Fire and Brimstone: The North Butte Mining Disaster of 1917

Taken together, a remarkable three-quarters of Montana wage earners drew their checks from some part of Daly’s Anaconda enterprises.

Yet just as Marcus Daly had dreamed of creating an empire, Standard’s Rockefeller and Rogers envisioned something bigger still: not an empire, but the empire. In the late nineteenth century, the mighty Standard Oil had come to dominate 90 percent of the American oil industry. Seeing the enormous profits to be gained from capturing a monopoly, businessmen of the 1890s battled to replicate the Standard Oil model in other fields—from sugar and tobacco to telephones and steel.

A new generation of Standard Oil leaders, meanwhile, searched for fresh domains to conquer. Copper stood out as a gleaming target. “Think it over,” Henry Rogers is reported to have said, “and you will agree with me that the possibilities are far beyond those of oil.”

The purchase of Anaconda from Marcus Daly represented the first significant step toward the creation of a copper trust. Standard Oil incorporated a new holding company called “Amalgamated,” into which the component pieces of the new copper trust would be collected. Henry Rogers—known to his Wall Street contemporaries as the “Hell Hound”—would be Amalgamated’s new president. William Rockefeller—son of the great founder—would be secretary and treasurer. Marcus Daly, though nominally Amalgamated’s vice president, was by this time gravely ill and increasingly unable to work. Eastern management had come to Butte.

So had eastern finance. Within a matter of weeks, Standard Oil took Amalgamated public. After a heavy promotional campaign to “stir up a market,” Standard Oil sold one-third of the stock in its $39 million investment for a tidy $26 million in cash.

Put another way, Standard recouped two-thirds of its month-old investment in exchange for only one-third of Anaconda’s ownership. In his classic history The War of the Copper Kings, C. B. Glasscock summarized the new situation back in Butte:

No longer were the mines of Butte to be operated solely for their production of copper, zinc, silver, lead and gold. Thenceforth they were to be operated also for their production of new stock certificates, theoretically based upon metal resources and output, but practically based upon the acquisitive genius of Henry H. Rodgers [sic], William Rockefeller … and their associates and successors in Wall Street.

Standard Oil floated a second issue of Anaconda stock in 1901. Naked manipulation of the stock price would follow: driving the price higher before selling; then driving it down before buying back shares at bargain-basement prices. Thousands of small investors lost millions of dollars.

Meanwhile Standard Oil/Amalgamated—with a fat new war chest—went after the rest of Butte’s copper.

Two men stood in its way. One was the scandalous William A. Clark—fresh from his foiled effort to bribe his way into the U.S. Senate. The other was a relative newcomer to Butte, a twenty-nine-year-old boy-king who would rise to fight a brilliant war against the most powerful economic juggernaut of its time.

Butte history has a singular ability to keep topping itself. As remarkable as was Clark’s and Daly’s War of the Copper Kings in the 1890s, it practically pales in comparison to the titanic battles that took place from 1899 to 1906. This second War of the Copper Kings would again seize the attention of the entire nation. For decades to come, the outcome of the conflict would transform the town of Butte, the state of Montana, and the lives of the men and women who lived there.

The third of the three Copper Kings—Frederick Augustus Heinze—was born in Brooklyn on December 5, 1869. Unlike his counterparts, Marcus Daly and William Clark, young “Fritz” Heinze grew up in a comfortable life of moderate wealth. He received a top-flight European education that included study in the classics, language, and a solid foundation in the scientific discipline that would shape his meteoric life—geology.

Fritz Heinze entered the Columbia University School of Mines at the age of fifteen and received his engineer of mines degree at nineteen. In addition to a knowledge of mining, Columbia taught Fritz other skills that would serve him well in Butte. He joined the Phi Delta Theta fraternity and was known as an expert poker player. For the rest of his short life, Heinze would be the charming frat-boy rogue. He could drink with the best of Butte—and that was saying something. He was tall, physically powerful, and handsome—his giant ego buffered by raw charm. In short, people loved him.

After Fritz’s graduation from Columbia, his father offered to fund postgraduate study in Germany. Fritz, though, had his heart set on the West. Three months later, in September 1889, Heinze arrived in Butte. He hired on as a junior engineer at the Boston & Montana Company—an independent operation owned by neither Clark nor Daly.

