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Angus McKinnon and Morris A. Ruffner filed the first copper mining claims at this location in 1876. In 1880, Frederick A. Tritle, the governor of the Arizona Territory, and Frederick F. Thomas, a mining engineer from San Francisco, bought these claims from the original owners. In 1883, with the aid of eastern financiers including James A. MacDonald and Eugene Jerome of New York City, they created the United Verde Copper Company. The small adjacent mining camp on Cleopatra Hill was named Jerome in honor of Eugene Jerome, who became the company secretary. United Verde built a small smelter at Jerome and constructed wagon roads from it to Prescott, the Verde Valley, and the Atlantic and Pacific Railroad depot at Ash Fork. However, transport by wagon was expensive, and in late 1884 after the price of copper had fallen by 50 percent, the company ceased all operations at the site.

The town owes its existence mainly to two ore bodies that formed about 1.75 billion years ago along a ring fault in the caldera of an undersea volcano. Tectonic plate movements, plate collisions, uplift, deposition, erosion, and other geologic processes eventually exposed the tip of one of the ore bodies and pushed the other close to the surface, both near Jerome. In the late 19th century, the United Verde Mine, developed by William A. Clark, extracted ore bearing copper, gold, silver, and other metals from the larger of the two. The United Verde Extension (UVX) Mine, owned by James Douglas, Jr., depended on the other huge deposit. In total, the copper deposits discovered in the vicinity of Jerome were among the richest ever found.

Jerome made news in 1917, when strikes involving the Industrial Workers of the World (IWW) led to the expulsion at gunpoint of about 60 IWW members, who were loaded on a cattle car and shipped west. Production at the mines, always subject to fluctuations, boomed during World War I, fell thereafter, rose again, then fell again during and after the Great Depression. As the ore deposits ran out, the mines closed, and the population dwindled to fewer than 100 by the mid-1950s. Efforts to save the town from oblivion succeeded when residents turned to tourism and retail sales. Jerome became a National Historic Landmark in 1967. By the early 21st century, Jerome had art galleries, coffee houses, restaurants, a state park, and a local museum devoted to mining history.

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