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|How Nevada Became a State|
1/24/01 The Mail
Statehood without State Functions: Nevada Continued
Importantly, according to Nevada state archivist Guy Roche, one of the economic factors that influenced the original grant of territorial status to Nevada in 1861 was the discovery of the Comstock Lode of 1859. Though it was not the determinative factor in the territory's successful drive for statehood three years later, it did have a material influence on it because Nevada's territorial status directly benefited the US government. Among other things, it ensured that "[Nevada's] riches would help the Union and not the Confederate cause. Furthermore, Roche claims that the "federal government bought much of Nevada's silver and gold bullion to support its currency" and, of course, whatever federal taxes were collected went straight "into Union coffers."
And interestingly, it was Nevada's mine operators themselves who led the drive for Nevada statehood in 1863, at a time when Nevada's economy was relatively robust. The miners' chief motive was primarily economic. Hoping to win Congressional representation in order to shoot down a proposed federal tax on mineral deposits extracted from the western territories, they clamored for states' rights. And the timing fit in nicely with President Lincoln's own fears about losing the forthcoming presidential election and his ardent hopes for passing the 13th Amendment, which, of course, outlawed slavery. (He believed that he required two additional Senatorial votes to secure passage; ironically, it turned out that he didn't.)
In 1864, Congress did in fact grant Nevada statehood. But in that same year a statewide recession set in. Ironically, it was the miners themselves who had voted down a proposed "gross proceeds" tax on territorial mines the year before that would have averted the financial crisis in the state. As a result of the economic downturn, the miners passed a "net proceeds" tax instead, which failed, unfortunately, to generate sufficient revenues to avert the crisis. Nevada then issued bonds to prop up the economy, which were snapped up by California bankers at exorbitant interest rates. But by the end of the 1860's, the "Big Bonanza" had struck -- fueled by gold and silver discoveries in Nevada's southwest desert and the arrival of the Transcontinental Railroad. (Silver would soon supersede gold as Nevada's # 1 economic engine, and it became known as "The Silver State.") By 1869, cattle and sheep farming had also become a key state economy. During the course of the next seven years, the "money rolled in," says historian Drakes, and by 1875 Nevada was able to "pay off" its California bonds.