For over 125 years, South Dakota’s Homestake Mine churned out ore loaded with gold and silver. Thousands of men worked the strike down to over a mile and a half below the earth’s surface, the deepest mine in the Western hemisphere as well as the American mine producing the most gold. At the price of gold as of this writing ($1821 per ounce), the mine’s lifetime production of almost forty million ounces would be worth $72 billion. The Homestake was the first publicly traded mining stock and a key source of William Randolph Hearst’s fortune, managed by his widowed mother Phoebe for 28 years. Today the former mine plays a role in astrophysicists’ search for the origins of the universe. Here, in brief, is this remarkable story of money, men, machines, and, above all else, gold.
In 1874, General George Armstrong Custer was assigned to lead a massive expedition into the Indian territory that is today South Dakota’s Black Hills. Over 1,000 men, 1,900 horses and mules, and 110 wagons moved through the land in the southwestern part of the present state. Custer’s men found signs of gold. His reports of the precious metal spread across the nation using the power of the telegraph, and another gold rush was on, reminiscent of the 1848-9 rush to California.
Two years later, the thirty-six-year-old general would die at the Battle of Little Big Horn, defeated by the likes of Crazy Horse of the Lakota Sioux.
The Black Hills were remote, two hundred miles from the nearest fort at Pierre (“peer”) and the nearest railroads. Summers could be hot, but the winters were more brutal, with temperatures sometimes dropping well below zero. And the land was not yet even legally “American,” – the sacred hills of the Sioux still belonged to them.
Yet hardy prospectors flowed to the area, erecting tents and ramshackle houses, but mainly scratching, digging, sluicing, and panning for the gold. Deadwood and other communities arose in an instant. One of the boom towns was Lead City, pronounced “leed” in recognition of the “leads” or “lodes” of gold-laden ore, largely quartz, that they found.
The standard mining claim was based on a rectangle 300 feet wide and 1500 feet long. The claimant had to start a shaft within a few months, and mark off land 150 feet on either side of it. Claims were made left and right, often overlapping and bumping into each other. There was no county seat or state capital in which to file these claims. Each claim was of questionable legality since the land belonged to the Indians. But those obstacles did not stop the prospectors, who often found new strikes so fast that they never finished work on their earlier claims, failing to drill the required shafts on time and thus secure their claims. Surveying was sometimes slipshod. Almost every find was thus subject to debate as to ownership.
Among those prospectors were the Manuel Brothers, Fred and Moses, raised in Quebec and of French descent. The Manuels, who had already made $25,000 ($600,000 in 2021 dollars) mining in Alaska but tired of the cold there, made several claims in the big hill that was Lead. The Manuels’ Homestake claim of 1876 was one of the most promising finds. (The name is generally thought to derive from the idea among miners of finding a stake that was big enough to allow them to “go home,” usually back East.)
But the man who was to shape Lead and the Homestake Mine came from the west. He lived in San Francisco and his name was George Hearst. The then-thirty-year-old Hearst had left his native Missouri in 1850 to find wealth in the California gold fields. Hearst learned metals and mining well, but it wasn’t until 1859 that he struck it rich with a one-sixth interest in Ophir silver mine, near Virginia City and the Comstock Lode in the future state of Nevada. In 1872, Hearst backed his friend Marcus Daly in the Ontario silver mine at Park City, Utah. The Ontario strike would produce $17 million worth of metal over the next ten years. Hearst was thus a rich man and considered one of the top mining experts in the nation. (He also later backed Marcus Daly in Montana’s 1881 Anaconda copper mine, one of the most important in the world.)
In order to pursue the numerous mining opportunities across the West, George Hearst partnered with two San Francisco attorneys, both originally from Kentucky. James Ben Ali Haggin was the grandson of an immigrant from Ottoman Turkey who had married his Christian slave wife. Lloyd Tevis was an investor in telegraph and transportation companies in California and would gain control of and serve as the president of express and banking company Wells, Fargo from 1872 to 1892.
The three men, of about the same age and all living in San Francisco mansions, formed Hearst, Haggin, Tevis, and Company, the largest private owners of mines in America. While Haggin and Tevis remained in their posh San Francisco offices, George Hearst was always travelling to new mines, living in rough camps, scratching the earth for himself, and reporting to his partners on what he found. Few if any had the eye for great mineral strikes that Hearst had.
