The Rothschild’s Gold Operations
On August 5, 1572, settlers established Huancavelica, a city in Peru, as a Spanish colonial administrative district and the capital of the Huancavelica region. An Indian Nahuincopa, a servant of Jerónimo Luis de Cabrera, had discovered the metallic deposits in the mountains around 1542 and people built the city up around the mines. The area was the major source of quicksilver (mercury) in Spanish America and was critical to mining production in the colonial era. Mercury was essential to extract silver from the ores found in Peru’s silver mines, as well as those in what is now Bolivia. Quicksilver extraction was dangerous and difficult and resulted in a high mortality rate, due to the arsenic vapors, but the mines were part of the economic pillar of Spain, along with the mercury deposits of Almadén, the largest quantity of liquid mercury metal in the world for at least 2,000 years. Miners almost exhausted the resources in Peru’s Huancavelica mine by the early nineteenth century.
Gold refining had changed and by the 1820s, many chemical engineers patented new methods for effectively removing gold and silver found in ores. The owners of the refining factories, because they required substantial financial backing, made it a point to get along with the major bankers who would provide that financing.[135]
Mexico acquired their independence from Spain in 1821, which altered the composition of some facets in the Mexican economy. Without the strong presence of a central power, some government officials allowed private entrepreneurs, both Mexican and foreign, to create monopolies. Previously, the Spanish government supervised the quicksilver trade. However, after 1821, it fell into the hands of non-Mexican merchants. Researcher and writer, Alma Parra has documented the fact through the Rothschild Archives that N M Rothschild & Sons of London participated in the growth of mining activities in Mexico during the first half of the nineteenth century by their creation of business networks operating within Mexico. There were several mining regions in Mexico where mining interests had established workshops called haciendas de beneficio where workers extracted the silver from ore using chemicals, a process called amalgamation. In the colonial period, the workers also used quicksilver, which the Spanish acquired from the mines of Almadén in Spain, from Idria (in the Austro-Hungarian Empire) and from Huancavelica and other areas in Peru. Thereafter, they sent the extracted silver to the Mint where workers made coins.[136]
However, with Mexican independence in 1821, a mercury shortage combined with the consequential chaos from the European wars and the after effects of the War of Independence from Spain forced the emerging Mexican government to reorganize the mining industry and develop new sources of quicksilver. [137] The Junta de Fomento, 1825-1827, a document related to Mexico, established guidelines for the political and economic issues regarding their territory, the current state of California. The bounty that Mexico offered was in conjunction with the Junta de Fomento. The Junta de Formento launched a bounty for Mexican quicksilver, which did not increase gold mining costs.[138]
Both Spain and Mexico unwisely allowed private, foreign involvement in their economies. In Spain, the officials gave concessions to private companies to work the Almadén mines. Mexico had insufficient capital and yet they desperately needed to revitalize its mining operations, a great source of wealth. Therefore, they allowed a London-based joint-stock mining company to function in Mexico. This company managed the entire mining operation, both technical and administrative, using the latest mining innovations and equipment. British merchants and their supportive bankers controlled the quicksilver trade. During a two-decade period, the new methods became indispensable. These British merchants exploited the organizational void left by Spain.[139]
Mexico had vast natural resources but apparently lacked the finances and technology to develop them, perhaps because the country had been under the dominion of Spain for so long. In the early 1820s, after the profit-producing Napoleonic Wars, London bankers, such as Goldsmid and Barclays loaned money to the Mexican government through their local Mexican agents. At about that same time, the Rothschilds successfully acquired control of the distribution of quicksilver. In 1830, they procured a contract for the further development of the Almadén quicksilver mines, which helped them expand their business tentacles into Spain where they were soon engaged in the financial markets, buying up government debt, and investing in copper mining and railways. Meanwhile, the Austrian branch of the family assumed total control of the quicksilver market in Idria. In 1838, they obtained another contract in Almadén and then monopolized the quicksilver market until the discovery of the quicksilver mines in California.[140]
