ODDS’N’SODS — Mine financing in the 1800s

Most of the mines now abandoned in the hills and mountains of Arizona, as well as those that are a part of open-pit operations, required outside financing to operate.

Few miners had the money to operate “out of pocket,” and so they needed assistance. Some got it with “grubstakes” — money provided by private parties at high risk. Rarely, however, was the money paid back. Most obtained their capital through some form of public offering; they sold stock through the corporate vehicle.

The advent of the California gold rush brought prospectors through Arizona on their way to that state. While the Spanish explorers first developed a few silver and gold mines, the new breed of prospectors generally stuck to placer gold mining along the rivers and tributaries. Lode mines were considered too dangerous to search for, because of Indian trouble in many regions of Arizona. Immigrants and prospectors generally moved through Arizona quickly. By the time of the discovery of the rich Comstock Lode in Virginia City, Nev., in 1859, and its subsequent development, more and more miners searched throughout the west for their metallic fortunes. The federal government began to help by providing forts and military personnel as trail escorts through hostile Indian territory, particularly in such areas as Arizona. The common practice of financing a mine in the early 1860s was to sell a certain number of feet (usually 100) in the mine or lode. If the claim was 1,500-ft. long, the owner would get 15 investors at 100 ft. each. This worked fairly well for a while in lode mines but not at all in placer mines. Boundary disputes developed, as well as disputes over mining methods. The result was an incorporation of all the persons who had bought “feet” in a specific mine. This acted to reunify the claim to its original size and gave all the owners an equal share.

As early as 1860, through the efforts of such notable men as George Hearst, miners learned to band together their “feet” in a mine, in a new co-operative venture known as a corporation. Hearst brought together — as a corporation — the original owners of the Chollar mine on the Comstock, raised funds and, with them, discovered a bonanza orebody. By 1863, the selling of stock in western mines, particularly in Comstock and Reese River (Austin, Nev.) districts, was rampant in New York and San Francisco.

— From James Garbani’s “Arizona Mines and Mining Companies,” published in 1993 and available from Arizona Territorial Trader, Box 85842, Tucson, Ariz. 85754-5842, U.S.A.