AKA George Graham Rice or Graham Rice
"I wonder on whose bank account reposes all the dough I had,In what fat ledger the amount is tabulated - Oh it is a sad, sad story of the hoists, Egad!The winds have blown them all away with the hunches that were bad.Where is the stock of yesterday?Where is the profit promised by Mr. Schwab and Patsy Clark?Where is the golden vista's lure across the desert far?Keep it dark..The way is long and far the hark between the promise and the pay,between the hunger and the shark.Where is the coin of yesterdaythe winds have blown away?"
The Greenwater Mining Stock Scam
One of the best accounts of the Greenwater Death Valley copper scam of 1907 comes from Jacob Herzig in his book My Adventures with Your Money. Herzig [also known as George Graham Rice] describes three major parties acting in the Greenwater affair beginning with promoter Patrick Patsy Clark and Malcolm Macdonald; the second interest represented was Charles Schwab with Tasker Oddie and Charles Miller behind the monopoly money promoting in New York, Philadelphia and the Pittsburgh stock exchanges; and the third interest was that of Arthur Kunze, an original locator in the region.
Clark was a promoter of Butte Montana copper and Clark's early promotion of copper stocks in Death Valley produced some limited development in Furnace that coincided with Miller and Charles Schwab taking a huge interest in local properties with a desire to diversify their interests. Based on developments sponsored by Clark and Schwab, Macdonald's ambition as a new president of the First National Bank of Tonopah motivated MacDonald's financial interest in Greenwater; while Court and Arthur Kunze maintained their major stake in the Greenwater Brokerage Co.
Graham Rice writes with his own agenda as a gifted confidence man, and contrary to the Rice assertions, Greenwater did not intend to start life as a stock swindler's paradise. Recent huge strikes in Goldfield, Tonopah, Bullfrog, Rhyolite and surrounding environs led mining men as well as the public to believe that the mineral belt could easily extend into California and Greenwater, in the heart of Death Valley, and the history of Greenwater could have been very different if the mineral showings in the district had extended to the 300' level and beyond as promised by engineers in the semi-developed prospects, but alas the promised spectacular copper deposits did not develop at any depth.
According to Rice, stock promoters ignored local stock exchanges to promote directly in the East where it was difficult for mining men and engineers to survey and sample the ground. For every reputable promotion that Clark, Schwab, and Macdonald attempted there were a dozen con-men and misguided stock promoters driving the copper market further into realms of unreality - dangerous ground for any securities market.
How the Scam Developed
Copper-bearing ore had been discovered in Greenwater Canyon as early as 1884 however the dubious pleasure of working a mine hundreds of miles from civilization or railroads and with a limited water supply, especially in summer, prevented the area from being developed. But with the mining booms in Tonopah and Goldfield from 1904 attention was directed once again to this mineralized area of Death Valley and exploration centered around three camps:
Exploration and development by Patsy Clark in Furnace Valley
The Kunze expedition [Kunze & Glasscock]
Charles Schwab's Interests
The Charles Schwab Interest
Donald B Gillies Charles Schwab Malcolm Macdonald
Charles Schwab was represented by Donald B Gillies and Malcolm Macdonald in Nevada and California. Gillies had represented Schwab in the Bullfrog District and the Montgomery-Shoshone was purchased by Schwab based on a recommendation by Gillies. Gillies had come away from considerable former success with the Montana-Tonopah Mining Company as well as the Tonopah Extension. With his extensive Tonopah exposure it was only natural that Gillies and Macdonald were acquainted, in fact Macdonald also had ties to the Montgomery-Shoshone and the Tonopah Extension mines so it is only natural that these two men were the major instruments of Schwab's efforts in developing Greenwater. To dispense with detail Schwab would eventually engineer a consolidation of Greenwater mines as follows:
Greenwater & Death Valley Copper Co.
Furnace Creek Copper Co. (a former Clark enterprise)
United Greenwater Copper Co.
The Patsy Clark Interest
If ever a promoter had the dubious distinction of being the pioneer in this scam it was Patsy Clark and the benefit to Clark is evident today - Clark's ostentatious mansion in Spokane is now an upscale restaurant. Clark grubstaked two hardy and rugged prospectors to investigate Greenwater Canyon and despite early setbacks these two gents staked considerable ground. The first working but non-producing prospect was established in this region and incorporated as the Furnace Creek Copper Company; perhaps one rail car load of high-grade copper ore originated from this mine during it's early days but no more commercial-grade ore was ever found in quantity. Clark sold his controlling interest in this early Death Valley prospect at it's peak and then formed a new company, the Furnace Valley Copper Company.
