Black Hills Gold Rush

Overview

The Black Hills Gold Rush followed the discovery of gold in the Black Hills Region of South Dakota by a military expedition led by George Armstrong Custer. The Gold Rush transformed the region, as thousands of prospectors established boomtowns like Deadwood and mines like the Homestake Mine. However, tensions between the U.S. Government and the Sioux led to the Great Sioux War and Custer’s Last Stand at the Battle of the Little Bighorn. The Black Hills Gold Rush stands as one of the significant events in the legacy of America’s Westward Expansion and the development of the legendary Old West.

Essential Facts

• The Black Hills Gold Rush started in 1874 after the Black Hills Expedition discovered gold in the area.
• Miners flooded into the Black Hills, violating the Treaty of Fort Laramie (1868).
• The U.S. tried to buy the Black Hills from the Sioux, but the offer was refused.
• Deadwood, South Dakota, was founded in April 1876 in the Black Hills.
• After hostilities with the “Non-Treaty Sioux” led to the Battle of the Little Bighorn (1876), the U.S. pressured the Sioux into ceding the Black Hills by threatening to withhold food rations over the winter.
• The Homestake Mine, founded by Moses and Fred Manuel, became the most productive gold mine in U.S. history.
• In 1980, the U.S. Supreme Court ruled the government acted in bad faith toward the Sioux and awarded them $106 million in compensation. However, the Sioux refused the settlement, insisting on the return of their sacred lands.

Key Events

• 1874, June 8 — Custer received orders from General Alfred Terry to explore the Black Hills. Custer spent the next month preparing the Black Hills Expedition.
• July 2 — The expedition left Fort Lincoln with the band playing “Garry Owen,” one of Custer’s favorite songs. It moved southwest toward the Heart River.
• July 16 — The expedition crossed into Montana.
• July 17 — The expedition crossed into Wyoming Territory.
• July 18 — The Black Hills came into sight, Custer wrote to his wife, Libbie, saying, “We have discovered a rich and beautiful country.”
• July 22 — The expedition arrived in the Black Hills after traveling for three weeks and an estimated 330 miles.
• July 26 — The expedition moved back into the Dakota Territory.
• July 27 — Miners Horatio Nelson Ross and William McKay started panning for gold.
• July 30 — One of the prospectors found a hint of gold in French Creek, in an area the soldiers called “Custer Park.” This date is approximate.
• August 1 — The expedition encamped below Harney Peak and explored the area for the next five days.
• August 2 — More gold was discovered. Custer and newspaper reporters filed reports and stories about the find, but neglected to mention that the land was owned by the Sioux.
• August 2 — Custer shot and killed a grizzly bear.
• August 10 — The New York Tribune printed the story with the headline “New Gold Country.”
• August 10 — The New York Times published Custer’s report.
• August 30 — The expedition returned to Fort Lincoln.

Historical Context

The Black Hills Gold Rush happened 25 years after the California Gold Rush, one of the most significant moments in Westward Expansion. The rush to the Black Hills happened about six years after the Battle of the Washita River (November 27, 1868), in which Custer led the 7th U.S. Cavalry in an attack on a Native American Indian camp in Indian Territory. During the attack, the Cheyenne Peace Chief, Black Kettle, was killed.

Significance

The Black Hills Gold Rush is important to American History because it led to the Great Sioux War (1876), the forced cession of the Black Hills to the U.S., and promoted American Manifest Destiny.

History

Sheridan Plans for a New Fort in the Dakota Territory

In 1873, Civil War hero Philip Sheridan was the commander of the Western Division of the Missouri. That fall, he approached President Ulysses S. Grant about the possibility of building a new fort in the Black Hills area of the Dakota Territory. Sheridan believed a fort in the Black Hills would help control dissident bands of Native American Indians at the Red Cloud and Spotted Tail Agencies.

• The Indians were celebrating their perceived victory from the Treaty of Fort Laramie (1868), which closed the Bozeman Trail as a path for the Westward Expansion of the United States.
• The Fort Laramie Treaty effectively closed the Bozeman Trail, which was significant to the Sioux.
• The closure of the Bozeman Trail contributed to Red Cloud’s War and the Fetterman Massacre.
• After the closure of the Trail, the Indians continued to carry out raids, using the agencies as bases for operations that extended as far southeast as Nebraska.

There were several major obstacles to Sheridan’s plan:

• The Black Hills were located in the center of the Great Sioux Reservation.
• The area was not well mapped by U.S. Army surveyors.
• The Black Hills were considered sacred by the Sioux.

