It Was Easier To Lose Money Than Make It During The Gold Rush
Mining History by Harold Hough
One of the great myths of American mining history is that the prospectors and miners were the chumps of the western gold rush and everyone else made money. That’s far from true. A lot of savvy people went out west with the intention of making a fortune selling goods and services to miners, but ended up going home a failure.
Take gamblers for instance. A lot of gamblers headed out west sure that they could make a killing without realizing that the move might be akin to going from star of the high school football team to the Super Bowl. Many gamblers from the east, who went out west were themselves cleaned out by better gamblers.
Then, there were the professionals and retailers. When word came back that stoves fetched $50 and a cord of wood $25, many a shop owner packed up his goods and headed out west. In many ways, they were just as naïve as the prospectors who headed out to the gold fields.
Professionals who assumed that the growing mining towns would need their skills often made the biggest mistakes. Amongst those were the lawyers who overestimated the miner’s need for legal advice. In 1897, during the Yukon gold rush, several lawyers, who rushed to Dawson to offer their services, were forced to take passage on the last boat to leave Dawson before the winter froze the river. These lawyers, who gave fictitious names, lest others discover their failure, came north in hopes of setting up lucrative mining litigation practices. However, according to a writer of the time their, “only practice up to the present time had been an occasional exhibition of their knowledge of the rules of order and parliamentary procedure at miner’s meetings.”
Ironically, even doctors often went home in defeat. Physicians, who were often used to the comforts of medicine in a large city practice, were shocked to see conditions in the mining community. Miners were more interested in occupational medicine – keeping the body together in order to keep mining. Minor complaints were often ignored or dosed with a liberal swallow of the local “Red Eye.”
One writer said, “It would require a population of 20,000 to assimilate the lawyers, physicians, dentists, electrical engineers, etc. now on the ground. Most of them are spending the winter in idleness, consuming their substance and cursing the economy.”
The one job that always seemed in demand was bookkeeper. The Alaska Commercial Company would pay bookkeepers in the far north $125 a month in gold, equal to about $6,500 a month today. And, of course barkeepers, who knew how to mix up many different types of drinks, could make up to four times as much a month ($26,000).
History records the successful retailers like Levi Strauss, who made a fortune turning canvass and copper rivets into jeans. But it wasn’t easy to make a living as a retailer in remote mining camps. In addition to the capital to make purchases, it took quite a bit of effort to get goods across the wilderness – especially during the gold rushes in Alaska and the Yukon. Moving goods required a large number of men and pack animals, who, could be hired at a port, but might desert at the nearest gold strike. The retailer was then forced to hire new workers at higher prices.
The trip itself often broke the prospective entrepreneur. Alaskan Gold Strike writer Sam Dunham tells of a drover who was moving a herd of cattle to Dawson in hopes of making a fortune selling miners beef at $1.00 a pound. “One drover reports that in crossing the Chilkai River, he was forced to sit helplessly on his horse and see his herd of 85 cattle disappear in the quicksand until in many cases only their heads were visible. Fortunately, the quicksand was shallow, and the cattle were rescued by means of lariats, but in an exhausted condition, which rendered it necessary to allow them several days rest.” About a third of the herd died before he reached his destination. That’s why many would just give up and sell their stock before they reached their final destination.
The best chance to make a quick profit was by transporting small stocks of goods that brought high prices. Diamonds and pocket watches yielded profits of 100% – 150%, while cowboy hats could bring a 400% margin. Yet, even this was tricky. Some dealers would bring in quantities of cheap jewelry, only to find out that the demand was only for high grade diamonds.
Of course, there was one sure fire commodity – alcohol. Even in the Yukon, where alcohol import was limited to, “medicinal, mechanical, or scientific purposes,” consumption was about 12 gallons per capita per year. “It must be admitted that the traffic offers great attractions to the man who wants money so badly as to render it immaterial to him how he makes it,” said Dunham.