The Mechanics of Optimism: Mining Companies, Technology, and the Hot Spring Gold Rush, Montana Territory, 1864-1868

Published by EH.NET (November 2005)

Jeffery J. Safford, The Mechanics of Optimism: Mining Companies, Technology, and the Hot Spring Gold Rush, Montana Territory, 1864-1868. Boulder: University Press of Colorado, 2004. xii + 185 pp. $35 (hardcover), ISBN: 0-87081-782-5.

Reviewed for EH.NET by Lynne Pierson Doti, Department of Economics, Chapman University.

A professor of history, now emeritus, at the University of Montana, Jeffery Safford was always curious about the ruins in the nearby Hot Spring Mining District. Over a score of years Safford, assisted by family and students, did an extensive search of primary and secondary sources to tell the story of a brief bonanza. With local newspapers, mining company records and business and private correspondence, Safford reveals the story behind the remains of buildings which once housed the executives and equipment of the mining companies.

In May 1863, miners struck an unusually rich gold vein in Alder Gulch in southern Montana, near what is now Virginia City. As miners explored further, they struck gold in other nearby areas. The result was the Hot Spring Mining District which, for a short time, seemed to promise rich lodes. The area was near the Bozeman trail, so travelers abandoned their wagon trains to prospect and news spread quickly with those who continued on. By 1864, investors from New York and other Eastern cities rushed to set up claims and bring in crushing mills to process the ore. These mills were massive and apparently complicated affairs. They cost $25,000 or more and had to be transported from the east coast or San Francisco. One of the largest investors, the New York and Montana Mining Company, spent $39,000 just to outfit a wagon train to transport a mill. The companies also invested in structures to house the machinery and employees.

Unfortunately, as the expenditures rose, the ore was already running out. Thinking that the veins would thicken as they dug deeper, investors at first remained oblivious to the problem. By 1866, these investors were becoming alarmed. Some of the mills were having technical problems. The low yield ore required upgrading the machinery. The harsh Montana climate and remote location made mining even more difficult. The streams that powered the mills ran dry early in the summer and froze early in the winter. Miners and mill workers tired of the cold weather and wanted to leave. Food and other supplies could not be produced locally and were expensive to obtain. Distant investors sent rapidly changing messages: focus on the richest mine, buy more mines, dig deeper into existing mines, try to lock up more surface placer ore, don’t mine, just mill the gold mined by others. None of this advice worked. By 1867, the mills operating often processed tons of rock and recovered so little gold it could not even cover cost. Small problems, like the illness of key personnel, caused disaster. One mill was looted by employees fearing they would not be paid while the manager was bedridden from rheumatism. By 1868, the boom was clearly over. Mines were being abandoned. One of the largest companies closed and put their equipment up for sale. The manager went home to his family in New York amidst criticism by the owners. The problem, however, was not bad management, technical difficulties, or even the location or climate. The problem was best summed up in the local newspaper: “We have ascertained to a certainty, that the richness of our quartz was greatly overestimated by the first discoverers” (p. 143).

This book tells a tale probably similar to many in the late nineteenth century west. Now littered with ghost towns of these brief interludes of optimism, even California and Colorado had hundreds of short-lived mineral booms. As Safford points out, this was the norm (p. xvi).

This book provides useful insights into the technical side of extracting gold, although this could have been explained more systematically. The details on the business arrangements are not compete, but the quantity of detail is a valuable addition to the literature. Those who have an interest in the mining business will want to read the entire series, “Mining in the American West,” of which this book is an important part.

Lynne Pierson Doti is the David and Sandra Stone Professor of Economics in the Argyros School of Business and Economics at Chapman University. She is writing a financial history of California.