Gold Mining in the Black Hills

The Black Hills gold rush and the consequent local mining industry began with the Custer Expedition of 1874. As Custer led his 1000 men through the Hills, two miners attached to the undertaking uncovered small quantities of gold near present day Custer, South Dakota. As word spread, the rush began. People flocked to the southern Black Hills, looking for their share of the gold. But the diggings proved meager, and soon prospectors started looking for better paying locations.

From Custer, the fortune hunters moved north, establishing the towns of Hill City, Sheridan, and Pactola. At each spot, flecks of gold appeared in their pans, but never the bonanza they sought. For all practical purposes, the Black Hills gold rush could have ended then and there. Poor returns had stymied many earlier gold rushes in the West.

But everything changed when the roving miners stumbled across Deadwood and Whitewood Creeks in the northern Black Hills. Each spade of earth uncovered a veritable fortune in gold to those who arrived first and staked their claims. By early 1876, miners had claimed all of the land around the creeks, but thousands more folks poured into Deadwood, hoping to find a missed spot. The gold they found was placer gold, loose gold pieces that were mixed in with the rocks and dirt around streams. Most good prospectors knew that this gold had to come from somewhere else. They knew that gold naturally occurred in quartz/rock formations, and that thousands of years of erosion had released the placer gold. So, while some people rushed to the placer diggings at Deadwood, others looked for the quartz outcropping that had originally held that gold.

The greatest day in Black Hills mining history came on April 9, 1876, when Fred and Moses Manuel, Hank Harney and Alex Engh discovered a gold bearing outcropping near present day Lead, staked a lode claim, and named their new mine the Homestake. They had located a small part of the most significant gold vein in American history. It was from this vein that the placer gold in Deadwood Creek had eroded, and it would be from here that men would produce 10 percent of the world’s gold supply over the next 125 years. Such a vast undertaking required capital, and early on, three bonanza kings from the gold fields of California, William Hearst, J. B. Haggin and Lloyd Tevis, bought the mine and eventually made a fortune from it.

All prospectors and miners hoped to find another “Homestake,” so they continued to look. But the Homestake was a unique gold mine in the Black Hills. The quartz rock did not hold the gold very tightly. Workers could simply crush the rock to release the gold, then expose the crushed material to the mercury that would catch the gold. Miners called this kind of gold ore free-milling.

Gold did exist elsewhere in the Black Hills, but it was not in this free-milling state. In these cases, gold was chemically bound to the rock, and very difficult to remove. It was called refractory gold ore. New processes had to come along to treat this type of ore. So for a number of years, the Homestake operated as the only major gold mine in the Hills.

New processes did come along, however. By 1890, chlorination and smelting were seen as two methods that could remove gold from the refractory ore, and some new hard-rock mining regions opened around Lead and Deadwood. Then by 1900, the cyanide process was refined. Cyanide dissolves gold out of crushed ore, and this procedure became universally adopted in the Black Hills. Mines at Galena, Carbonate, Bald Mountain, and Ruby Basin all came to life.

In the early 20th century, thousands of men worked in the ground extracting gold. The government, however, had fixed the price of gold at $20.67 per ounce in the 19th century, and did not change it for years. Gold mine after gold mine closed during World War I as the price for labor and supplies escalated, but the price of gold did not. Only the Homestake could endure.

Then the Great Depression swept across the nation, and Roosevelt decided to raise the price of gold to $35 per ounce, hoping it would help the country’s finances. While the nation remained in the Depression, the gold industry boomed. The Homestake hired workers and expanded, and other mines in the Hills reopened. But what the government gives, it can take away. When World War II hit, the federal government classified gold mining as a non-essential industry, and ordered all gold mines closed. As men and their families moved away, mining towns in the Black Hills suffered, only slowly to recover later. Even after the war ended and gold mining was again allowed, mining companies struggled. Gold remained frozen at $35 per ounce, and the mines had a hard time competing for labor during the nation’s post-war prosperity. Only a few miners worked in the Hills, and only the mighty Homestake could continue.

When President Nixon freed gold from government control, its price floated with the world market. Prosperity seemed assured as gold topped $800 an ounce in the early 1980s and a new gold rush swept the Black Hills. The Homestake expanded operations, and long abandoned mines became attractive to investors. New mining companies came to the Hills and started using open pits and the heap leach cyanide method to recover gold. At least five open-pit mines began operating. Since these heady times, the price of gold has floated down to more reasonable levels. All but one of the open pit mines has closed, either because they ran out of gold ore, or the lower price of gold prevented a profitable return. Even the Homestake succumbed to dwindling returns and ceased operation in 2001.

Only the Wharf open pit mine near Terry Peak remains in operation. When it closes in a few years, gold mining will, most likely, be a bygone chapter in the history of the Black Hills.