Clark's interests were vested in the Pittsburgh and Philadelphia stock markets and Clark appears to have had minimal contact with senior mining men of Tonopah and Goldfield, with the possible exception of Malcolm MacDonald. Certainly Herzig has little respect for Clark implying that Clark's stock promotions were designed to hoodwink the public, allegations that might hint of credibility if the source itself were more credible.
The Furnace Valley Copper Co. was Patsy Clark's next big incorporation subsequent to his promotional gains with the Furnace Creek Copper Company
The Saratoga was always popular with the editors of the Chuck-Walla, Kunze and Glasscock, and they may have held an interest of some sort in the mine but it never paid - this stock has a State Bank & Trust registration stamp.
The Chuck-Walla editors were also fond of Charles Schwab for very obvious reasons, and the United Greenwater was consolidated by Tonopah financier Malcolm MacDonald with several other properties to form Schwab's 25 million dollar Greenwater Mining & Smelting operation; unfortunately the twenty-five million cap was soon to be zero and this stock is worthless as a financial instrument.
The Kunze Interest
Rare Photo of Kunze courtesy of the California State Museum; these Buildings Moved to the new Townsite
Court Kunze was a German emigrant in California hoping to study at Berkeley but he went into the newspaper business instead. With the financial help of his brother Kunze set out for Greenwater with friend and fellow reporter C. B. Glasscock from the San Francisco Examiner, when the Greenwater boom looked to be the Next Big Thing in the desert. Kunze and Glasscock published the famous Death Valley Chuck-Walla in a shameless attempt to promote Greenwater, and the Chuck-Walla was perhaps one of the strangest news periodicals ever devised.
Kunze's goal was to become a millionaire in the desert but Kunze and Glasscock never came close to realizing that dream. Glasscock is quoted as saying that he and Kunze arrived with $35.35 and they could have sold out several months later for $10,000 - a significant sum in 1907 - but they were having too much fun with the Chuck-Walla and their free-wheeling life in Greenwater to do so. The content of the Chuck-Walla makes it clear to the reader that there can be humor even in failure.
Greenwater in winter snow of 1907; by June, 1908 the camp was abandoned
Kunze & Glasscock on the Failure of the Sullivan Trust
The article below ties in well to the theme of scam from a financial aspect, however the fundamental problem with Greenwater was it's failure to produce commercial grade copper ore. It is an important point that all major mining booms experienced a certain degree of shyster-ism on the margins of their success, whether the Comstock, Colorado or Pennsylvania coal, and the practice of hijacking the public was not limited to mining stock manipulation; mining stocks and wildcat mining promotions were only succeeded in their poor reputation by wildcat oil scams in later years. For this reason the Death Valley Chuck- Walla is recommended reading because it is invaluable to any financial history enthusiast who may wish to understand the psychology and mechanism through which savvy investors may be relieved of their funds in stock scams, even today.
"The Sullivan Fiasco" is from Volume 1 no. 3 of the Death Valley Chuck-Walla. This article was written and published in February of 1907 and proves that the Sullivan Trust was in trouble long before the dates mentioned by Jacob Herzig in his book My Adventures with Your Money.
'The fiasco of the L. M. Sullivan Trust Company of Goldfield is now ceasing to be an absorbing topic of conversation among brokers and mining men throughout the United States, but such a fiasco as it was, deserves a word in passing. It received many words from people for a time, and these well-mixed with curses on the heads of the company and it's directorate. Now it is forgotten in it's reconstruction, but there remains something yet to be said on the effect of the smash.
The company was cordially disliked by every honest broker and promoter in the mining centers. The company was known to be putting the money from its sales of stock into manipulation of the market to keep up the values of the stock instead of putting the same money into the mines to develop their value. The outcome of this could be readily foretold, and mining men who studied conditions were not surprised at the crash. They knew that such a crash was inevitable, and that it would, when it came, cause a scandal which would make the public suspicious of other companies and so hurt the business. For this reason they justly hated the L. M. Sullivan Trust Company and consequently shed no tears at its disgrace. Now the honest men are busy trying to clean the smirch of the Sullivan gang's disgrace from the honest concerns which have been spattered in the process.
