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| 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In 1893 President Grover Cleveland repealed the Act and silver was on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