Black Hills — Located in present-day South Dakota and Wyoming, the Black Hills hold spiritual significance for the Lakota Sioux. The discovery of gold in 1874 led to conflict as settlers violated the Treaty of Fort Laramie (1868), inciting disputes like the Great Sioux War (1876–1877).

Dakota Territory (1861–1889) — Originally part of the Louisiana Territory, the Dakota Territory encompassed present-day North Dakota, South Dakota, and parts of other states. On November 2, 1889, the Territory was divided and admitted to the Union as North Dakota (39th State) and South Dakota (40th State).

Red Cloud Agency — Founded in 1871 near Nebraska, the Red Cloud Agency served the Oglala Lakota by distributing rations and supplies. Named after Lakota leader Red Cloud, it was central to negotiations and conflicts during the Westward Expansion Era.

Spotted Tail Agency — Located near present-day South Dakota, the Spotted Tail Agency was established for the Brulé Sioux and led by Chief Spotted Tail. It managed federal relations, supplies, and resettlement issues during the Westward Expansion Era.

Treaty of Fort Laramie (1868) — This Treaty tried to set territorial boundaries for each tribe to maintain peace between them. However, some tribes continued to fight with each other. Signed between the U.S. government and several tribes, including the Lakota Sioux, it placed the Black Hills and surrounding lands in the Great Sioux Reservation. It also sought to reduce conflict with American settlers by closing the Bozeman Trail. However, violations by settlers and the discovery of gold in the Black Hills led to renewed tensions and war. The meeting that led to the Treaty was arranged by Thomas “Broken Hand” Fitzpatrick, the legendary Mountain Man. Chief Black Kettle, the famous Cheyenne Peace Chief, attended the meetings.

Bozeman Trail — Established in the 1860s, the Bozeman Trail was an Overland Trail connecting the Oregon Trail to gold mines in Montana Territory. Passing through the Powder River Basin, it crossed Indian lands, leading to violent conflicts, including Red Cloud’s War. The trail’s use ended with the Treaty of Fort Laramie (1868).

Great Sioux Reservation — Established by the Treaty of Fort Laramie (1868), the Great Sioux Reservation encompassed most of present-day western South Dakota, including the Black Hills, and was for the exclusive use of the Sioux tribes. However, the U.S. government seized much of the land after gold was discovered in the Black Hills, leading to violence and the loss of Sioux territory.

Black Hills Geography and Natural Resources

The Black Hills were formed by the same geologic forces that created the Rocky Mountains. The area features limestone and granite cliffs and densely wooded ridges, surrounded by a treeless, grass-filled prairie.

• It is believed the Sioux first entered the Black Hills in the 1770s.
• The Black Hills provided them with essential resources: wood for teepee poles, fresh mountain streams, deep canyons for winter shelter, and abundant game.
• The Black Hills became the spiritual center for the Sioux, known as “Paha Sapa.”
• The Fort Laramie Treaty (1768) ceded the Black Hills to the Sioux “for as long as the grass grows and the rivers flow.”

Sheridan Chooses Custer to Lead the Black Hills Expedition

Although there were U.S. officers who tried to respect the Indians, such as George “Grey Wolf” Crook, Sheridan famously said, “The only good Indian is a dead Indian.”

• President Grant approved Sheridan’s request for a fact-finding and mapping expedition into Sioux Territory.
• Sheridan eventually appointed another Civil War hero, George Armstrong Custer, to lead it.

Custer was a bold, brash officer whose long, blonde hair earned him the nickname “golden-haired boy general.” At the time, he was considered the most famous “Indian Fighter” in America. Sheridan praised Custer after the controversial attack against a Cheyenne village at the Battle of Washita (1868).

• The “battle” was an attack on a sleeping Cheyenne village, which Custer portrayed as an epic victory for the United States.
• During the attack, Chief Black Kettle and his wife were killed.
• Along with the Sandcreek Massacre, the Battle of the Washita is considered one of the two worst atrocities committed against the Plains Indians.
• Sheridan hoped Custer’s reputation would keep the Sioux, who called him “Yellow Hair,” from escalating the situation.

In leading the expedition, Custer had personal goals he wanted to meet. He wanted “good press” and ensured the expedition was colorful, lighthearted, and newsworthy enough to be covered by the New York World.

Ben Holladay’s Scheme

• Ben Holladay, known as the “Stagecoach King,” sought to exploit the Black Hills Region.
• Holladay collaborated with Custer and Quartermaster General Rufus Ingalls in order to capitalize on the opportunities the Black Hills provided.
• He wanted to establish stage depots, sutler’s posts, a distribution center for the Indian Agencies, and eventually new towns.

