The 1893 Silver Crash

                                                     Magnolia Blvd in Granite, Montana 

The mining camp of Granite was resilient, surviving more than one mine closure. There were many merchants and numerous substantial buildings. Weinstein had a mercantile store and Cain and Thibault were Grocers in 1889,according to the March 14, Mail. Also branches were established and the D.J. Hennessey Store, remained in Granite through more than one downturn in the economy. An article in the September 14, 1893, Philipsburg Mail stated: “This firm was one of the first to locate in Granite and although the town had previous setbacks, they have staid loyally by and have not made a lot of money but also built up the confidence among permanent residents-a thing that cannot be attained by those who came here to clean up and get out-We hope for the Hennessey Company continued success and when Granite resumes its normal conditions again we predict for them and all other business men who staid with the town a greater season of prosperity than they have heretofore enjoyed. J.P. Sullivan was the store manager.” 

The story repeated in numerous articles was that a huge rush of people left Granite when the silver prices fell in 1893. Referring to Arthur R. Stone’s original article March 9, 1912 re-published in Following Old Trails “it was one of the interesting experiences of my life that I was present during the exodus of the miners from Granite Mountain…There were not enough vehicles to transport those who wished a ride down the mountain and many of them walked; trunks were piled high upon great hayracks and shipped down to the railroad station; there were tears in a good many eyes, for Granite people loved their town.” But I did not find him giving any numbers of those leaving. Researching the newspapers of the time, I found no report of an exodus, just a steady stream of people leaving to find another paycheck. On September 14, 1893,The Philipsburg Mail published a list of residents “who have gone away pending the monetary financial panic.” The list contained a total of eighty seven names. I do not know if the name listed represented an entire family or only the male of the household. 

Reading the newspapers of 1893, it was apparent there was a high level of anxiety before any actual word of the silver price crash. There was a run on the First National Bank, for $75,000, beginning Monday afternoon, May 21, 1893. Before the run on the bank other incidents occurred. First, (May 4th) M.E. Doe & Co., served an attachment, enacted by Sheriff John Cole, causing the Standard Theater in Granite to be closed on May 4, 1893. The stated liabilities of owners Risch and White were $2,000 to $3,000 and F.T. Wilson held a $2,000 mortgage on the building. The article stated the sheriff sale would probably not realize much more than the mortgage. The May 4, 1893 issue of the Mail is the first paper available for that year at the Montana Historical Society Research Library. Therefore the information I have may be less panicky than the population had demonstrated. But articles like the following made the mood seem upbeat: “Hynes and Lynch continued work on the Puritan Extension and their prospect is looking better every day. Also, the Board of Aldermen and Mayor-elect Allison requested the businessmen of town to shut down their stores during the hours of the Memorial Day parade. Acting Mayor Ringling stated he would personally ask the business men to close. 

Then, during the week of July 4, it was decided to cancel the Fourth of July celebration. The committee announced subscriptions would be returned to the donors, less the few dollars spent building the dance platform. The article stated the cancellation was due to the business depression, caused by the low price of silver. 

In contrast, The People’s Hotel, erected directly across from the Northern Pacific Depot, was opened the first week in July and a full column was written about the décor and convenience for the railroad clientele. The hotel was under the management of Albert Paquin a businessman known in the Coeur D’ Alene area. 

 A news article on July 27, 1893 stated: “Orders received during the week for closing Granite Mountain, Bi-Metallic, Combination and other mines in the district secondary to a slump in silver prices. In August, hope was being expressed that Congress would pass a Silver Bill to control the price.. They discussed the various bills and legislators supporting them, in a vague way. There was an article published regarding the Windom Plan being superior to the Sherman Law, because the plan proposed using silver as a money basis while retaining gold as the sole standard.

A rumor in May (1893) stated “the (First National) bank was unsafe and its doors were likely to be closed to its depositors. ”The depositors did not wait to question the rumor but immediately began to draw out their money and before the hour for closing arrived several thousand had been paid out on time certificates. During Monday night the rumor spread like wildfire and when the bank opened its doors on Tuesday morning the eager crowd stood in line to draw out their money. 

Apparently, Mr. Hyde transferred some of his stock in the First National Bank to Freyschlag, Huffman and Company, and after doing so he departed for a visit to the World’s Fair. He was the President in both Granite and Philipsburg branches of the bank. Monday night, the banker’s ordered and received another $100,000 from Helena and were ready to give out all money requested, even keeping the bank open so the day shift could remove their money after usual banking hours. By Tuesday evening there had been $74,600 paid out, but during that afternoon people began returning to re-deposit their money and by Wednesday evening nearly “two-thirds of that taken out the day before had been put back on deposit”. 

Then on July 6, published under the headline "Two failures", was a column that stated: “Last Friday our people were surprised when the fact became known that the large mercantile firm of Freyschlag, Huffman & Co. had closed its doors. The firm assigned to James H. King, cashier of the First National bank, the cause being the rapid decline in silver values and the consequent stringency of the money market. It is said that the action was taken to secure home creditors. The store remained closed until Monday, when it was again opened under the charge of the assignee on a cash basis. Then Saturday morning the still more startling disclosure was made that the First National Bank had suspended, and upon investigation this fact was found to be true, as a notice attached to the door testified “that owing to the stringency of the money market, consequent upon the low price of silver, and the drain upon the institution it had been found necessary to close its doors for a time until matters could be adjusted.” 

