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Boom, Bust, & Boom: The Up-and-Down History of Keystone

Photo courtesy of the Keystone Historical Museum


Keystone’s location in a picteuuresque valley surrounded by forested hillsides of ponderosa pine long made it an idyllic spot, but natural beauty wasn’t a priority for early settlers, who were forced to eke out a hardscrabble living in an untamed wilderness far from modern civilization. Following the discovery of placer gold in Battle Creek in 1875—one of the first strikes in the Black Hills Gold Rush—prospectors began converging on the area, led by Fred Cross, who holds the distinction of being the first white man to settle in the region after he built a cabin in Buckeye Gulch (near the site of the present-day Powder House Lodge) in 1877. Fred realized that placer deposits were indicative of larger underground veins and built a stamp mill for crushing ore, but a personal fortune remained elusive. 

With the arrival of some 300 miners, the settlement of Harney City was established, complete with stores, saloons, and a sawmill. Most of the attention was centered on the northern Hills, where significant deposits of gold were discovered in Deadwood Gulch. The placer mines in and around Harney City yielded much less of value, and in 1883, attention shifted to mica and tin. The Etta Mine produced substantial amounts of tin ore, prompting a group of American and British stockholders to form the Harney Peak Tin Mining, Milling, and Manufacturing Company. They acquired 1,100 mining claims spread out over 5,000 acres. Despite this considerable investment, the Etta Mine never turned a profit and closed down in 1886. 

In 1891, three men—William Franklin, Thomas Blair, and Jacob Reed—discovered the Keystone Mine and opened  a stamp mill. While that mill proved profitable and provided the name for a new settlement called Keystone, Franklin’s discovery of an even larger strike at the base of Mount Atnea in 1894 proved to be a turning point in the town’s history. The Holy Terror Mine, a tongue-in-cheek reference to Franklin’s wife, yielded over $40,000 in gold that first year, and reliably produced between $10,000 and $70,000 a week. Keystone’s population swelled; prospectors, merchants, and businessmen flooded the town as houses, hotels, saloons, churches, and a school were built to meet the needs of the new citizens. For a while, Keystone was the largest community in Pennington County. 

The town went through several boom-and-bust periods over the ensuing decades. Fires and mining accidents took their toll; following the closure of the Holy Terror Mine in 1903, Keystone sank into an economic depression and the population fell to only 250—only about one-tenth of its heyday. Mining continued in fits and starts, but the town might have become a mere footnote in history if not for Doane Robinson, South Dakota’s State Historian, who came up with the idea of promoting tourism in the Black Hills through mountain carvings of historical figures in the granite outcroppings. Sculptor Gutzon Borglum toured the area and chose a mountain near the town of Keystone known unofficially as Rushmore. Work began in 1927 and brought significant improvements to Keystone, which benefitted from the addition of roads, railroad lines, and electricity. 

Work on Mount Rushmore was completed in 1941 after Gutzon Borglum passed away, ushering in economic prosperity in the form of tourism. Souvenir shops and other attractions were built to meet the demand as visitors on their way to Mount Rushmore passed right through the heart of town. Though its population will never rival the numbers seen at the turn of the 20th century, thanks to Doane Robinson’s vision and Gutzon Borglum’s carving skills, Keystone’s future is secure.