Willoughby: Part III — Economic calamities tarnished Aspen’s silver era
Legends & Legacies
The economics of Aspen’s silver era, complicated by ups and downs in prices, compares to that of the modern oil industry. Profits in each industry resembled the temperament of the little girl in the nursery rhyme: when prices were good, profits were very, very good. When prices were bad, they were horrid.
When I traveled between Aspen and Grand Junction as a child, signs along the highway advertised a future “oil shale city.” The words meant little to me, but eventually such a city, Parachute, developed. Oil shale contains countless barrels of oil. For years as a national defense strategy, oil was extracted from Colorado shale to produce jet fuel. An oil embargo that began in October 1973 sent the price of oil higher, and extraction produced profits. Later, the price dropped and profits shrank.
Silver mining in Aspen faced similar challenges. Before the Panic of 1893, miners left low-grade ore underground and processed only the plentiful, high-grade ore. Before the railroads came to town, it cost too much to haul low-grade ore by wagon or pack train to smelters in Leadville.
Whenever a mine’s ore quality dropped, it had to either increase production or cut production costs. Miners’ unions held strong in Aspen, and wages could not be cut except in the panics or recessions. But, as in many industries, technology provided cost relief. Electricity cost less than steam power, which had required pricey logging and wood hauling. Specifically, hydroelectricity provided an extra profitable advantage.
The larger mines began to use pneumatic drills. The technology did not necessarily reduce the number of man-hours on the job, but it increased production. The machine quickly drilled the 20 holes per each shift needed to advance a tunnel. As in the oil industry, diamond-tipped drilling bits also improved speed.
After the Panic of 1893, the price of silver dropped from about a dollar per ounce to around 80 cents per ounce. Miners’ wages fell. Around the same time, processing improved and more ounces of silver were extracted per ton of ore produced. In addition, miners increased production by bringing out the lower-grade ore, now profitable, which they had previously left in the ground.
Similarly, as oil companies approached peak oil they needed ways to expand production. They could dig deeper, drill horizontally, and/or prospect in the Arctic. Each possibility brought more costs, and whenever prices dropped, projects ended. But oil prices climbed, and boosted the viability of multiple options. Fracking increased productivity, as did other technological adaptations in mining.
Aspen’s miners undertook a growing challenge to withstand silver prices as low as 25 cents per ounce during the Depression. The deeper a mine dropped, the more water was encountered, and it had to be pumped out a greater distance. Even using electricity, the cost was high. In 1918 the owner of the power company raised the rates, the major mines quit pumping, and water flooded the lower levels of the mines.
Aspen’s mines survived and operated from 1880 to 1950, through ups and downs of price fluctuations. When the cost of electricity for pumping increased during 1918, mine operators focused activities on the upper levels of the mines. Milling and smelting methods improved. Lower grade ore could be mined profitably, and new veins could be discovered.
After World War II, a price drop hit as the final blow to Aspen’s mining operations. Producers in countries that could pay lower wages survived.
Just as oil companies evaluate the possibility of drilling for oil in the Arctic, investors hold onto the possibility of mining for silver in Aspen. In both cases, the decision is largely a matter of economic margins. Mining considerations include the quality of ore, the cost of pumping water, and new technologies.
In an upside-down way, the ski industry operates like silver mining and oil drilling. Skiing depends on a natural resource, albeit one that comes to Earth’s surface from a direction opposite that of oil and silver. Too much water underground challenges the mining industry. Due to human-induced global warming, too little snow challenges the skiing industry. As with oil and silver, the answer resides in the economics.
Tim Willoughby’s family story parallels Aspen’s. He began sharing folklore while teaching Aspen Country Day School and Colorado Mountain College. Now a tourist in his native town, he views it with historical perspective. Reach him at firstname.lastname@example.org.
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