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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Intelligent Fanatics October 2018 Digest
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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.