For a year the young Heinze added practical experience to his formal education. During the day he conducted surveys of the Butte Hill and at night he studied the complex veining of the richest hill on earth. He quickly became a master of Butte’s hidden treasures, and what he learned convinced him there was still a fortune to be made—even as the titans Clark and Daly seemed to tighten their grip on the town.

By 1892, the twenty-two-year-old Fritz Heinze was ready to put his theory to the test. He used a combination of family and outside money to start a new company—the Montana Ore Purchasing Company—“as a mining, ore purchasing, and smelting concern.”

An early Heinze business transaction reveals much about the tactics and ethics that he would bring to his career in Butte. Heinze leased the right to take ore from a Butte mine called the Estella. Under the terms of the lease, Heinze promised to pay the owner a handsome 50 percent royalty on all the ore extracted that showed at least 15 percent copper content. For any ore below 15 percent content, however, Heinze would pay nothing. As the lease played out, it turned out that none of the ore exceeded the 15 percent threshold—this in a mine known for rich deposits. How could this be? Because Heinze directed his miners to mix the good ore with waste rock, insuring the trigger for payment was never reached.

When Heinze’s landlord discovered the ploy, he promptly sued. Heinze hired the best lawyer he could find—and won. It was Fritz’s first lawsuit and it would not be his last.

With diabolical brilliance, Fritz married his knowledge of Butte’s geology with a pernicious mining law known as the Apex Rule. According to the Apex Rule, rights to underground mineral holdings were determined by the location where a particular vein came closest to the surface, or reached its apex. If a company owned the apex, it could follow the vein below ground to wherever it led—including ground beneath another owner’s surface property. Using his knowledge of mine engineering, Heinze began to identify and purchase strategic apex properties—many of them next to Anaconda (later Amalgamated) holdings. Then he pirated their ore. Lawsuits sprang up like weeds.

Lawyers, it turned out, would be Heinze’s most important mining tool. In Butte they called him a “courtroom miner.” Heinze fielded an army of more than thirty-seven lawyers, some of whom were charged with the lucrative task of digging up new opportunities to file claims and/or sue. The highly fractured nature of Butte’s mineral veins created a lawyer’s paradise, and Fritz learned a lesson that litigators still apply today: An expert can be hired to say anything. Elaborate scale models, “some costing $25,000 apiece,” were built to support testimony. In other instances, testimony was supported by “litigation drifts”—holes dug for the sole purpose of creating courtroom evidence.

Heinze filed his most notorious apex claim in the spring of 1899, just as Butte was awakening to the threat posed by Standard Oil’s purchase of Anaconda. Amid the convoluted patchwork quilt of mining claims on Butte Hill, Fritz and his lawyers somehow found two tiny parcels of unclaimed land. Added together, the two parcels equaled less than one one-hundredth of an acre—“the equivalent of a small room.” At this minuscule point of land, claimed Heinze, lay the apex of the great Anaconda vein. Revealing his penchant for hilarious irony, Heinze named his new mine the “Copper Trust.” It was, sputtered the Anaconda Standard, “an astounding piece of audacity.” So audacious that Butte’s courts, in a rarity, actually failed to support Heinze to the hilt.

Most of Heinze’s claims, however, found a sympathetic hearing. This did not occur by accident. Whether or not Heinze actually bribed judges is not clear, but it is certain that he worked tirelessly to ensure the election of his allies to key Montana courts. Perhaps his greatest asset was a colorful Butte judge named William Clancy. Clancy had a cartoonish appearance dominated by a tangled, flowing gray beard. According to one story, a man once approached Clancy and said, “Judge, I’ll bet you a dollar that I can tell you what you had for breakfast this morning.”

“You’re on,” said Clancy.

“Ham and eggs,” said the man triumphantly, lifting Clancy’s beard to point out the physical evidence.

“You lose,” said Clancy. “That was yesterday’s breakfast.”

