By William (Bill) Howald, CEO of Rye Patch Gold Corp.
If Nevada is so full of gold, why is it known as “The Silver State”?
It all started in 1849, after word of a huge gold strike, easterners rushed to Sutter’s Mill on the American river in California. On the way to California most miners and settlers traveled though the vast wilderness and forty-mile desert of Nevada. On the west side of the state just beneath the majestic Sierra Nevada mountains, near modern day Dayton, weary travels stopped to resupply, water their animals, and prepare for the worst that was yet to come, crossing the Sierra Nevada.
While milling around in the hills outside of Dayton, prospectors Pat McLaughlin and Peter O'Reilly found gold outcropping at the head of Six-mile canyon. A fellow prospector named Henry Comstock intervened and told the two the lode was on his property.
Meanwhile, another gentlemen by the name of James Finney, whose nickname was “Old Virginny”, was following up on the reported gold find. Upon his arrival -- in a drunken stupor -- Old Virginny passed out, I mean, accidently dropped his whiskey bottle, which broke upon the ground. Not wanting to waist the moment, Old Virginny declared the ground and his new bed as Old Virginny Town in honor of himself! This is the quaint and humble beginning of the hard drinking, gambling and rough and tumble mining town of Virginia City, Nevada.
The gold strike had a good tenor, but was difficult to mine because lots of blue-gray clay gunk that would stick to the picks, shovels, rockers and sluices. The goo mess was irritating for the gold miners, but something that had to be dealt with given the high quality of the strike. One day, someone had a great idea to assay the bluish ooze. Samples were collected and taken to Nevada County for assay. The blue-gray mud turned out to be high-grade silver ore worth over $2,000 per ton in 1859 dollars. The silver strike became known as the Ophir claim, which produced high quality silver and gold in vast quantities. The news of the high-grade strike quickly traveled eastward and caught the eyes and ears of President Abraham Lincoln.
Now, Lincoln wanted the silver and gold to help pay for the Civil War and keep the Union solvent, so in 1864 he carved Nevada out of Utah territory and fast tracked it to statehood even though it did not have the required 60,000 inhabitants needed for a proper state. The decisive factors propelling Nevada to statehood were Lincoln’s pending 13th Amendment banning slavery, and the quick action of the Nevada constitutional delegation sending the entire Nevada Constitution via telegram, the longest telegram of its day, to Washington D.C. Their speedy actions paid off with quick congressional approval of statehood on October 31, 1864, (yes, we are the Halloween state) and the new state of Nevada gave strong support to Lincoln.
The prospectors continued to excavate the mine. Troubles with processing lead to bringing others onboard to help capture the gold and silver. No one really knew what the deposit was worth or how large it could be so when the cash offers arrived, the prospectors took the money. Henry Comstock sold a portion of his share of the Ophir mine for a blind horse and a bottle of whiskey (the Old Virginny portion), and sold the remaining equity for $11,000.
Patrick McLaughlin sold his 1/6 interest in the Ophir claim for $3,000 to George Hearst - that’s right, the father of William Randolph Hearst. That winter, George Hearst and his partners managed to mine 38 tons of high-grade silver ore, packed it across the Sierra Nevada on mules, and had it smelted in San Francisco. Hearst and his partners made $91,000 profit or roughly $3.55 million in 2013 dollars. Hearst became one of the best-known mining men in the Americas. The acquisition of the San Francisco Examiner was the result of a bet where the loser paid his wager with the newspaper – which became the foundation for the Hearst publishing empire. Yet another example of bet on the jockey!
The silver ore of the Comstock created new wealth and captains of industry, built the city of San Francisco, propelled Nevada to statehood, and saved the Union. That’s why Nevada has the moniker “The Silver State”. So carry on California, you can still be the “Golden State” but we know Nevada is where all the treasure is buried.
Editor’s note: William (Bill) Howald is the co-founder of Rye Patch Gold Corp, a TSX listed company. Prior to joining Rye Patch, he was General Manager of Exploration, United States and Latin America, for Placer Dome Inc. During his tenure at Placer Dome, Mr. Howald was an integral part of the teams that delivered over 100Mozs of gold resources to the Placer portfolio. A number of these resources are now being mined or are at the feasibility stage and heading for a production decision. Mr. Howald was born on the “Richest Hill on Earth” and has 30 years in the international gold exploration and mining industry gained primarily in Nevada, Mexico, and Central and South America.
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