The Sullivan gang has received help from some unknown quarter, [Ed. - the authors undoubtedly refer to T B Rickey and the purchase of the Sullivan "assets" by Rickey.] and is allowed a definite time in which to make good. The result of that opportunity to make good is awaited with interest. The men who are behind it are each backbiting the other, and evidently trying to get out of the mess with as much of their dirty money as possible. So the honest men of the desert mines are as distrustful of the gang as before, and merely trying to keep away as much as possible. Such fiascos are known to set the mining business back by raising suspicions against good and bad alike, in the minds of outside people. Therefore, the end is awaited with hopes that it may be soon. Crooked concerns are not wanted, and if the members of the L. M. Sullivan Trust Company, now in their last few months of grace turn their attention to robbing each other that they may get out with as much as possible, the mining world and the general public will at least be safe from their dirty work. In proof of their intention of fighting among themselves we have the words of George Graham Rice, the manager of the concern. A more hypocritical outburst than that which he gave to one of the recent San Francisco papers it would be hard to imagine, and in the depths of his hypocrisy may be seen the character of a man who before all things and all obligations to the public will pull his own dirty dollars out of the mess. Here is some of his dope given to some trusting young reporter who gladly returned to his office and wrote of Graham Rice as the mainstay of the Corporation, and the guiding star which should lead it back to life.
"The present directorate is too vulnerable, and I think that the business of the Sullivan Trust Company would be best furthered by the elimination of their personalities. There is Larry Sullivan. Objection is made to him that he was once a saloon-keeper. Why a man once in the liquor business should not turn out as good a mining promoter as one graduated from any other business or profession I fail to see. But we will accept the prejudice and bow to it."
Now what do you think of that? Graham Rice, a known jailbird and ex-convict is willing to submit to a prejudice against a saloon-keeper and throw him out of the company. He is too generous. His attitude illustrates, however, the attitude of the rest. It is dog eat dog, and that until the end. Every man in the company, saloon-keeper or convict, is after what he can get out of it, and the chances are that at the end of the period of probation, there will be no more company. [Ed. - today this conclusion of the authors is easily attained, however in 1907 it took foresight and some bravery to publish such material.] The present men will make their getaway. The new ones may be decent. The company and all its directors, including Graham Rice, have done more harm to the mining business than any other ten liars in the country, and the sooner they kill each other off the better for all concerned.'
- The Death Valley Chuck-Walla, February 15, 1907
The Real Failure of Greenwater
Once we work our way through the financial implications of the copper market collapse in 1907 we are left with the fundamental engineering truths as stated above, that the real problem with Greenwater was it's failure to produce commercial grade copper ore. At any point during a mine's history there are men and women assessing the valuation of ore blocks consistent with managing the viability of the prospect's ability to pay a commercial return. These men and women are usually honest, erudite, upstanding and well-educated geologists and engineers. In the case of Greenwater several "knocker" geologists visited the camp and remarked at the lack of values in the ores that they sampled.
Kunze and Glasscock refer to a reporter from the East, one Parmeter Kent, as the central culprit in debunking the valuations touted for Greenwater copper ore. While the Chuck-Walla's analysis of these "knockers" of the camp is highly amusing and vehemently disparaging of the knocker's view, the individual most closely associated with reporting the truth on Greenwater ore probably never visited Greenwater at all.
The following account is historically the most plausible and well-documented on the demise of Greenwater, and did not involve analysis of ore at Greenwater, this is the account related by Sid Norman, the Furnace townsite manager concerning developments when Pope Yeatman investigated ore shipped by Furnace Creek Cooper, with Yeatman representing the Guggenheims: evidently Yeatman closely examined all of the Furnace properties and reported that malachite, chrysocolla and azurite held a limited amount of oxides of copper that did not extend in any direction beyond the 300 foot level of the Furnace Creek shaft.
Furthermore when Yeatman attempted to find the other Clark workings he discovered that no development had been done, and in fact that the prospects could not be identified on the desert, much less sampled for ore values! So as soon as Yeatman reached a phone in Las Vegas the bad news on Death Valley copper got to New York and stock prices for Greenwater and Furnace alike began to fall in strategic steps as the Guggenheims and other investors disposed of their Death Valley copper securities; a final major collapse in these securities occurred in October of 1907, and by June of 1908 Greenwater was totally abandoned and all copper development in the district had stopped.
At this point the burning question for the reader must be: how much money did the public actually lose in Greenwater? Nobody knows for certain, however Clark's Furnace Creek Copper issue originally sold well below par at fifteen cents per share and by December of 1906 had reached $5.50 per share on the New York curb with a float of almost one million shares. There were at least fifty major stock promotions related to Furnace and Greenwater copper in 1907 with innumerable property transactions and buyouts, invariably relating to worthless ground. When Schwab's Greenwater Copper and Smelting issue is considered along with Rickey's disastrous purchase of the Sullivan Trust, the very low estimate of public and private loss can be estimated as 50 millions with an upside loss of 120 millions in real terms; these amounts were no small sum in 1907, and the paper losses cannot be calculated, estimated, or even imagined.
Panic of 1907!