Ben Holladay (1819–1887) — Known as the “Stagecoach King,” Holladay was a transportation entrepreneur who expanded stagecoach routes across the western United States in the mid-19th Century, including the Overland Stage to California.

Rufus Ingalls (1818–1893) — Rufus Ingalls was a Union Army officer and Quartermaster General during the Civil War. He managed logistics for the Union armies, ensuring supplies and transportation for troops in major campaigns, including the Siege of Petersburg (1864).

Sutler’s Posts — Private trading posts authorized to sell goods to soldiers at military forts and camps during the 19th Century. They provided supplies like food and clothing but were often criticized for charging high prices and exploiting their customers.

Sheridan’s Ulterior Motives

Sheridan had other motives for the expedition other than mapping the territory. He sought to open the Black Hills Region for mining and settlements.

First, the people of the Dakota Territory have been demanding that the government move the Sioux to the eastern side of the Great Reservation since 1872.

Second, Sheridan was aware that rumors of gold in the Black Hills existed as early as 1833. He secretly told Custer to investigate the rumors.

• In 1861, the Black Hills Mining and Exploration Association sought gold in the area.
• The U.S. Army prevented the group from entering Indian lands for 10 years, often using force.

The Black Hills Expedition Travels to South Dakota

• Custer’s expedition left Fort Abraham Lincoln, Dakota Territory, in the summer of 1874.
• The expedition included nearly 1,000 soldiers, 60 Indian scouts, 2,000 horses, 100 wagons, a 16-piece brass band, three Gatling guns, three newspaper reporters, and two prospectors/geologists.
• After a two-week march, they arrived in the Black Hills with no trouble from the Sioux.
• Custer collected wildlife specimens to donate to New York’s Central Park Zoo.
• He shot his first grizzly bear, with help from Indian scouts, and posed for a photograph.

News of Gold in the Black Hills

• On July 30, 1874, one of the miners found a hint of gold in French Creek, in an area the soldiers called “Custer Park.”
• Custer sent a scout, “Lonesome” Charley Reynolds, to Fort Laramie to share the news.
• When he returned to Fort Lincoln, Custer told reporters the amount of gold exceeded any rumors.
• He suggested that they tell would-be gold seekers to use Bismarck, North Dakota, as the “jumping-off point” for expeditions into the Black Hills.

AHC Note — Some accounts indicate Horatio Nelson Ross was the first to find gold, while others say it was William McKay. Thom Hatch, author of The Custer Companion, includes an undated diary entry from McKay that says, “In the evening I took a pan, pick and shovel, and went out prospecting. The first panful was taken from the gravel and sand obtained in the bed of the creek; and on washing was found to contain from one and a half to two cents, which was the first gold found in the Black Hills.”

On August 15, Custer filed a report that indicated gold was not the only valuable natural resource in the Black Hills:

“There is no doubt as to the existence of various metals throughout the hills. As this subject has received the special attention of experts who accompanied the expedition, and will be reported upon in detail, I will only mention the fact that iron and plumbago have been found and beds of gypsum of apparently inexhaustible extent. I referred in a former dispatch to the discovery of gold. Subsequent examinations at numerous points confirm and strengthen the fact of the existence of gold in the Black Hills.”

The Black Hills Gold Rush Begins

News that gold had been confirmed in the Black Hills triggered a gold rush similar to the California Gold Rush (1849).

• The Dakota Territory was surrounded by miners who were anxious to enter the Black Hills.
• The U.S. Army, bound by the Treaty of Fort Laramie, took measures to prevent miners from entering.
• However, as incidents of miners sneaking into the Black Hill increased, the Federal Government faced pressure to alter the portion of the treaty that protected the Black Hills.

U.S.-Sioux Negotiations

In early 1875, Sioux chiefs Red Cloud and Spotted Tail traveled to Washington, DC, to discuss selling the Black Hills. The chiefs refused and returned to their homes.

• A commission from Washington was then sent to the Dakota Territory to explore buying or leasing the Black Hills.
• In September 1875, the commission met with 20,000 Sioux.
• The Sioux offered to sell the Black Hills for $70 million, an intentionally unrealistic amount of money.
• The U.S. commission rejected this price and counter-offered, proposing to lease the land for $400,000 per year.
• The commission also proposed an outright purchase for $6 million, payable over 15 installments.
• The Sioux refused to lease or sell the Black Hills.
• The Grant Administration responded by ordering the army to stand down and stop restricting access to the Black Hills.

