COLORADO SILVER, THE SHERMAN BROTHERS, AND MORGANITE

MINE DUMPS WEST OF CARBONATE HILL, LEADVILLE, CO.  LEADVILLE WAS ONE OF THE LARGEST SILVER CAMPS IN THE WORLD UNTIL THE 1893 CRASH.  PHOTO FROM USGS LIBRARY.

 Most persons with at least a passing interest in U.S. history would recognize the name of William Tecumseh Sherman, and if you lived in the southeastern part of the country the mention of his name in public might bring on trouble.  Likewise, Sherman is not popular among Native Americans.  During the U.S. Civil War General Sherman led his men on the infamous, scorched earth, “total war”, march to the sea through Georgia.  After the conflict he became Commanding General of the United States Army and as such was responsible for troops engaged in hostile actions with Native Americans in the western U. S.

General Sherman had a brother (actually he had three) by the name of John Sherman who was a successful U.S. Congressman, Senator, Secretary of the Treasury, and Secretary of State.  Today people hear his name associated with a law passed in 1890, The Sherman Antitrust Act.  This piece of legislation is intended to protect the American public from cartels and monopolies.

In the history of Colorado (and some other western states) Sen. John Sherman, Chair of the Senate Finance Committee, is known as the author of the Sherman Silver Purchase Act enacted in 1890.  This legislation stipulated that the U. S. government purchase about 4.5 million ounces of raw silver every month (in addition to silver already being purchased as mandated by the Bland-Allison Act).  The Sherman Act was a great boon to Colorado mining companies that had a vast supply of silver at their disposal, both in storage and in the ground, and raised the price of silver to over $1 ounce.  But since Sherman was a senator from an agrarian state (Ohio) the act was supposed to help farmers who had accumulated large debts (mostly to due to bad luck and droughts).  Supporters thought the law would stimulate the economy, combat deflation, create inflation, and then drop the dollar in value (so the debts could be paid in cheaper dollars---and I thought “voodoo economics” was invented in 1980).  Well, the entire scheme backfired and people begin to buy gold with their redeemable notes, rather than holding silver, and the country’s gold reserves became depleted.  In 1893 President Grover Cleveland repealed the Act and silver was on its way out and most mines in Colorado suffered.  Large scale unemployment was rampant in Colorado and mines all over the state closed down.  The “lucky” ones were able to produce gold or copper or lead-zinc.

Today, J. P. Morgan Chase & Co. seems always to be in the news---mostly as the “bad guy”.   In the late 1800’s and early 1900’s J. P. Morgan, the financier, always seemed to be in the news---often as the “bad guy”.  However, in 1893 the U.S. Treasury had been nearly depleted of gold as banks thought gold a better investment than silver, something the Sherman Act did not anticipate.  At any rate, J. P. Morgan, the financier, sold/loaned the U.S. about 3.5 million ounces of gold.  Always the shrew banker, he received a long term bond in exchange for the gold and certainly made money.  But, his immediate action did perhaps save the nation?  Could any individual, today, come up with those sorts of resources?

It is interesting to note that although the Act was repealed in 1893, the debate on the national scene went on for many years.  History books in “my era” (a long time ago) spent several pages talking about the “Goldbugs” of the Republicans and Wm. McKinley (a gold standard) vs. the “Silverites” of the Populists and Democrats and Wm. Jennings Brian (free silver) in the presidential election of 1896.  The free silver issue really was not settled until the Federal Reserve System was established in 1913.  But, hold on.  Many of us can remember how two brothers from Texas tried to corner the silver market in the 1970’s and early 1980’s.  In the early 1970’s the price of silver on the commodities market was less than $2 per oz.  By about 1980 the brothers owned 50% of the disposable silver and prices artificially soared to over $50 an oz.  Silver mines all over the west were retooling and share prices of silver mining companies were high (at least out of my reach as a small time investor)!  But then, the bubble burst as the Federal Reserve “came to the rescue” and the price of silver collapsed (as did the stock market; remember the prime rate of 22% in 1980?).

Perhaps the political intrigue of that time in history was just as dark and dirty as today?  I once read a bibliography of J. P. Morgan and it was simply fascinating.  He was an astute businessman involved in a wide range of activities and “older” (read my generation) history books will tell you that he organized over 40 corporations and owned numerous railroads, a true venture capitalist.  He was disliked by many but loved by a few.

Morgan collected gemstones, many/most of which later landed in collections of the American Museum of Natural History. George Kunz, the chief jeweler for Tiffany & Co, suggested in 1910/1911 that the pink variety of beryl [Be₃Al₂(SiO₃)₆] be named morganite after J. P.  Of course, Kunz was the person who curated Morgan’s gemstones.  Kunz may be best known for  his namesake, the pink variety of spodumene, kunzite [LiAl(SiO₃)₂].  The pink color in both morganite and kunzite is likely due to manganese ions.

mike