In 1827, in France, James de Rothschild had joined with others in founding a company to re-melt metals. In 1833, Michel Benoît Poisatin was in partnership with Saint-André in a gold refining business, a business so successful that it attracted the attention of the Rothschilds who controlled the concessions on quicksilver mines in Almadén, Spain, the greatest source of quicksilver, an essential component for refining both silver and gold. In 1835, the Rothschilds built a refining factory close to the Canal on the Quai de Valmy in Paris. In 1838, to cement their partnership, James Rothschild financed Poisat with 434,534.66 francs. The Quai de Valmy workshops functioned as a conveyance center for gold and other metals they constantly transferred between numerous countries. They purified and processed gold from Australia and California prior to delivery to the Mint in London. They often melted down coins from abroad at the Paris metal refining operation.[141]
Between 1700 and 1800, production at the Almadén and Idria mines was consistent. Then the Rothschild cartel assumed ownership and control of the two quicksilver mines in about 1830 and for the next fifty years, evidence seems to indicate that the cartel methodically decreased the productivity of the mines. Whether the lower production rates were intentional on the part of the cartel or simply a coincidence is unknown. However, given the history of manipulation of prices and production in other resources, it appears that it was intentional. The cartel, wanting a monopoly, attempted to negotiate an arrangement with the mine producers in California to reduce their yield of product.[142]
Eustace Barron was the British Counsel to Mexico before Alexander Forbes who had written extensive descriptions of Mexican California, with accounts of California’s agriculture and landscape. Forbes authored a book, California: A History of Upper and Lower California (1839). He had been a merchant in Tepic, Mexico. He suggested that Britain seize control of California in return for forgiving Mexico’s debt to the British government. Instead, to exploit the area’s resources, the two men formed Barron, Forbes and Company of Tepic, Mexico.[143]
The Rothschilds did not have success using local agents who typically tried to exploit their position.
Therefore, in 1843, the Rothschilds sent a cousin, Lionel Davidson, to represent their interests in Mexico
City and to develop an extensive network for the distribution of quicksilver (mercury). He began sending
reports to the London firm that summer. Nathaniel Davidson, Lionel’s brother, had responsibility for
several Rothschild businesses in South America, especially in Chile. He also journeyed along the Pacific
coast and transmitted relevant information, regarding mining to London. When Andrés Castillero
discovered the quicksilver mine, later called New Almadén mine in California, Nathaniel Davidson
informed his Rothschild relatives. Additionally, he alerted them about the discovery of gold at Sutter’s Mill.[144]
Absent the California quicksilver mines, it is certain that the Rothschild cartel would have demanded and received higher prices for their product. Josiah Dwight Whitney (1819-1896), an American geologist, and chief of the California Geological Survey (1860–1874), indicated that the cost of quicksilver in Mexico
in 1844 was three times as high as it was in 1777, apparently because of the monopoly. Certainly, the cartel would have increased its profits with the gold and silver boom.[145]
Andrés Castillero, captain of the permanent cavalry, had discovered a mine of cinnabar in 1845, located near San Jose in the Santa Cruz Mountains on the coast of California, then under Mexican jurisdiction. Further, he and Jose Reyes Berreyesa, retired sergeant of the Presidio Company of San Francisco discovered a vein of silver and one of gold, in the same area. Later, in a court case, he produced witnesses to verify his story on December 3, 1845. On December 30, 1845, in the Court House of San Jose Guadalupe, he received legal possession of the mine from the magistrate of that jurisdiction. Thereafter, officials presented the record of his mining possession to the Junta de Fomento y Administracion de Mineria, who legalized it. On May 20, 1846, the Executive confirmed it as his possession and granted him “two square leagues” on the surface of his mining possession. On May 23, they issued Castillero a patent of title with which he began to take possession, but war erupted which prevented him from taking possession. Castillero acquired a perfect title stating that he and his grantees held possession of the mine since 1845, and expended large sums of money on it.[146]
Because Castillero lacked additional financing, he sought help from the British bankers, Barron, Forbes and Company, already doing business in Mexico. The bank took out a sixteen-year lease on the mining operation and named it New Almaden, after the mercury mine at Almadén, Spain. The mine was about fifty-six miles southeast of San Francisco and approximately twelve miles away from San Jose. One ton of ore generated about seventy-five pounds of quicksilver.[147] Full production at the quicksilver mine began in 1850, presumably with some kind of an agreement between Castillero, Barron and Forbes. Between 1850 and 1900, the New Almaden mine produced about half of the world’s supply, exceeding the production of the mines of Almadén and Idria. By the 1870s, California mines produced two-thirds of the world’s output. Consequently, this new mine broke the Rothschild’s monopoly of mercury. After 1890, the New Almaden mine declined; apparently, the miners had extracted all of the cinnabar.[148]