And thus, in 1877, George Hearst was in Lead in the Dakota territory. His hands and eyes told him that there was a lot of gold there. His capital resources allowed him to make good on his vision. Hearst, Haggin, Tevis bought out the Manuel brothers’ Homestake claim for $70,000 ($1.7 million in 2021), giving the brothers the “homestake” of which they dreamed. But George Hearst was now in the driver’s seat in Lead.
Hearst spent much of the next two years in Lead securing control of the Homestake and neighboring mines. He’d occasionally return to San Francisco to rest and see his family. That family came about when the then-forty-year-old bachelor returned to Missouri to care for his aging mother when he met the lively young Phoebe Apperson. The two were married in 1862: George Hearst was forty-one and Phoebe was nineteen. A year later, their only child, William Randolph “Willie” Hearst came along.
But in 1877-79, George Hearst focused on the Homestake. In 1877, the federal government had “negotiated” a treaty with the Sioux which finally made the land “American.” But the mining claims were still suspect and overlapping. Hearst was quick to do his own surveys and take the other prospectors to court to validate his own claims. He bought claim after claim, paying as much as $100,000 when needed. While the New York Herald reported that he had others killed in order to seize their claims, historians have found no evidence to that effect. While non-violent, George Hearst was relentless in his efforts to control and develop the Homestake, expanding his claims to thirty acres of ore-rich land.
Hearst and his partners invested $200,000 in developing their stake. A narrow-gauge railroad was built into nearby forests in order to bring timber to the mines, timber that would form the underground structure of the ever-deepening mine. (Much of the gold was also found on the surface, resulting in a huge pit that remains to this day.) Hearst ordered hundreds of “stamps” – large mills which pounded the ore once a second with 900 pounds of iron weights, making deafening sounds as they worked.
Five hundred men worked the Homestake as it dug 100 feet, then 200, into the ground. The required tools and machines were hauled the 200 miles from Fort Pierre to Lead in mile-long trains of twenty-oxen teams. Prospectors and settlers walked alongside the trains, paying a small fee to toss their gear and belongings onto a wagon. Refined gold was sent out of Lead on stagecoaches under the watchful eye of the express companies like Wells, Fargo and American Express, the UPS and FedEx of their day.
None of this was easy. It was the prototypical “wild west:” Lead and nearby Deadwood saw frequent murders. In one of his many letters to his partners in California, in 1878 the fifty-eight-year-old George Hearst wrote:
“You can bet your life I have made up my mind to fight this thing out on the old line at all hazards as it shows the most damnable fraud every perpetuated in any country. I will hurt a good many people. As I wrote you, if we succeeded in finding out the fraud and maintain our rights there would be more squealing than ever was heard before. And it is quite possible that I may get killed, but if I should I can’t help but lose a few years, and all I ask of you is to see that my wife and child gets all that is due them from all sources and that I am not buried in this place. We will commence the survey of that and the Gold Run (another stake he had bought) tomorrow when the fight will commence.”
By 1879, George Hearst accomplished his goals in Lead, left the town, and never returned. He was active in California politics, and in 1880 bought the San Francisco Examiner newspaper to further his political ambitions. (In those days, almost every paper was either Democratic, like Hearst, or Republican. Bias was built into each issue.) Hearst became a US Senator from California in the 1880s.
Hearst urged his twenty-something son Willie to run one of his large ranches (in California and Mexico) or to run the Homestake, but Willie wanted to run the newspaper. George had purchased the weak paper for political reasons, not to make money, and thought that business hopeless. Against his better judgment, he let Willie run the paper. Blasting sensational stories, the Examiner set the tone for William Randolph Hearst’s “yellow journalism” and publishing empire that evolved over time. (A fictionalized version of Willie’s life lives on in the classic film Citizen Kane, considered one of the greatest movies ever made.)
In 1891, the seventy-year-old George Hearst died, leaving his entire $18-19 million fortune to his widow Phoebe, then forty-eight years old. Until her 1919 death in the influenza epidemic twenty-eight years later, Phoebe ran the family empire, including the Homestake. She also tried to keep a watch on her son’s increasingly uncontrolled spending through her cousin’s son and chief administrator, Edward H. Clark. Records indicate that Phoebe Apperson Hearst loaned her son over $10 million during this period. Both Haggin and Tevis outlived George Hearst and remained major investors in their shared enterprise, but Phoebe was the largest stockholder and ran the show along with cousin Ed Clark.