Founding of Deadwood, South Dakota

It is estimated that as many as 15,000 miners flooded into the Black Hills at their own risk. This rapid population growth led to the settlement of “boomtowns.”

• Alfred Gay founded the town of Gayville in early 1876 in a gulch called Deadwood.
• By April 1876, Gayville had merged with other nearby settlements, forming the famous town of Deadwood, which had a population of 7,000.
• Notable residents of Deadwood included former sheriff and sharpshooter James Butler “Wild Bill” Hickok, who was famously killed by a bullet to the back of the head while playing cards in a saloon.
• Deadwood, the unofficial center of the Black Hills goldfields, had banks handling up to $100,000 daily and boardinghouses charging miners $1 per night for a cot to sleep on.

James Butler Hickok (1837–1876) — Better known as “Wild Bill” Hickok, James Butler Hickok was a legendary Old West figure known for his roles as a gunslinger, lawman, and gambler. He was famously shot and killed in Deadwood, South Dakota, while holding a “Dead Man’s Hand.”

Dead Man’s Hand — The “Dead Man’s Hand” refers to the poker hand of aces and eights, reportedly held by Wild Bill Hickok when he was murdered in Deadwood in 1876. The term has since become associated with bad luck and legend in the Old West.

Deadwood — Deadwood, South Dakota, was a mining town established during the Black Hills Gold Rush of the 1870s. Known for lawlessness and legendary figures like Wild Bill Hickok and Calamity Jane, it has become an icon of the Old West Era.

Increasing Tensions Between the U.S. and the Sioux

As more miners poured into the Black Hills, the likelihood of conflict with the Sioux increased, and the Federal Government was faced with having to protect Americans who were trespassing and being attacked by bands of Sioux warriors.

• The government decided that the Sioux would bear the consequences of the escalating conflict.
• U.S. officials identified 3,000 Sioux, led by Sitting Bull, Crazy Horse, and Gall, who had not signed the Fort Laramie Treaty, as the likely source of attacks on miners.
• The government issued an ultimatum, ordering the “Non-Treaty Sioux” who were ordered to report to the agencies by January 31, 1876, or face military action.

This ultimatum never reached the Sioux, but Sitting Bull, Crazy Horse, and Gall would have refused even if they did.

The 1876 Campaign and the Battle of the Little Bighorn

The U.S. Army launched a summer campaign in 1876 to force the “hostile” Sioux back into the agencies. The plan was to have three columns of troops converge on the Sioux south of the Little Bighorn Valley in southern Montana.

1. The first column, led by George Crook, approached from the south.
2. The second column, led by John Gibbon, remained at the Yellowstone River to the west.
3. The final column was led by Custer and Alfred Terry and approached from the east.

Crook engaged the Sioux at the Battle of the Rosebud (June 17, 1876) and was defeated by a combined force of Lakota and Cheyenne led by Crazy Horse. Crook’s force suffered 28 killed and 56 wounded. Crook retreated to Fort Fetterman and did not rendezvous with the other columns.

Terry and Custer circled south, went around the Sioux, and approached from the east. They intended to drive the Sioux westward, where Gibbon was waiting for them. However, Custer convinced Terry to allow him and his command, the 7th Cavalry, to scout the Indian encampment on the Little Bighorn River. When Custer approached, he decided to attack.

• On June 25, 1876, around 2,000 Sioux and Cheyenne warriors overwhelmed and annihilated Custer and his 225 men, which included his brothers Thomas Custer and Boston Custer.
• The Battle of the Little Bighorn was a significant victory for the Indians, but it had severe consequences for the Sioux.
• Many Sioux, including Sitting Bull, fled to Canada to avoid reprisal from the U.S. Government.
• The Sioux who remained on the reservation were not as fortunate.

Great Sioux War (1876) — A series of conflicts between the United States and the Lakota Sioux and Northern Cheyenne tribes. It was sparked by disputes over the Black Hills, where gold had been discovered. The war included major battles like the Rosebud and Little Bighorn. It ultimately ended in U.S. victory, leading to the loss of Sioux lands and their forced relocation.

Battle of the Rosebud (1876) — A battle that occurred on June 17, 1876, during the Great Sioux War. Lakota and Cheyenne warriors, led by Crazy Horse, engaged U.S. forces under General George Crook. The Indians stopped Crook’s advance, setting the stage for the Battle of the Little Bighorn.