By the mid-1830s, some key customers complained about Rothschild’s high prices and they attempted to locate other sources of mercury. Mexico was in constant chaos because of the war in Texas and other issues. Additionally, the need for quicksilver increased with the new discoveries of silver in a couple of areas in Mexico in the late 1840s and early 1850s. Lionel Davidson was able to meet those needs because of his distribution network. Therefore, the Rothschilds controlled the quicksilver market and its price, despite Davidson’s concerns to his superiors in London that, to retain the market, that prices should be reasonable, particularly in view of new competition. The Rothschilds monopoly ended in the late 1840s with the local discoveries of quicksilver and the recent opening of other mines. The most significant factor in their decreasing international monopoly was the mines of New Almadén in California, controlled through a company established by Barron and Forbes, who set up their main office in the Port of San Blas in Western Mexico. They had a ready supply of quicksilver.[149]
On January 21, 1848, James Alexander Forbes, one of the complainants in a later U.S. Supreme Court
case regarding the New Almadén, and a partner in Barron, Forbes & Company filed papers in Tepic,
Mexico and procured a witness who assured the court that he knew the Senor Vice Consul, Don James
Alexander Forbes. This witness knew Forbes when he was a resident of Tepic. Forbes’s witness signed
affidavits on March 15, 1850. However, Forbes did not produce claimant papers until August 18, 1856
after he appealed to the District Court. Yet, the papers he presented later differed in some very essential
aspects. On November 6, 1856, Forbes introduced other items, including a certificate dated August 13, 1846.[150]
Henry W. Halleck returned from France in 1844 where he had been to study European fortifications and the French military, along with studying mining laws. During the Mexican-American War (1846-1848),
his superiors assigned West Point-educated Henry W. Halleck (1815-1872) to California. Later they transferred him further north where he worked under General Bennet Riley, the Governor General of the California Territory. Riley appointed Halleck, an attorney, as military Secretary of State, which made him the governor’s representative at the 1849 convention in Monterey where Halleck functioned as the principal architect of the California state constitution, which officials adopted in November 1849.[151]
In the spring of 1850, Lt. Henry W. Halleck, the future senior Union Army commander in the Western Theater, became the Director General of the New Almaden’s mining operation for which he received $500 a month. He oversaw the construction of brick structures as a replacement for the wooden buildings. While he supervised many of the activities at the mine, John Young managed the day-to-day operations. In addition to his regular salary as the Director General, Halleck’s law firm was the legal representative for the mining firm with a $30,000 retainer. In 1857, the mine made $1,622,325 with expenses of $280,000. During its years of operation, the New Almaden mine generated a million flasks of quicksilver worth between $50,000,000 and $75,000,000.[152]
The Rothschilds were willing to go to great lengths to acquire the resources they wanted in order to control the distribution, price and general availability of a particular product, especially basic items that people have become accustomed to using, owning, eating or drinking. The Rothschilds had enjoyed a virtual world monopoly of the quicksilver market. The gold rush and the silver from the Comstock mines increased the price and the demand for quicksilver. The Mexican government offered a “bounty,” included in the Junta de Fomento, when quicksilver escalated to $150 for a small container, prior to the discoveries in California and Nevada, which increased the demand for quicksilver. In 1850, after miners initiated quicksilver mining at New Almaden, people sold a flask (76.07 pounds) of quicksilver for about $100. However, without the new quicksilver mine in California, Rothschild could set the price and demand as much as $150 per flask, or more.[153]
The discovery of the California quicksilver mine coincided with the decrease of production at Huancavelica and the Rothschild domination over Almadén and Idria. On the other hand, the demand for quicksilver increased with the discovery of gold and silver in the latter half of the nineteenth century. The world production of silver and gold dramatically increased after 1850.[154]
Benjamin Davidson, son of Meyer Davidson, was a Rothschild agent in San Francisco by 1848-1849 because of the most recent gold discovery in that state. Meyer Davidson of Amsterdam was Nathan’s brother-in-law as he had married Jessy Barent Cohen in 1816. She was Hannah Barent Rothschild’s sister.[155] By 1852, Rothschild agents, in Mexico, shipped specie to N.M. Rothschild and managed the quicksilver shipments within Mexico.[156] Many Jews went to the west coast and served as intermediaries between California, the eastern states and Europe. Efficient and loyal agents, undoubtedly very well paid, managed all of the important transactions. In addition to Davidson, the Lazard brothers established a banking house in San Francisco.[157] In 1880, the London Rothschilds would replace their own California financial agency with the Bank of California.[158]