Clancy was just as notorious for his outlandish courthouse behavior. He was often manifestly disinterested in legal proceedings, a fact he sometimes demonstrated by sleeping. When awake, he could be caustic and withering toward courtroom participants—especially those affiliated with Amalgamated. Once, irritated with a particularly loquacious witness, Clancy erupted: “It seems to me this witness is troubled with constipation of thought and diarrhea of words.”

Whatever anyone else might think of Judge Clancy, for Fritz Heinze he was a sure bet. It was a truism with which Standard Oil/Amalgamated would soon become painfully familiar.

Fritz Heinze’s first major engagement against Standard Oil came in the context of the election of 1900. Heinze’s goal in this election flowed directly from his signature method of extraction. As a “courtroom miner,” Heinze depended upon friendly courts; he set about to ensure that his allies occupied key benches.

Like any savvy political strategist, Fritz recognized that there is no asset like a good enemy. In this regard, at least, the Standard Oil purchase of Anaconda was like a dream come true. Nationally, “progressivism” was taking off as a powerful political movement—a reaction, in part, to the rise of abusive monopolies. Montanans, on the heels of a decade in which populist sentiment had run strong, resented and even feared the idea of control by the most notorious of eastern trusts.

Whether Heinze was a true believer or a clever opportunist is subject to debate, but in either event, he had found a potent rallying cry: “My fight against Standard Oil is your fight,” Fritz told audiences across the state. “In this glorious battle to save the State from the minions of the Rockefellers and the piracy of Standard Oil you and I are partners.”

In his enmity to Standard Oil, Heinze found a powerful ally—or perhaps more accurately, a marriage of convenience. Copper King William A. Clark, a man incapable of shame, strode unabashedly back onto the stage. For Clark, noisy opposition to Standard Oil/Amalgamated would provide a satisfying slap at his bitter rival Marcus Daly. But Clark sought an even greater revenge: a new path to the prize he had long coveted and long been denied—a seat in the United States Senate. While Fritz Heinze saw the election of 1900 as a way to win friendly courts, William Clark envisioned a way to win a friendly state legislature—one that would elect him (legitimately, this time) to the U.S. Senate.

Between Heinze’s political savvy and Clark’s bottomless supply of cash, the two formed a potent team. Together they turned the election into a dramatic political circus. In a way it looked thoroughly modern—hired talent pumped into the state in a seamless melding of politics and entertainment: political cartoonists, famous actresses, fireworks, free champagne, and even vaudeville performers, slamming Standard Oil to a catchy ragtime beat.

Standard Oil, hardly a naif, did not take the Heinze-Clark challenge sitting down. It began its own free-spending campaign, including a $1.5 million war chest to buy Montana newspapers.

Though the newspapers would be important later, they were not enough to swing the election of 1900. In the end, Heinze elected and/or reelected a slate of friendly judges, and a new Montana legislature—barely a year beyond the bribery scandal of 1899—sent William A. Clark back to the United States Senate.

Within weeks, though, the ground beneath Fritz Heinze began to shift. Standard Oil employed a tactic that would serve it (and its successors) to great effect: Divide and conquer. Senator William A. Clark provided an easy target, devoid of scruples and vulnerable to his own recent past. Standard Oil threatened to dedicate its boundless resources to a revived U.S. Senate challenge of Clark’s credentials—unless Clark broke with Heinze and dropped his opposition to Amalgamated. For Clark, it was an easy call. He shed himself of Fritz Heinze with the ease that most people change a shirt. Heinze now stood alone against the preeminent economic power of his day.

In the immediate aftermath of the 1900 election, another development seemed to sharpen the battle lines. On November 12, Marcus Daly died. His death, wrote historian Michael Malone, seemed “to symbolize the passing of the great captains of frontier industry and to herald the emergence of the giant and impersonal new supercorporations.”

From 1900 to 1906, the second War of the Copper Kings raged through Butte and ultimately through all of Montana. It was a war with dozens of battles, but two in particular are worth noting. One brought Heinze and Amalgamated into literal warfare—on a battlefield hundreds of feet below ground. The other represented, in essence, a Standard Oil coup d’état of the once-sovereign state Montana.

The armed conflict broke out as a by-product of one of Fritz Heinze’s infamous apex claims. Just before the turn of the century, Heinze had filed a series of claims based on his ownership of a mine called the Rarus—which bordered Amalgamated property rich in copper. Pending resolution of the case, both Heinze’s Montana Ore Purchasing Company and Amalgamated were enjoined from mining in the contested zone.

