Jacob Snively made the first big strike in 1857 when he discovered gold along the Gila River about 20 miles (30 km) upstream from the junction with the Colorado. A year later more than a thousand people were panning for coarse grains in placers or robbing those who did in Arizona's first boomtown, Gila City. It set the pattern for the boomtowns to come. Although a few prospectors became wealthy, most barely found enough gold to purchase food at the inflated prices, bread for a dollar a loam and beans at 50 cents a pound ($1.1/kg). In 1864, according to journalist J. Ross Browne, the "promising Metropolis of Arizona consisted of three chimneys and a coyote."
Another type of mining community, the company town, also developed, that were fueled by corporate ventures. Most did not appear until railroads and a revolution in technology made large-scale copper mining feasible, but a few such as the Sonora Mining and Exploring Company represented corporate capitalism's first foray onto the Arizona frontier. Two partners, Samuel Heintzelman (a hard-nosed Pennsylvania German) and Charles Debrille Poston [1] started the company in Cincinnati in 1856. Poston and a German mining engineer named Herman Ehrenburg established the company's headquarters at the abandoned presidio of Tubac and purchased the 17,000 acre (69 km²) ranch of Arivaca from Tomás and Ignacio Ortiz. The following spring, another German engineer, Frederick Brunckow, discovered silver in the Cerro Colorado Mountains just north of Arivaca. Soon advertisements were trumpeting Poston and Heintzelman's venture as "the most important Mining Company on this Continent."
Heintzelman left Poston in charge of the mines while he attempted to raise money back east. More interested in self-promotion than production, Poston allowed his engineers to open too many mines without developing any of them and never completed the smelting works at Arivaca, and he spent much more than he made. The Panic of 1857 swept across the financial centers of the United States and the business unraveled. While Heintzelman tried to entice investors, banks failed, debts mounted, and work in the mines themselves proceeded at a snail's pace. In December, Heintzelman persuaded firearms inventor Samuel Colt to invest $10,000 in the company. By 1859, Colt had seized control of the company. Colt imported new boilers, lathes, and steam-powered crushers and amalgamators, but ore still had to be shipped out by wagon across southern Arizona and loaded onto steamboats near Fort Yuma.
Mexican labor: Heintzelman and Poston's most immediate problem was the labor. Like Sylvester Mowry's Patagonia mine, the Sonora Mining and Exploring Company relied heavily on Mexican labor, a precedent that would be followed by most of Arizona's extractive industries for years to come. There were 231 males living at Tubac in 1860, only 23 of whom had been born outside Mexico or the territory of New Mexico. In the mining communities of Santa Rica, Arivaca, and Cerro Colorado, Mexicans constituted 70 percent of the labor force (67 of 96). Poston bragged of his paternalism and claimed that he married Mexican couples and baptized their children. Other managers despised their Mexican employees and never understood the fluid work patterns of the frontier. When Mexicans left the mines in late August for the fiesta of San Augustín in Tucson or made their annual pilgrimage to Magdalena, Sonora, to pay homage to San Francisco in early October, Heintzelman and his German engineers complained about Mexican laziness and unreliability, not understanding how fiestas maintained bonds between people and powerful saints and made life more bearable and knit families together on the frontier.
More serious was the exploitation of Mexican labor itself. According to mining engineer Raphael Pumpelly, Mexican workers received 12 to 15 dollars per month, compared to 30 to 17 dollars for Anglo workers. The mining companies often paid them "in cotton and other goods, on which the company made a profit from one hundred to three hundred percent." Differential wage scales, combined with late pay, lead poisoning, malarial fevers, and abusive overseers prompted Mexicans to strike for better conditions or to simply walk off the job.
On May 1, 1859, in an event known as the Sonoita Massacre, a ranch foreman named George Mercer whipped and shaved the heads of seven Mexican workers. Five days later, one of Mercer's friends was murdered at his ranch near Tumacacori. Enraged, Mercer and seven other armed men vowed to drive all Mexicans from the region. They rode up to a mescal distillery in the Sonoita Valley and opened fire, killing four Mexicans and one Yaqui Indian.
News of the attack spread rapidly, and many Mexicans fled to Sonora. Watching their workforce evaporate, mine owners condemned the massacre and some workers came back to the mines. Acts of violence escalated. During the late 1850s and early 1860s, Mexicans murdered 25 people in Arizona, yet Anglos, a small minority in Arizona's population, killed 39 people in the same period, 23 of whom were Mexicans. In many respects, southern Arizona was like southern Texas. Both were regions where Anglos exploited Mexican laborers, and both were regions where Anglo and Mexican desperadoes slipped back and forth across the border to commit crimes.