CHAIN O’ MINES

By Ben Dugan
GCN Historical Writer

Economic conditions following World War I and the fixed exchange rate of $20.67 per ounce of gold enabled gold coins and gold certificates to become popular mediums of exchange.  Today the U.S. Treasury is required to maintain reserves to back the value of Federal Notes.  In the period preceding the 1920’s the U.S. Treasury did not have adequate specie (gold or silver) reserves to cover its legal obligations.  There were, however, enough reserves to cover its gold certificates.  This monetary policy was designed to prevent bank runs and panics as the holders of gold certificates could appear and request gold coin instead.  World War I changed this.  Despite nationwide labor problems and the Panic of 1907 caused by the failure of several Wall Street Brokerage Firms and the Knickerbocker Trust, the United States enjoyed prosperity from 1898 to 1914.  An inflationary policy was adopted by Europe during World War I. Gold, which was already losing purchasing power, suffered severe deflation after the war began.

The economic conditions in Central City were severely depressed during the 1920’s.  The population in Central City declined to approximately 500 people.  By the late 1920’s, gold mining began to see a resurgence in Gilpin and Clear Creek Counties.  An investment group from Chicago organized a company to take advantage of the cheap and abundant mining claims in the area.

Dr. W. M. Muchow and investors set up the Chain O’ Mines Company and began construction of a 250-ton per day mill to process ore from the Quartz Hill mining claims and surrounding properties.  An aerial tramway was installed to bring ore from the Glory Hole Mine over the top of Quartz hill to the mill.  Evidence of this tramway can still be seen in the “stripes” through the trees above the tailings pile in Central City.

Much development work in the old mining claims was required and thousands of tons of milling ores were previously broken down into stopes (vertical shafts) to be drawn and put through the mill.  In late 1929 a new 850-ton capacity mill was in full operation by the end of December.  The new mill contained the very newest scientific machinery known in the mining world and no expense was spared to make this mill one of the most efficient in the Country.  Dr. Muchow proved to be quite the capable director of operations and challenged other mining operations throughout the state.  The equipment in the mines were also the best and things ran well and efficiently for many years until the events of World War II brought an end to the glory days of mining in Gilpin County.

Modern equipment and efficient methods permitted the low-grade ore to be processed and shipped for smelting to the American Smelting and Refining Company in Leadville.  The smelter had its origins from the Guggenheim family.  Meyer Guggenheim got into the mining business financing the A.Y. mine property in Leadville’s early days.  In 1911, ARASCO netted a $13,699,726.31 profit and had assets totaling $185,599,107.87, according to their consolidated financial statements for that year.  One of Meyer’s sons, Benjamin Guggenheim, went down with the Titanic in April 1912.  The ARASCO Smelter in Leadville shut down in the early 1960’s as did the Carlton Mill in Cripple Creek ending the modern era of Gold and Silver mining in the State of Colorado.  The Cresson Mine located between Cripple Creek and Victor currently produces gold on a large-scale basis.

The Chain O’ Mines Company also refurbished the old Central City Hotel at Central City.  They spent about $40,000 and it became one of the finest hostelries in the mountains.  Seven carloads of furniture were delivered and it opened to the public in 1930.  The Hotel is located at the corner of Eureka Street and Main.  The Golden Rose Casino was also previously located in this building.