James Rothschild developed mining interests in California and Australia. His many agents sent gold bullion, dust and nuggets to Rothschild in Britain. In 1851, after the gold discoveries in California and Australia, the British government actually leased their Royal Mint’s refining plant to Anthony de Rothschild of N. M. Rothschild. Ernest Seyd, one of their agents, said in 1868, “There are four of five large refineries in London, which almost exclusively share between them the refining of banker’s bullion. Two of these establishments are worked in connection with eminent Foreign Banking Firms.” Rothschild and H. L. Raphael’s Refinery were renowned as two of the best gold refiners in the world.[159] For more than a century the Royal Mint Refinery, the primary gold agent to the Bank of England, refined a range of metals – gold, silver and copper. Engelhard Industries bought the Mint in 1967. The Rothschild family
made certain that their agents destroyed the majority of the records that they created during the time that they controlled the Mint. The name Engelhard was as significant as the names Oppenheimer and Rothschild were in the gold industry.[160]
Nathaniel Davidson focused on exporting silver while actively engaging in the bond trade with Mexican government bonds. He helped facilitate the British Convention Fund, a vehicle in which many British creditors exploited the economic situation in Mexico. Lionel Davidson, in addition to supplying quicksilver, made personal as well as Rothschild investments in some of the local mines. Within a year of his arrival, he began investing in several mining operations. In 1853, Lionel Davidson died and Nathaniel Davidson assumed full responsibility for the Mexican operation. With his death, Nathaniel developed additional mining interests for the Rothschilds. While their quicksilver business diminished, they retained their financial interests in the mines of El Oro. Additionally, through their French branch, they invested in El Boleo, in Baja California.[161]
Meanwhile, individuals shipped the gold from the west to eastern U.S. ports and then to Britain. While the Chinese obtained adequate amounts of quicksilver, they received negligible amounts of gold. However, the discovery of silver in Nevada (then western Utah Territory) in 1858 altered economic issues. California silver producers shipped massive amounts of silver to China from San Francisco. Over half of what they exported was comprised of Mexican silver dollars, utilized extensively in China. The movement of silver to China had continued over a period of three centuries. Because gold was so plentiful in California, for export to Europe and for domestic use, people favored the exportation of silver to China. There was sufficient gold and silver to meet everyone’s needs.In conjunction with the California gold boom, people wanted to maintain the established trade patterns to Asia.[162]
Producers required quicksilver to process the precious metals so abundant in the western United States. They did not need quicksilver for some of the purest gold but mercury amalgamation significantly improved the proficiency of recovery and miners found it imperative after they had depleted the early, rich deposits. Miners could not easily recover gold from hard rock ores and found it almost impossible without quicksilver. This was applicable in the refining of silver. Mercury amalgamation was literally the only realistic technique possible until miners invented the cyanide procedure in the 1890s but of course, that process had many environmental disadvantages. By providing western mills with mercury, California quicksilver mines facilitated gold and silver production in the west.[163]
California production of quicksilver for gold and silver recovery created competition for Rothschild’s quicksilver operations at Almadén and Idria, mines that had enabled the House of Rothschild to enjoy a monopoly. However, he would have to double his production in order to supplant California quicksilver. This was an impossibility for several reasons, one of which was the age of the mines at Almadén and Idria. Irrespective of Rothschild’s desires and avid materialism, he did not own the mines in California and the people who controlled them were not going to surrender them.[164]
A legal battle ensued which finally ended up in the U.S. Supreme Court. The Justices ultimately ruled against Andrés Castillero.[165] As it turns out, after all of the witnesses and the paperwork that Andrés Castillero produced, the original documents, somehow were misplaced or lost. Some of this information, according to the court records includes, “A considerable portion of this voluminous record is occupied by evidence of the statements and declarations of Castillero himself. Besides his own declarations made to Colonel Fremont, letters written by him to General Vallejo and Governor Pio Pico; letters of Pico addressed to persons in Mexico; a letter from Manuel Castro to Pico; dispatches from Mr. Larkin, United StatesConsulatMonterey,toMr.Buchanan,thenSecretaryofState.”[166] Mr.BuchananisJamesBuchanan; he was Secretary of State from March 10, 1845 – March 7, 1849.
