William Boyce Thompson’s first crack at city building taught him a valuable lesson — never try it again.
The mining magnate’s joyful attempt to create a new city, Ely City, Nevada, later renamed East Ely, was a complete failure, mainly due to forces beyond his control. Yet, in typical fashion, the crafty entrepreneur still found a way to snatch financial gain from the jaws of defeat.
Thompson’s grand plan was hatched after the Nevada Consolidated Company, the most significant mining presence in Ely, considered building a new smelter and treatment plant east of the city. It would employ 1,200 workers. Thompson had sold a controlling interest in Nevada Consolidated to the Guggenheim brothers a year before.
“WB went out a mile or two on the desert from the old town of Ely,” remembers journalist William Starr Bullock, “purchased hundreds of acres, and started the development of a townsite with sewers, water mains, fire protection, paved roads, sidewalks and other improvements.”
The site for Ely City — which the Post Office a few years later renamed East Ely, much to Thompson’s dismay — was on high ground, remembers Charles F. Ayer, another Thompson business associate who later became president of Magma Copper Company. “There was no expanding the town as it was, as the canyon had been flooded by cloudbursts several times, so it seemed reasonable to lay out a new town on the plateau.”
In 1905, Thompson purchased a mining operation west of Ely that included the Cumberland Ely Copper Company and the Veteran Mine. Working with his partner, George Gunn, he had also taken up options on the McGill Ranch near Ely and its water rights. “He realized the importance of water for concentrating the ore in the mills and for smelter operations,” recalls Henry Crumb.
Meanwhile, Thompson had a grand vision for Ely City, situated two miles east of Ely. He wanted it to become the next major commercial center in Nevada. A mere village twenty years before, Ely had steadily grown due to the expansion of copper mining operations in the mountains outside town, and it was poised to become the next Butte.
Thompson and his partner George Gunn established The Ely Townsite Company in 1906. The Magnate initially put his brother, James R. Thompson, who was skilled at real estate, and James P. Gaskill in charge of building out Ely City. They quickly put more than 500 people to work grading streets. They oversaw the construction of the nine-story Steptoe Hotel, the Ely Water Company, the Ely Electric Light and Power Company, and the Bank of Ely, later reorganized as the Copper National Bank.
The county approved the plat for the town in November. Much of the land for the new city was originally part of the Georgetown Ranch, which provided most of the water to the city of Ely.
Thompson made a killing selling lots. He bought the desert land for 50 cents an acre, then carved it into small building lots that he sold — on a time or space basis — for between $300 and $500. The lots went on sale immediately after the county approved the plat. The day they went on sale, the Townsite company sold 114 lots, ranging from $250 to $2,500. It cleared $182,450.
“Watch Ely Grow!” became the catchphrase around Thompson’s office on Broadway in New York City. In-house hysteria ran so high that even Alice Goodwin, the official stenographer, bought land. According to Thompson’s personal assistant, Cornelius Kelleher, it was ground that even Robinson Crusoe’s goats would have scorned.
Brochures distributed to investors back East touted the great fortune to be made in Ely. Massive wealth would be reaped from mining, to be sure. But growth in the “Copperopolis” would produce real estate fortunes for smaller investors as well, read a widely distributed pamphlet from the time, Ely and Her Mines.
The publication sought to reassure investors that the story of Ely wouldn’t be one of boom and bust. “Within the next few years, the town will have 50,000 people within its boundaries,” it claimed. Few people would leave Ely, as they had other mining towns, because people who settle in Ely come to stay. “Ely is building for all time to come,” read a brochure that couldn’t have been less accurate. Fewer than 5,000 people live in Ely today.
Getting to Ely was no easy matter until the railroad station opened in 1907. Supplies and travelers came in from Eureka by sled in winter and wagon in summer, and the trip took people two days — supplies took a week or more. “Tobacco, drugs, and other small supplies were sometimes sent in by letter post, as parcels post had not been established,” said Crumb.
By 1907, the Townsite Company’s interests- including the Ely Securities Co. and the Copper National Bank- had grown so extensive that Thompson sent his close business associate Arthur Smith to take charge. Smith remembers that Thompson loved the work of establishing a new town. “It’s a fine thing to be a party to the building of these things,” he once told Smith.
The town of East Ely boomed with a vengeance, Ayer remembered. “Streets were laid out with sewers and electric lights. Public buildings were erected, and a hotel was built. Lots were sold at high prices, and once a month photographs were sent East, showing the improvements…Ely was to rival Butte and surpass it. It was like a gold excitement.”
Ely was a lot like Butte in other ways. Open gambling and dance halls flourished, remembered mining engineer Henry Krumb. The Northern Hotel, which opened in 1907, was one of the premier venues for that sort of entertainment, and it was one of the fanciest attractions in Eastern Nevada.
A Deal Gone Sour
Thompson’s investment went up in smoke when Nevada Consolidated decided to build the smelter in McGill, a company town fourteen miles from Ely. Company engineers agreed that they didn’t have enough water in Ely to treat the ore and serve the city. In McGill, they had access to enough water to process a massive 25,000 tons of ore daily. At the time, the facility was the largest of its kind in the world.
According to a Wall Street Journal article, environmental concerns provided additional motivation to site the smelter away from town. Nevada Consolidated, the report noted, had secured eight square miles around the smelter site so that the company couldn’t be accused of creating a smoke nuisance or polluting the water, “as has been the case with the smelters at Anaconda, Mountain, and Bingham, Utah.”
In retrospect, Smith thought the mining company had miscalculated the water situation. “There was actually no reason why, instead of moving the smelter to the McGill ranch, the water from the [McGill] ranch should not have been brought to East Ely,” Smith recalls. “[Thompson] himself recognized that later, but said at the time when the matter was in the air he had been too busy to study the situation.”
When Thompson learned that the smelter would be in McGee, he put down a letter he had been reading, smiled the famous Thompson million-dollar smile, and said to his stenographer, “I guess I better stick to something that I know and let real estate alone.”
“Probably this brought him a realization of the fact that he was essentially a mining man and not a realtor,” wrote Bullock. “So far as we recall, he never attempted another city building operation.”
Thompson’s mining operation in Ely also turned out to be a bust. “Cumberland-Ely was operated for a number of years,” Crumb remembered. “It produced considerable copper but never paid a dividend owing to the fact that the ore was not very good, the mining difficult, the expenses heavy.”
Ever the wheeler-dealer, Thompson figured out how to profit from his investment anyway. First, he traded his water rights on the McGill Ranch to Nevada Consolidated for half interest in the railroad to be built from Cobre to Ely on the main line of the Southern Pacific. He also obtained a half interest in the smelter and concentrator built at McGill.
The brilliance of this move was recently the subject of considerable debate in the hereafter. The deal gave Thompson half the profits from ore hauled and treated by his rival. It also gave him the leverage he needed to bring about consolidation between the mining companies. Nevada Consolidated paid roughly $8 million in August 1910 to acquire the assets of Cumberland-Ely.
Thompson ultimately ceded control of East Ely to his friend and business partner Arthur Smith, who ran it prosperously for many years. According to one local history, the Smith dynasty dominated Ely’s upper business and social crust for more than six decades.
Though the major players in this scheme are long gone, some buildings remain, including the Thompson-Gunn building and the Copper National Bank. They stand within the half-vacant blocks of East Ely as silent monuments to unfulfilled ambition.