By July 13, 1893, the bank was closed with an auditor showing that the total assets were $194,000 in Securities and $124,000 in deposits and “The stockholders claim positively that every dollar owed to the depositors will be paid in full, no matter what the outcome”. It was rumored that Freyschlag, Huffman and Company, comprised of Hyde, Freyschlag, Dr. J.M. Merrell and James Patten, who were the head of the Granite Bank, owed the bank $66,000, “but the truth of the matter is that the sum is only about $3,000.” 

A short notice, printed under the Combination Notes, in the July 20, 1893, Philipsburg Mail, stated Freyschlag and Huffman had re-opened.” Then, “Freyschlag, Huffman and Company, was closed by attachment last Thursday night (September 28, 1893) and that extensive establishment is now in the hands of the sheriff. When the late crash first struck Philipsburg, this business, was temporarily suspended, but they managed to reopen about the first of August, by arranging for an extension of time on some indebtedness. The firm was heavily indebted to Hyde, Freyschlag & Co. the banking firm at Granite and owing to the failure of the First National Bank, in which the same parties as those connected with the Granite Bank were interested, and the subsequent and urgent request from the receiver of that institution for a realization of funds, the attachment was forced. It was preferred by Messrs. J.M. Merrell, Joseph A. Hyde, and James Patten, who composed the banking firm of Granite and who have claims against the store to the extent of $67,000 (October 5, 1893)". 

In October, the big news was the entire stock and property had been bought by Josiah M. Merrell. Merrell paid, at a sheriff’s sale $17,500 for the stock in the Philipsburg store; $7,500 for the stock in the Granite store; $300 for eight horses and $2,000 for stock in a warehouse. The buildings and real estate were to be sold in about two weeks, and it was estimated that the total for all stock and buildings would represent not less than $200,000. I did not find the sale of the property published in the newspaper, so it probably remained in his possession until his death on April 28, 1913 in California. His obituary stated he made a fortune from Granite Mountain which he sold at $45 a share. Walter Kroger managed Merrell’s assets after his move to California.

During the period of the silver crash a wage issue developed at the Puritan Mine. The Union Secretary of Granite Miner’s Union notified all underground workmen that if they were receiving less than $3.50 a day, they were to discontinue work immediately. The mine manager, John McKechney informed the Mail that he was making no attempt to reduce union wages.  Since the silver disaster had set in the workers had agreed to accept two-thirds of the union wage in cash and take a company certificate for the other one-third. This certificate would be redeemed by the company when the silver market was restored. The twenty men employed all had families and felt quite fortunate to continue working in the financial downturn.

Alluding to the financial situation, the Ladies Guild of the Episcopal Church stated they had helped at least two families who were in need and had set up a small fund to continue assistance for the families in need. They also stated it was known the people would not ask for help until forced to do so because of hunger.

By November 1893 preparations were underway for the Bi-Metallic Mill to do considerable work during the winter. Apparently a vast amount of tailings had accumulated in the past four or five years while milling only for silver and they planned to re-work them once they had the necessary equipment.

As this issue continued to be worked on by the mine manager, union leaders and the community, miners were sitting with out any work. Before long the Bi-Metallic employed twenty five men at $2.00 a day and the merchants of Philipsburg called a meeting to discuss whether or not they should get involved in the matter. There was much discussion, including town pastors explaining how business and wage earners run parallel courses and should not be interfered with by one and other. Finally the Knights of Labor explained they would assist any family that needed help, as they did not want anyone working for that wage. Needless to say, the men who had families with mouths to feed, saw the writing on the wall and knew if they were not wage earners they needed to become contractors. This way they would bear the risk as the mines could not continue to operate at the wages previously paid.

Later in January 1984 the Bi-Metallic announced work was to commence immediately and they were awarding contracts for the opening of the drain tunnel. The first division of the drain tunnel was awarded to David Balentine & Co. to work a distance of about 2,075 feet. The grading contract for the Bi-Metallic Mill was awarded to George Metcalf. The contract for stone work of the foundation to the addition was let to Joseph Tiefenthaler. The machinery for the luxivation plant would be furnished by Fraser & Chalmers of Chicago. The second division of the tunnel would be worked by the company. Colonel Hart of the Bi-Metallic stated the local residents would be given preference over outsiders for the jobs.

Wages continued to be an issue through out the next decade. There were frequent intervention of union leaders such as J.C. Duffy of the Granite Miner’s Union and the Silver Lake Union, which covered the workers at Gold Coin, insisting that workers must be paid $3.50 a day

In April of 1904, James Willoughby, the foreman of the Bi-Metallic for seventeen years, resigned. Shortly after Sam Arthur who was in charge of the tramway resigned. These resignations were followed by Dan Smith and William Willoughby. Julius Wiegenstein a former shift boss took over the foreman position. Then one year later, Granite Bi-Metallic officials announced the mines were worked out: “Famous properties that have made many men wealthy are to be abandoned. Tracks and pumps taken up and workings left to fill with water. The long predicted end has finally come. Granite will be dead, in fact too dead to skin, but this is accepted as a matter of course. The announcement that the end has come is really a relief to everyone. In the meantime the business men and property owners of Philipsburg are not losing any sleep. They will go right on doing business as if the Granite and Bi-Metallic mines had never been known.”

Obviously, the writer of the news article knew the mettle of the population. Booms and busts continued for many more years and sometimes they included the Granite and Bi-metallic re-opening.