The discovery of the New Almaden mine occurred before the Mexican-American War and fell under the Spanish-Mexican land and mining law. Despite this, on March 10, 1863, the U.S. Supreme Court ruled that the mine was on federal property. On May 6, 1863, Interior Secretary John P. Usher, supported by Attorney General Edward Bates, offered a unique arrangement to Samuel E Butterworth, president of the Quicksilver Mining Company, one of the New Almaden’s claimants. The government would allow Butterworth to lease the property and mine the resources but he would have to relinquish a third of the profit accrued from the mine to the government each year of the lease. If they struck a bargain, Leonard Swett, an Illinois attorney and friend of Lincoln, would take “immediate possession of the mine” and manage it. President Lincoln signed an eviction order against Andrés Castillero.[167] On June 29, 1863, Swett and Butterworth arrived in California and handed the presidential order to the mine supervisor. They also summoned General George Wright and some federal troops to guarantee their seizure of the property. A group of soldiers from Company F, Second Cavalry, California Volunteers, left for San Jose “fully prepared for active service.”[168]
In 1869, the Rothschilds purchased the Martin firm from the refiner, H. L. Raphael who had ventures in both London and Paris. The Rothschilds then collaborated with Raphael for specific contracts, both in London and Paris, in the 1870s when it appeared profitable to do so. There were a number of refineries in London, which supplied the Bullion Market with an ample amount of gold. Previously, Britain’s official Mintrefined gold but they sold that part of their operations to Sir Anthony Rothschild, who owned one of the largest private refineries.[169]
Rothschild’s profits would have increased, regardless of the gold supply. Miners readily “switched between” Rothschild and California quicksilver producers. However, the California producers at New Almaden acquired the Chinese market when they undercut Rothschild prices in China. Until 1884,
Rothschild interests in Spain and private and U.S. government interests in California contended in the profitable worldwide quicksilver market. In 1884, Rothschild recaptured the China market through a vigorous price battle. The Rothschilds were willing to cut profits to retain control.[170] There was a sharp decline in the quantity of California exports to China in 1884. After the California producers lost the majority of the China market because of Rothschild’s price war, they never recovered it. This created a lengthy period of economic hardship for California quicksilver producers.[171]
“China was the largest market, taking 43.4 per cent of California exports. Mexico took 37.1 per cent and South America 11.0 per cent. China and Mexico combined accounted for more than 80 per cent of California quicksilver exports. California quicksilver exports were almost entirely a Pacific phenomenon.”[172]
Mexico and her nationals intended to develop quicksilver mining at New Almadén to serve the economic needs of the Mexican and South American gold mines. The Chinese soon became their key customer. The Mexicans exported more quicksilver to Asia than they utilized domestically. Additionally, California quicksilver expedited the movement of U.S. and Mexican gold and silver into the worldwide market. The Rothschild cartel, which until then, held a monopoly, viewed this as unwanted and dangerous competition to their objectives. The Rothschilds waged a battle against his competition in the Pacific. After 1884, the battle involved the world quicksilver market and was not limited to the Pacific.[173]
Miners used California mercury (quicksilver) to extract both gold and silver from ore. Between 1850 and 1900, the California mercury mines supplied half the world’s mercury. It was an essential ingredient to gold and silver processing in California, until they developed the cyanide process in the 1890s. The California quicksilver discovery predictably decreased quicksilver prices, which the Rothschild cartel had previously controlled. This has serious consequences for people who lived in California, especially the indigenous population. A small population of whites in California had an undeveloped economy, but a peaceful lifestyle, until the gold boom. Mining activities generated a need for people who could supply wheat, cattle and sheep. The population grew and people developed new industry, especially mining equipment, to meet the needs of the miners and an increasing population. California’s economy invigorated the economy of the Pacific Rim, and offered an expanding market for western producers, including China and Australia.[174]
A Foundation of Greed, Globalism and Banking
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