, gold ought to belong to those who brought it out of the earth. Some of the grumblers, emulating Jean-Nicolas Perlot and the other early squatters, began digging on their own behalf on the Mariposa, and defied Frémont to prevent them from keeping what they dug. Others took matters more firmly into their hands, invading one of Frémont’s shafts and provoking an armed standoff that threatened to erupt into pitched battle. Although Frémont and the occupiers eventually reached a bloodless settlement, the affair tarnished his reputation among many who had been his staunchest supporters.
The outbreak of the Civil War caught Frémont in France raising money to expand operations on the Mariposa; immediately he turned to purchasing weapons to defeat the Confederates, writing checks for the guns from his own account. Lincoln considered him for minister to Paris, where he retained his popular cachet, but he preferred to return to arms. He received command of the Union army’s Department of the West, headquartered near Jessie’s family home in St. Louis. His zeal for the antislavery cause—or perhaps it was her zeal, operating through him—outran his authority, and when he issued a proclamation freeing the slaves of Missouri, Lincoln countermanded the order. Frémont rashly allowed himself to be nominated for president in 1864 by Republican radicals vexed with Lincoln; when his candidacy stalled, his star plunged further.
Frémont had never been an astute businessman, and amid the distractions of the Civil War he lost financial control of the Mariposa, which continued to pay, only no longer to him. He tried to recoup his fortune by going into railroads, but found himself competing against Leland Stanford and others who actually knew the business. The money that remained from the Mariposa vanished when his rail venture collapsed in 1870.
All that saved him and Jessie from dire poverty was her pen. As she had come to his literary rescue in the 1840s by drafting his expeditionary reports, now she came to his—and her—financial rescue by contributing dozens of articles to magazines about their lives together and apart. At times the two were compelled to accept the charity of friends. When bronchitis forced Frémont to find a warm climate, Collis Huntington offered his own private car for the trip. Frémont at first resisted the offer, but allowed himself to
be persuaded by Huntington’s logic: “You forget our road goes over your buried campfires and climbs many a grade you jogged over on a mule. I think we rather owe you this.”
Although Congress finally voted Frémont a pension, he didn’t live to enjoy it. Seized by a chill while visiting Brooklyn in 1890, during his seventy-eighth year, he weakened quickly. Yet to the end he hoped for a another stroke of good fortune. “If I keep this free of pain,” he told his doctor, during a momentary improvement, “I can go home next week.”
“Home?” replied the doctor, who was unfamiliar with the full Frémont biography. “What do you call home?”