In 1903—with the case still pending and the injunction still in place—Heinze executed one of his most outrageous legal maneuvers. He simply transferred ownership of the Rarus mine from his Montana Ore Purchasing Company to one of his other corporations, the Johns-town Mining Company. Then, with the disingenuous reasoning that the Johnstown was not subject to the court’s injunction, he secretly began to mine the contested ground.

Over a period of many weeks, Heinze flooded miners into the Amalgamated holdings, pulling out hundreds of thousands of dollars’ worth of copper. Amalgamated finally caught wind of the scheme when its miners, working in a nearby property, began to hear blasting—clearly coming from the “forbidden zone.” Their suspicions finally raised, Amalgamated sent spies on an underground mission to determine the scale of the pirating. They were shocked at the wholesale plunder.

Back on the surface, Amalgamated asked a federal judge to mandate an inspection of the property. But before the inspection took place, Heinze covered his tracks by dynamiting the cavities and filling them with waste rock. More injunctions were issued, which Heinze now blatantly ignored, continuing his extractions from the forbidden ground.

Below ground, meanwhile, the struggle degenerated into open warfare. Fistfights broke out when groups of Heinze miners encountered their counterparts from Amalgamated. These quickly escalated, and soon miners were fighting one another with more dangerous weapons. Dueling miners burned “stink-producing material”—including rubbish, old shoes, and rubber—to fill the enemy’s workings with smoke. They blew a powdered form of lime through air hoses to pollute the tunnels with caustic dust. They diverted water to cause flooding and used dynamite to cave in tunnels and block access points. The miners even tossed homemade hand grenades—short pieces of dynamite crimped inside tomato cans.

Remarkably, amid weeks of running skirmishes, only two men were killed.

Poised on the brink of large-scale loss of life, both sides seemed to catch themselves and called a truce. After stealing more than $500,000 worth of copper, Heinze would ultimately pay a fine of $24,000—less than 5 percent of his haul.

While dramatic, the Rarus apex case was just the tip of Heinze’s gigantic litigation iceberg. Some lawsuits Heinze won outright. With others he secured injunctions, idling Amalgamated properties while endless proceedings plodded through the courts. Amalgamated was spending millions in legal fees, and even more significant, Heinze’s suits had tied up Amalgamated holdings valued at $70 to $100 million.

Building on his success in the election of 1900 and his devastating legal attacks, Heinze also mounted a relentless public relations barrage. He continued to cast himself as the local David against a heartless, foreign Goliath, and the people of Butte rallied to his side. F. Augustus Heinze was in many ways like a Butte version of Robert E. Lee—a beloved field general reeling off a remarkable string of battlefield successes against a much larger foe. Like Lee, however, Heinze faced an opponent with patience, resolve, and vastly superior resources. And for Heinze, his Gettysburg was about to unfold.

Apex litigation may have been Fritz Heinze’s trademark, but it was far from the only weapon in his legal arsenal. Heinze was also giving Standard Oil/Amalgamated fits through the technique of minority shareholder suits. In a minority shareholder suit, Heinze allies purchased a few shares of companies being absorbed into Amalgamated. Then they devised claims as to how Amalgamated was violating their minority shareholder rights and brought suit—preferably in a court presided over by a close Heinze ally.

In the most far-reaching claim, Heinze’s minority shareholder allies argued that the absorption of component companies into Amalgamated had been undertaken without their consent—and therefore should be quashed. As a holding company, Amalgamated was nothing without the companies it had absorbed. If Fritz and his allies won, Amalgamated would effectively be dissolved. Heinze, of course, had chosen his forum carefully. The suits were filed in the court of an old friend—the gray-bearded Judge Clancy.

On October 22, 1903, Judge Clancy ruled in favor of Heinze, prohibiting Amalgamated from absorbing component companies (without the permission of all shareholders) and also prohibiting the Company from paying dividends derived from the profits of the acquired companies.

If Clancy’s ruling stood, Amalgamated was dead—along with Standard Oil’s broader play to build a copper trust.