History of the big bonanza

by Dan De Quille

It was the coming in of the multitude, as, indeed, it always is, that sent not only the stock of the bonanza mines, but also all other stocks rushing sky-ward with rocket-like celerity. When the people start in en masse to buy stocks they—to use a very elegant illustration—shut their eyes and rush in like a hog going into battle. They exhibit startling vigor, activity, and enthusiasm, for a short time, but the moment they stop to “get their wind,” that moment they are in a fit condition for a panic. The least thing now startles them, and they take wing and are off like a flock of pigeons; or, to carry out the simile, turn tail with a snort, and make for the canebrakes. As many of these unusual dealers in stocks have bought at the highest figures, and on margins to a ruinous extent taking all manner of desperate chances, a panic among them speedily demoralizes the money-markets, and persons who have made their purchases with the best of judgement lose, as all stocks are driven as much below as they were before forced above their real value.

In the time of a grand panic the coolest of persons and men of best judgment are forced to sell their stocks in self-defence, or because it is, as they say, “business” to sell when it is plainly to be seen that the tendency of prices is irresistibly downward; and in this way the crash is made still more complete and sweeping. Men no more take into consideration the real value of a stock at a time when there is a crash in the market than they do when the market is unduly excited and everything is going up with a “rush.” The condition of the mines is not taken into consideration on the occasion of a panic. Rich developments in the mines undoubtedly are the prime cause of an advance, and this advance is generally such as is justified by the mineral wealth brought to light until the people “rise up in their might” and take a hand in the business, after which time no man can say what will happen.

As the masses purchase without knowing anything of the mines except what they have heard, so they sell in spite of all that may be told them. Having never seen or examined the mines into which they have bought, when a panic occurs they are more ready to believe that there are no mines at all than to believe that they still exist and remain the same as when they made their purchases. Thus at the time of the panic, in 1875, there was actually a vast deal more ore in sight and the mines were looking better than at the time that the highest figures were reached—that was daily being brought to light the existence of which had formerly only been surmised. Men, however, were not dealing in the big bonanza as it existed in Nevada, but as it appeared on California street, San Francisco. They had lost their interest in the mines and were thinking only of their money.

At the time of the panic men who had seen and examined the great bodies of ore developed in the Consolidated Virginia and California mines, not only held on to their stock but continued to purchase as long as they had money—buying more and more as the stock receded, and in this way some of even the best-informed “came to grief,” as, looking only at the mines and not at California street, they bought on margins, and the call of the brokers for “mud” soon distressed them and forced them to make ruinous sacrifices. In speaking with Mr. John Mackey, the mining millionaire and one of the principal owners in the bonanza mines, about this time (February, 1875), he said to me: “We have not yet fairly started in upon the California. It will require steady work for at least six months to show what that mine really is.”

In regard to the Consolidated Virginia (then yielding at the rate of $1,000,000 per month), he said: “Some persons think that the stock has already sold for more than it is worth. The truth is that it has never yet sold for one-half of its value; but all this will be seen in good time. People will see it after a while.”

Speaking of the crash in stocks, Mr. Mackey said; “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, and 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 $500,000 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.”

Mr. Mackey, indeed, troubles himself very little with the ups and downs of the stock-market or with the chicanery and wire-pulling of the stock manipulators. As he says, he is content to see that all goes well in his mines and mills, and, as it were, scoops his coin directly from the lower levels into his pockets. He wants to make no money by engineering crashes in stocks which ruin thousands on thousands of industrious and worthy persons. During a short conversation with him, Mr. Mackey repeatedly said: “My business is square, legitimate mining, I make my money here from the mines—from the ore itself. Both here and in San Francisco,” continued he, “persons are constantly coming to me, or writing to me, to ask—‘What shall I buy?' I say to all that come to me—‘Go and put your money in a savings bank.[bank.]’”

Indulging in a quiet laugh, at this point, Mr. Mackey said: “You should see some of them stare at me when they hear this advice. They evidently consider me a strange kind of mining-man. But in speaking so I mean just what I say, and my advice is good. I never advise people to buy mining-stocks of any kind.”

In this Mr. Mackey is right. He can never know what jobs may be put up by the “stock-sharps” to break the price of almost any stock on the list, merit or no merit. By giving no advice he escapes all reproach, and pursues the even tenor of his way, digging his dollars out of his mines, regardless of the fluctuations in stocks and the machinations of the “manipulators.”