William Sharon, King of the Comstock: Part I

King of the Comstock, William Sharon. | Courtesy UC Berkeley Bancroft Library.

William T. Sharon may have smugly welcomed his royal moniker, “King of the Comstock,” but it brought him little respect or fealty from the average citizen of Virginia City and nearby Gold Hill, Nev.

Sharon was the Bank of California’s investment agent for Comstock mining operations, who later became head of the San Francisco-based bank. Comstock and Carson City residents and businessmen eyed him warily, seeing him as “cold and hard, focused only on corporate goals.” Sharon’s ruthless foreclosure policy, shadowy stock deals and steep assessments levied on stockholders invested in his mines endeared him to no one.

Born in Ohio in 1821 to a Quaker family, William Sharon worked a farm to pay his way through Athens College and then studied law at the office of Edwin M. Stanton, who later became President Abraham Lincoln’s secretary of war. Sharon had a successful legal practice in Illinois until he bolted for California in 1849, catching the first wave of the gold rush. After a destructive flood in January 1850 wiped out his tent-house business in Sacramento, Sharon shipped out for San Francisco. He dealt in real estate and amassed $150,000 by 1856.

In 1858, Sharon met William C. Ralston, founder of the Bank of California. Sharon had recently lost his fortune in high-risk stock speculation and was effectively bankrupt. Despite Sharon’s financial status, Ralston liked what he saw in the man and he brought him in as a partner. Ralston paid Sharon to be the bank’s point man in Virginia City, thus saving his new associate from economic ruin.

In the 1860s, despite a significant downturn in Comstock mineral production, Sharon and the bank invested heavily in further exploration of the mines at a time when other financiers were cashing out and abandoning the still largely untapped mother lode of silver and gold. The Bank of California’s top officers, Ralston and Sacramento banker Darius Ogden Mills, were initially skeptical of investing too much in the sketchy Nevada mines, but Sharon deviously controlled mine production and share prices on the San Francisco Stock Exchange to his advantage; he was on his way to becoming one of the richest men in America. The Bank of California made millions, as well.

Through foreclosures on low-interest loans that they had made to optimistic mine and stamp mill owners in bonanza times that later petered out, Sharon and the Bank of California acquired a sizeable portion of the Comstock operations. Between 1864 and 1874 Sharon controlled more than a dozen of the best producing mines in the region. Sharon’s business acumen helped create the financially influential “Bank Crowd,” San Francisco-based directors and financiers who controlled much of the big investment money on the West Coast. A master at insider trading and business fraud, Sharon capitalized on the rigged game of stock speculation and he acquired enormous wealth in the process. Mining intelligence gleaned from his underground foremen and superintendents gave Sharon secret information that he needed to lock in big profits on the stock exchange.

Comstock lawyers hit their own bonanza litigating mining law, especially the contested interpretation of where one claim ends and another begins. In June 1871, Sharon had a hunch that the Belcher Mine, which most investors presumed tapped out, had significant potential. The mine adjacent to it, the Crown Point, had recently opened up a sizeable vein of silver and its stock price had soared from less than $5 a share to $340. The Bank of California owned $1.4 million worth of Crown Point stock and its value seemed destined to climb much higher but based on his belief that the lucrative Crown Point vein could be accessed through the adjoining Belcher, Sharon cashed out and used the profits to take controlling interest in the Belcher.

Sharon immediately hired away Crown Point’s respected foreman W.H. “Hank” Smith to work for him. Hank had made the recent Crown Point discovery and within a short time successfully directed Belcher exploration toward the rich underground vein originating in the Crown Point. When miners reached the lode, shares of Belcher Mine stock rocketed from Sharon’s purchase price of $1 a share to $1,525 per share in just three months. Between 1871 and 1878, the Belcher Mine produced nearly $32 million, compared to the Crown Point’s total bonanza of about $26 million. Sharon certainly had the Midas touch, as well as the dark cunning of Mephistopheles.

Sharon and the Bank of California invested nearly $2 million to build the Virginia & Truckee Railroad that mechanized Comstock freighting, fulfilling Sharon’s vision of a vertical monopoly to control activities from the collecting of raw materials through the shipping of the final product. Without a railroad, the high cost of freighting Comstock ore to the stamp mills that processed the rock on the Carson River cut deep into mining profits. The river current was essential to the ore milling process because waterpower cut ore reduction costs by half when compared to stamp mills with pistons driven by cordwood-fueled steam engines. The freight companies were big business; they employed 2,000 men and used between 12,000 to 15,000 mules, horses and oxen to pull huge wagons loaded with ore down to the river — and they siphoned a lot of money out of the profit chain.

For years the bull whackers maintained a stranglehold on Comstock operations, but the bank’s short-line railroad, completed in 1872, connected the Comstock to the Carson River and Reno to end the monopoly. They could now cheaply transport ore to the reduction mills and for the return trip the empty railroad cars could be loaded with cordwood and lumber flumed down from the Tahoe Sierra for fueling boilers and shoring up shafts and tunnels. The railroad operation, freighting and ore transportation costs plummeted 30 to 40 percent.

Similar to other powerful business tycoons of the era, men such as John D. Rockefeller and Andrew Carnegie, Sharon was a visionary capitalist of the so-called Gilded Age, where American industrialization expanded rapidly and produced unprecedented economic growth. The robber barons’ glamorous lifestyles and opulent palatial estates, however, were just a thin gold veneer that masked the fact that millions of Americans were languishing in squalor and grinding poverty.

Stay tuned for Part II in the next issue of Tahoe Weekly and at TheTahoeWeekly.com.

Special thanks to my colleague, historian Michael J. Makley, who authored “The Infamous King of the Comstock: William Sharon and the Gilded Age of the West,” published by the University of Nevada Press.