Black Hills gold rush - Business in United States of America
The Event: Discovery of gold in the Dakota Territory and subsequent influx of prospectors and development
Place: Dakota Territory (now in South Dakota)
Significance: The gold rush led to the development of the Homestake mine, which operated for 125 years and produced 10 percent of the world’s supply of gold.
In the summer of 1874, the U.S. Army directed Lieutenant Colonel George Armstrong Custer to lead an expedition to explore the Black Hills in what was then the southwestern corner of the Dakota Territory. The official purpose of the expedition was to map a route to connect with the road to Fort Laramie and to find a location for a planned new military post. Unofficially, the Army hoped to settle questions about the presence of gold in the region. Under the terms of the Fort Laramie Treaty of 1868, the Black Hills had been promised to the Native American Sioux tribes; persistent rumors of gold in the hills threatened to undermine that agreement.
Custer’s force left Fort Lincoln, located near the site of present-day Bismarck, North Dakota, in early July and traveled south along the western side of the Black Hills. The one-thousand-man expedition turned east into the hills on July 22, 1874. It proceeded as far east as the site of present-day Custer, South Dakota, where it stayed for one week. While Custer and other military officers explored and mapped the area, the two civilian miners attached to the expedition checked local streams for traces of gold. They found some in French Creek. Custer returned to Fort Lincoln and reported the gold find. Almost immediately, thousands of miners rushed for the Black Hills. The sheer volume of miners made it impossible for the military to keep them out of the region. The influx exacerbated the Indian wars that led to Custer’s death at the Battle of the Little Bighorn two years later.
The first prospectors began searching for gold in the southern Black Hills, near the site of the initial discovery in French Creek. Results were poor, with only thin traces of gold being found. It was not until the search moved north that a true bonanza was discovered. The area around Deadwood Creek was rich with placer gold, large nuggets that had broken loose from a larger vein. On April 9, 1876, four miners— Alex Engh, Hank Harney, Frank Manuel, and Moses Manuel—filed a claim on a gold-bearing outcropping near the present-day Lead. They named their mine the Homestake.
Shortly afterward, a consortium of San Francisco investors led by George Hearst bought the Homestake for $70,000. Although the Black Hills gold rush lacked the drama of the two other major American gold rushes—in California in 1848 and in the Klondike in 1896—the Homestake vein proved to be the richest gold vein in American history. The impact of the 1848 gold rush was diffused, with multiple claims being filed and developed over a wide geographic area in northern California. Some 12 million ounces of gold were extracted from California claims during the first five years of the gold rush, but most claims were quickly exhausted. Similarly, the Klondike, with its harsh winter weather and arduous conditions, provided much human drama, but the gold rush there had less of an economic impact than did either the California or South Dakota rushes. Since the initial discovery of gold, the Klondike region in Canada’s Yukon Territory has yielded approximately 12.5 million ounces of gold, a respectable amount but not even a third of the Homestake’s production over the same period of time.
Profits from the Homestake were concentrated in the hands of a small group of investors, so they helped build some of America’s best-known fortunes, such as that of the Hearst family. They also aided the growth of corporations such as Anaconda Mining. With company headquarters in San Francisco, Homestake Mining Company eventually expanded globally into other areas of mining, such as uranium and copper, in locations as far-flung as Australia and Chile. Thus, the economic impact of the Homestake continues to be felt into the twenty-first century.
Miners continued to prospect in the Black Hills, each hoping to strike a claim as rich as the Homestake, but no comparable veins of easily processed ore were found. The Homestake mine itself eventually became the deepest mine in the United States, with a depth of eight thousand feet. More than 40 million ounces of gold were removed from the mine before it closed in 2001.
McDermott, John D., comp. Gold Rush: The Black Hills Story. Pierre: South Dakota State Historical Society Press, 2001.
Meldahl, Keith Heyer. Hard Road West: History and Geology Along the Gold Rush Trail. Chicago: University of Chicago Press, 2007.
Parker, Watson. Gold in the Black Hills. Pierre: South Dakota State Historical Society Press, 2003.
See also: California gold rush; currency; exploration; Fort Knox; gold standard; Klondike gold rush.