Unlike George, Phoebe took a real interest in the welfare of Lead and made several visits there. Under her ownership, the Homestake Mine Company or Phoebe personally gave the city medical care, a library, a recreation center, and a kindergarten. She also personally owned and developed the then-largest department store in South Dakota (which became a state in 1889), the Hearst Mercantile Company in Lead. The store gave unlimited credit to the Homestake mine employees, but payments on the store accounts were deducted from their paychecks.
Life in the Homestake Mine:
Over time, every aspect of Lead grew. It became the second most populous town in the state. The mine dug deeper and deeper. The number of noisy “stamps” approached 1,000. Employment count exceeded 2,000 men. Homestake developed new and better technologies to get the gold out of the tons of ore mined. In 1890, two local railroads finally connected Deadwood and Lead to the national railroad system, ending the era of oxen trains and stagecoaches. The two were later acquired by the big Chicago railroads, the Chicago, Burlington, and Quincy and the Chicago and Northwestern.
As the mine dug deeper and carved more earth away from the open pit part, the buildings in Lead began to subside into the land. Each had to be rebuilt further away from the mine, and the Homestake Company helped pay for the moves despite the fact it had no legal obligation to do so.
It was said that “the Homestake is Lead and Lead is the Homestake.” A succession of experienced miners ran the mine in Lead, always reporting back to their San Francisco bosses, led by Phoebe and Edward Clark. The Homestake Mine continued to absorb new capital and was a public company with shareholders all over South Dakota and the nation. Yet Phoebe remained the largest owner with about a twenty percent share, and Ed Clark oversaw the company on the family’s behalf until his 1945 death.
By the 1970s, the mine reached 7,000 feet down into the earth, and by the 1990s hit the final 8,000-foot mark. With temperatures at that depth exceeding 130 degrees, the company spent hundreds of thousands on air conditioning to keep it cool down there, under 70 degrees. The mine contained over 370 miles of tunnels.
In 2001, Canada’s Barrick Gold acquired the Homestake Mining Company, which had expanded into mining in other areas for other minerals, including uranium, for $2.3 billion in stock. Today, Barrick and the American competitor Newmont Mining Company are still the largest producers of gold. The two companies share ownership of Nevada Gold Mines, the largest gold mining complex in the world, with 7,000 employees.
At the same time, Lead’s Homestake mine had finally run its course as an economically viable gold and silver mine. It was closed in 2002 and in 2006 given to the state of South Dakota. Over its long life, the mine averaged a net production of just .3 ounces of gold for each ton mined and milled. Millions of dollars flowed to the Hearst family and other investors, far more than even the optimistic George Hearst ever dreamed.
With millions in government and philanthropic money, the Homestake mine became the Sanford Underground Research Facility. Deeper than any mine in America, it was the ideal place to do research on neutrinos and other particles, away from the interference of particles from the sun and atmosphere. Work is now being completed on a massive project in which neutrinos will be shot 800 miles through the earth from Fermilab outside Chicago to the lower levels of the Homestake. This video explains one of the several projects underway at the Lead facility.
Despite William Randolph Hearst’s spending millions building “Hearst Castle” on his father’s San Simeon land and collecting art and castles around the world, virtually bankrupting him in the 1930s, the Hearst fortune and media empire not only survived but prospered. Today Hearst Communications is an $11 billion private company chaired by William Randolph Hearst III. The firm has extensive interests in broadcasting, magazines like Cosmopolitan and Good Housekeeping, newspapers, and cable television (including a half interest alongside the Walt Disney Company in the A&E Networks, which includes the History Channel). And San Simeon, the largest private home in America and a property nobody wanted or could afford to maintain when donated to the State of California in 1958, has become one of the most-attended state park facilities in the nation.
American Business History Center
PS Here is a video tour of my recent trip to the Black Hills, including a section on the Homestake. For more on George Hearst and dozens of other entrepreneurs of the West, see Philip Anschutz’s excellent book that we reviewed here.