Gainey Goldmine, part 2

By Craig Hilmer

East of St Charles, there is a boarded-up mine shaft that for a brief time at the start of the last century captured the attention of St Charles residents.

Mines aren't too common in this neck of the woods. Save for limestone and gravel the mineral deposits aren't of the valuable kind. In 1910, however, the Gainey family of St Charles thought their land held something different.

M.W. Gainey, owner of the gold mine

Louisa Hemmelberg Gainey, wife of Mike Gainey, was an entrepreneur. Its been said that some of her enterprises were less than on the up and up. In this case, the mine that she convinced the family to dig on the family farm certainly cemented that idea. Louisa enlisted a psychic to convince the family there was gold on the property and by 1910 a mine shaft was dug into the hillside.

By 1924, and 830 feet into the hillside, the only gold found was for the Gainey family and was in the form of monies collected in stock certificates sold for shares in the gold mine. Over 116,000 shares of $1.00 stock were sold in the mine, in addition to an unknown number of $2.00 shares, according to a report in the Winona Republican-Herald dated November 11th, 1924.

The Gaineys had been denied a permit to sell stock in the mine, in the newly organized Commerce Commission as of 1923. When the family continued to sell stock Louisa’s brother, A.A. Hemmelberg, was arrested and charged with grand larceny in the second degree for selling unregistered securities.

The Gaineys and the Gainey Consolidated Gold Mine Co were denied stock issuance because the ore samples taken from the mine proved to be worthless. A University of Minnesota assayer had been called to take samples from the mine determined the samples were “fool’s gold”. That was in contradiction to samples taken earlier in the decade by A. Mills Beam, an assayer from Colorado, hired by the Gaineys.

A.A. Oberg said, “The assay returns of the samples from the mine show no gold or silver value and no merchantable gold or silver ore.”

Oberg, a Minnesota Securities Commission investigator, reported, “Charles Stearns of Pontiac Michigan” was the superintendent of the mine and noted that his experience in mining is minimal, but that “he is better equipped at this (mining) than any of the Gaineys.”

A November 21, 1925 Winona Republican-Herald article called the mining operation a “Smooth Swindle Game.”

The Gainey’s used monies from sale of mine stock to buy personal items, farming equipment and livestock, and ultimately spent about $20,000 that could be attributed to the mine.

An early questionable purchase was one of the first gas-powered engines in the area that the Gainey’s bought with mine money, but used in threshing on the farm. Eventually, under pressure, the Gainey’s reimbursed the mine $10 per day for use of the engine. When not being used for farming the engine was used to dig and to haul debris out of the mine.

Nearly 100 years later the Gaineys are gone. William Gainey, owner of the land the mine sat on died on May 4th, 1925, at the height of the legal troubles. The land has been sold several times and little remains to show that once the Gainey’s and a lot of area and nationwide shareholders once rested their hopes on the supposed gold in the hills east of town.

The last of the Gainey brothers died in 1945. He was receiving government aid at the time of his death, otherwise penniless.

Gainey Goldmine, part 1

By Craig Hilmer

File this fact under “Did you know that St. Charles once..” housed an active gold mine? It’s a fact; in the first part of the 20th century property east of St. Charles was the site of a flourishing gold mine.

Well, flourishing is in the eye of the beholder, and indeed that distinction was what netted most of the attention to the mine.

Common stock was sold for the gold that would be mined from the large operation under the name of Minnesota Gold Mining Company. Shares were one dollar and capital raised was to go to exploration and extraction costs.

That exploration and extraction went on for years and years without a return to shareholders. All the while shares continued to be sold, raising the ire of many an investor.

The Gainey family, over time, sold 625,000 shares of their mine. Its widely assumed that there wasn’t actual gold in those mines, that samples “extracted” from the mine were actually seeded; an example of such is available for viewing at the Winona County Historical Society. Along with the sample, which rests in a glass vial, is the summary of an assay accomplished that indicates the sample is merely iron ore.

Heavy metal seems to been the stock in trade for the Gaineys. Louisa Gainey, wife of Michael, practiced a variety of sales before entering the gold mine business. Louisa was born Louisa Hemmelberg and got her start in marketing with a “complexion beautifier’ used by “society ladies, belles and actresses”. It was, in fact, white lead paint, which of course would sicken, perhaps with finality, anyone who used the product.

In 1910 when the market evaporated in lead-based beauty paint, Louisa talked her brother-in-law John into seeing a psychic. Kate Ehmcke, according to a Rochester Post-Bulletin story on the gold mine, was a “trance medium and healer.”

Ehmcke “saw” visions of gold under a door when she visited the farm. When the door swung open, she said, it will hit a post, over which is a window.

After a search of the property turned up nothing, but months later the Gaineys looked out on their chicken coop one windy day in time to see the door blow open and slam into an adjoining post.

The Gaineys moved the coop and started digging. Hitting bedrock within a foot or two they begin to tunnel under the rock shelf towards their riches and such began the journey to St. Charles’ only known goldmine.

Was it all a scam Louisa cooked up with Ehmcke? One can’t say for certain, but the legal record left doesn’t speak kindly for her efforts.

By 1911 Lousia founded the Gainey Consolidated Gold Mine Co., which was incorporated in the Arizona Territory.

Gold mines were, in fact, the rage at this point of time. Nationwide schemes that echoed this “discovery” were repeated. A noted outdoor writer, Emerson Hough, wrote a scathing piece on such mining efforts, “The Gold Brick and the Gold Mine, Fake Mining Schemes that Steal the People's Savings.” Hough, born in Newton Iowa, was a respected writer for magazines such as Field and Stream and also wrote historical fiction.

Many credit Hough for popularizing the romance of the Western expansion of our population with such books as “The Covered Wagon, 54-40 or Fight, and The Mississippi Bubble.” The Covered Wagon was made into a successful silent film in 1925. Hough was also an attorney and used his writing skills to push various agendas.

Hough wrote at the start of his 62 page Gold Brick volume: “…Your tailor charges you a stiff price for your suit of clothes. That covers the clothes of the dead beats who did not pay. To allow the sale of a fraudulent mining stock is to depreciate the basis of this country's values. Such a wrong ought not to be allowed in a country claiming an enlightened government.’

Eventually, the protections that Hough asked for were established. In Minnesota, in 1923 the Commerce Commission was created and all securities were required to be registered.

The Gaineys, when they refused the examination of their accounts, received a fine for selling over 115,000 shares of unregistered stock.

That spelled the beginning of the end. From 1923 to 1925 the St. Charles papers, as well as Winona, Rochester and St Paul papers are dotted with reports of assorted trials and examination boards passing judgment on the Gaineys’ operation.

The Winona Republican of January 19, 1925 front page headline read; “’Gold Mine’ Firm Enters Guilty Plea Here; Fined $200.” Judge C.E. Callaghan presided and bound Louisa’s brother, A.A. Hemmelberg over to the County jail at Wabasha to face charges of grand larceny in the second degree for selling unregistered securities.

The Gaineys, according to a review of their books, spent only $20,000 to drill 700 feet into the earth in search of a motherlode that was never to be. $60,000 was diverted to the Gainey’s personal use.

Fraud charges were filed by shareholders, a Gainey brother was arrested as he tried to leave the state, and schemes to keep the mine alive grew more and more bizarre.