The Story of John Mackay – The Bonanza King


#1

In his day, John Mackay’s story (1831 – 1902) was the most beloved rags-to-riches story in America. He’d risen from the infamous Five Points, the world’s most notorious slum. When Mackay sailed from New York in 1851, he’d had no name, no money, and not a single influential friend on earth. He possessed nothing but strong arms, a clear head, and a legendary capacity for hard work.

He would work as a miner, a laborer, at the bottom of the heap, for over eight years. Penniless, he then walked 100 miles after hearing of a gold strike at the Comstock Lode in Nevada. While other mining men got drunk, gambled, wasted their money and time, he sat home and studied mining and self-improvement. He stayed up late studying every piece of geological and engineering literature he could find and combined that with the practical knowledge he obtained while laboring away at mining for ten years.

He was paid $4 per day as a laborer and he would take on additional contract jobs for other mines and receive “footage of the mine” for his labor. Slowly but surely he labored his way into small ownership positions. Mackay was the perfect example of escape velocity. Escape velocity is achieved by compounding small daily decisions. Everyone who dealt with Mackay knew his word was his bond and he was a man to be trusted.

It is hard to fathom but several years later he would ascend to control the greatest gold district in mining history. He would discover the greatest ore body ever found in North America, known as the “Big Bonanza”. This one mine would pay out $181 billion in today’s dollars, and Mackay took home half of it.

John Mackay would become the third richest person in the world, and during a multi-year stretch in the 1870’s, Mackey had the highest income in the world, with an income of $500,000 - $700,000 per month. His $75 million net worth was mostly in cash and bullion.

But what made him unique was he worked alongside his men. Notable politicians and businessmen would travel to see Mackay and they would find him working in the mine. In a day of “Robber Barons”, there was no other titan worth tens of millions of dollars working alongside men making $4 per day. He would pay his men above average wages while other mines lowered their labor rates.

After his mines were exhausted, he focused his sights on the most hated businessman in the world, Jay Gould. Gould’s Western Union monopoly annoyed Mackay because he felt it wasn’t right for the people. So Mackay launched his own cable company and paid to lay down his own transatlantic cable. He fought the robber baron and broke up his monopoly. While Gould was highly levered, Mackay was not. Gould would say, “If he needs another million he will go into his silver mines and dig it out.”

His employees loved him. The community loved him. The world loved him, and yet his story is mostly unknown.

Earlier this year a wonderful book was published retelling his story called - The Bonanza King. If you love mining history, business history, and intelligent fanatic history, you will enjoy this book.


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#2

John Mackay’s mining interests were publicly traded, but he was not a stock jockey. He was an operator. He made his money off the huge dividends he paid to shareholders, of which he was the largest shareholder.

There were two great stories in the book that highlighted this.

During one of the many mining booms, when Mackay had already made a name for himself, people would stop him on the streets asking for advice on what mining stocks to buy.

He told them all the same thing, “Go and put your money in a savings bank.”

Most people would hear this advice and “stare at him agog, surprised, if not outright resentful, that such an eminent miner wouldn’t share his opinions.”

During a panic, in which several mining interests were manipulating stocks and making money spreading false rumors and shorting their own stocks, a San Francisco reporter asked Mackay if he too made money off the manipulation.

“It is no affair of mine. I am not speculating in stocks. My business is mining - legitimate mining. I see that my men do their work properly in the mines and that all goes on as it should in the mills. I make my money here out of the ore. Had I desired to do so, I could have gone down to San Francisco with ten thousand shares of stock in my pocket, and, by throwing it on the market at the critical moment, I could have brought about a panic and a crash, just as has been done. Suppose I had done so and had made $250,000 by the job - what is that to me? By attending to my legitimate business here at home I take out $500,000 in one week.”


#3

Thank you, @iancassel. John is a legend, and I have definitely never heard of him before… It appears he is not referenced (directly) in the book Think and Grow Rich. He should be!


#4

Thanks @rileynewport. I never heard of him either until I stumbled upon this book. I’m glad I did.


#5

John Mackay provided a good example of reciprocity or “karma” (from Jan 28, 1891):

Capture

The story went on to give a move-by-move, almost boxing match-like, account of the scuffle.

Why did the Bonanza King do it? He was known as a complete gentleman.

C. W. Bonynge came from humble beginnings in England. He moved to the US and made some money in California. Upon earning wealth he went back to England to live in the “high society”. Since few British knew of Bonynge’s humble English beginnings, he believed he could live amongst England’s rich.

That was until someone told the English press of Bonynge’s true beginnings. Numerous exaggerated stories were published in English newspapers on Bonynge’s activities in the US. The British believed the stories. And the English elite didn’t accept the poor - turned rich man, who was now considered American.

C W Bonynge believed it was John Mackay, then in England, who told the press. Mackay knew of Bonynge’s affairs in California and was “hob-nobbing” with English aristocracy at the time.

Perhaps Bonynge concluded that Mackay imagined that London was not large enough for two California mining millionaires. But Mackay didn’t do it.

What Bonynge did in retaliation was circulate attacks upon Mrs. Mackay in New York and London papers. Bonynge also set up a competing cable company to Bennett-Mackay (which Ian highlighted above). All of this infuriated Mackay since he did nothing to receive it.

Mackay responded in kind when he noticed Bonynge meeting with the Nevada Bank’s president Isaac Hellman. Mackay was a director of the company and was a frequent guest.

Isaac Hellman, the only witness, recounted:

“I never in my life saw a man so helplessly at the mercy of another. Mackay continued to pummel him, and Bonynge denied having done Mackay any wrong the later repeated the word ‘liar,’ and further emphasized it with a vigorous blow.”