Battle of the Little Bighorn (1876)  — Fought on June  25–26, 1876, it was a key engagement in the Great Sioux War. Led by Sitting Bull and Crazy Horse, Lakota and Cheyenne warriors defeated and wiped out the 7th Cavalry under Lt. Col. George Custer. The victory, known as “Custer’s Last Stand,” became a symbol of Indian resistance.

Forced Cession of the Black Hills

In the fall of 1876, commissioners were sent from Washington to the Black Hills. They demanded that the Sioux cede the Black Hills to the United States or lose their winter rations.

• Under the threat of starvation, the Lakota surrendered the Black Hills.
• The cession of the Black Hills was illegal, as 75% of the Indians had not been polled, per the Treaty of Fort Laramie.
• Despite the treaty violations, the Black Hills Region was claimed by the U.S. Government.

The Homestake Mine

Soon after the U.S. seized the Black Hills, it is estimated that 7,000 more miners entered the region. Two brothers, Moses and Fred Manuel, discovered a quartz vein three miles south of Deadwood and founded the Homestake Mine.

• In 1877, the Manuels sold the Homestake Mine to a group of men from San Francisco, including George Hearst, Lloyd Tevis, and James Ben Ali Haggin, for $150,000.
• They sold shares in the Homestake Mining Company and listed it on the New York Stock Exchange.

The Homestake Mining Company altered the scope of mining in the Black Hills as it shifted from individual prospecting to more industrialized operations.

• The original wildcat miners and the boomtowns faded away as the industry matured.
• The Homestake Mine became the most productive gold mine in the United States, producing $720 million in gold over the next century.

Wildcat Miners — Independent prospectors who operated without formal claims or authorization, often in contested areas like the Black Hills during the gold rush. Their unauthorized activities frequently violated treaties with Indians, contributing to tensions and conflicts, including the Great Sioux War.

Boomtowns — Rapidly growing settlements quickly established during the Westward Expansion Era. They were usually close to mines, railroads, or trading posts. DDeadwood was symbolic of Boomtowns, which were often filled with makeshift buildings and lawlessness. These towns attracted miners, merchants, and settlers seeking fortune. While some boomtowns thrived and became permanent, many declined once resources were exhausted.

Canyon Springs Stage Robbery

Indians were not the only threat to miners and settlers in the Black Hills Region. Most of the gold and other precious minerals from the Black Hills were shipped to Cheyenne, Wyoming, in wagons that became known as “Treasure Coaches.” These became targets for the growing number of outlaws and bandits in the region. The most famous incident, the Canyon Springs Stage Robbery, took place in September 1878.

• On September 26, 1878, a stagecoach from the Cheyenne-Deadwood Stage company left Deadwood for Cheyenne.
• The stagecoach carried three armed guards and two passengers. Its special iron safe was supposed to take six days to crack if it was stolen.
• It arrived at Canyon Springs, and the guards were told the expected team of six fresh horses was not ready.
• When one of the guards climbed down to go find out why, outlaws hiding in a nearby barn opened fire. The guard was wounded, and one of the passengers was killed. Another guard was knocked unconscious by debris, and the third, Scott Davis, took shelter behind a tree and returned fire.
• The outlaws seized the stagecoach, cracked the safe, and stole $27,000 in gold and other valuables.
• Authorities pursued the outlaws into Wyoming, Nebraska, and Iowa.
• Over time, roughly 40% of the gold and valuables were recovered, except for one gold bar.
• According to legend, some of it was buried by the outlaws in Canyon Spring, where it remains.

United States v. Sioux Nation of Indians

Starting in the 1920s, the Sioux turned to the courts to reclaim the Black Hills, which was rightfully theirs per the Treaty of Fort Laramie. These legal efforts culminated in United States v. Sioux Nation of Indians (1980), which was heard by the U.S. Supreme Court.

• The Court ruled 8-1 in its decision.
• It decided that the Black Hills would remain in the possession of the U.S., but the Sioux were entitled to compensation equal to the estimated value of the land in 1877, plus interest.
• The Court awarded the Sioux $17.5 million plus interest, totaling $106 million in compensation for the loss of the Black Hills.
• The compensation was considered minimal compared to the estimated $18 billion in mineral resources extracted from the Black Hills since 1877.
• The Sioux refused the payment and continued to do so, insisting on the return of their sacred lands.

AP US History Alignment

The Black Hills Gold Rush is part of the following units, topics, and chapters in the APUSH curriculum:

Unit 6: 1865–1898

• 6.2 — Westward Expansion: Economic Development
• 6.3 — Westward Expansion: Social and Cultural Development

American Pageant Notes

• Great West and the Agricultural Revolution (1865–1896)