Capitol City, Colorado – Legends of America
Nestled amidst the rugged beauty of the Colorado Rockies, along the scenic Alpine Loop Backcountry Byway, lies Capitol City, a ghost town whispering tales of ambition, industry, and ultimate decline. Situated approximately nine miles west of Lake City in Hinsdale County, this once-bustling mining town stands as a poignant reminder of the silver boom era and the dreams that fueled its rise and fall.
The story of Capitol City begins in 1875, when George B. Greene of Denver first envisioned a settlement he intended to name Silver Glen. Greene initiated the construction of a smelting operation a short distance above the townsite. However, Greene encountered complications with the local ore and financial difficulties, causing the project to remain unfinished.
In 1877, George S. Lee took over the development of the town, which had been known alternately as Silver Glen and Galena City. With the establishment of a post office in May 1877, Lee proposed the name Capitol City, inspired by the town’s proximity to Capitol Mountain, whose form resembled a state capitol dome. But Lee’s ambitions went far beyond mere nomenclature. Local lore suggests that he harbored a grand vision of Capitol City becoming the capital of Colorado, with himself as its governor. It was with this aspiration that he embarked on developing industries in the area.
Originally hailing from Illinois, George S. Lee received his education in the eastern United States before venturing westward to Colorado. In the 1860s, he gained experience as a mine superintendent in Central City. In 1877, he established an office in Lake City, driven by ambitious plans for the newly established Galena Mining District.
In 1878, a 200-acre townsite was meticulously developed, and lots were offered for sale. Capitol City quickly transformed into a vital supply center for several neighboring silver mines, including Capitol City, Czar, Silver Chord, Yellow Medicine, Red Rover, Vermont, and Excelsior.
Lee soon embarked on constructing a grand two-story brick home in Capitol City, showcasing his aspirations and vision for the town. Workmen were brought in from various parts of the state, and bricks, costing $1 apiece, were hauled from Pueblo, Colorado. Completed in 1879, the house was a testament to luxury and refinement. It featured a spacious veranda, a formal parlor with a bay window where tropical plants thrived, an attached library wing, a small ballroom, a small theater with an orchestra pit, and several fine guest bedrooms on the second floor. The exterior was adorned with landscaped gardens, and the outbuildings, including stables, a carriage house, and a gabled brick outhouse, were also constructed of brick. George Lee was an early adopter of the telephone and had a system connected between his house, Lake City, and neighboring communities by 1881. His home was locally known as the Lee Mansion, but Lee called it The Governor’s Mansion.
The Lees were known for their lavish hospitality, opening their home to the public as the Mountain House Hotel. Their esteemed guests included Colorado Governor F.W. Pitkin in 1879 and travel writer Frank Fossett, who in 1880 described it as "the most elegantly furnished house in Southern Colorado."
Lee’s initial industrial venture in Capitol City was the Lee Smelter, built on the town’s lower edge in 1878. He later developed the Henson Creek Reduction works at the upper end of Capitol City, encompassing the incomplete Greene Smelter. However, these operations were plagued by inconsistent performance due to a lack of quality ores and insufficient water power during much of the year.
Lee also constructed Rose’s Lime Kiln to produce an ash-free lime used as a cement additive. The kiln was named after his daughter, Rose Lee. He also operated several sawmills and lumber yards which provided timber, lath, and shingles for building projects in Capitol City and Lake City, as well as a brick kiln at Capitol City which in 1880 produced 240,000 bricks. Lee also envisioned an upper Henson Creek marble quarry, but this dream was never accomplished. His business interests in the Capitol City area in the late 1870s and early 1880s employed more than 115 men, making him one of the county’s largest employers.
Capitol City was officially incorporated in 1879, experiencing rapid growth. At its peak, the town boasted two stores, several hotels and restaurants, saloons, a post office, approximately 100 cabins, two smelters, a sawmill, and a schoolhouse. A stagecoach provided transportation to Lake City for $1.50 and to Animas Forks for $1.75. Mail service operated daily from Lake City from April through September but only once weekly from October through March. The population peaked at 400 residents.
However, George Lee’s grand aspirations were dashed in 1882, when the local economy experienced a downturn. Overextended financially, the Lee Smelter at the lower end of Capitol City was sold at a sheriff’s sale in March 1882. In August of the same year, it was quietly announced that George and Mary Jane Lee had sold all their Hinsdale County holdings and would reside in Denver while overseeing a coal mine near Morrison. Lee later continued to move around the west, searching for placer diggings and developing silver mines. He was also an inventor and moved back east, where he secured several patents. He remained active until he died in 1905, but despite his dreams and ambitions, leaving a meager estate valued at just $98.90.
Despite Lee’s departure, Capitol City persevered, but its population dwindled, and by 1885, it was home to only about 100 people. During the 1880s, the town was also plagued with litigation, prompting George A. Crofutt, author of the 1885 Grip-Sack Guide, to lament:
“Work has demonstrated there are many rich mines and mining prospects near the camp, but the owners are sitting and fighting, and the smelting works are idle while waiting for something to turn up. The more valuable the mines and property, the more certain they are to be tied up and ruined by quarreling and litigation. Prospects for wealth in any mining camp were seldom richer than in Capitol City, and it is to be hoped that the clouds will clear away and great prosperity result.”
Lee’s Capitol City ventures never regained profitability, and both smelters were dismantled for scrap within a short time.
The silver demonetization in 1893 dealt a further blow to the region, causing mineral output to steadily decline. Although the discovery of gold around the turn of the century briefly revived the town, the resurgence was short-lived. The post office, the second longest-lived in Hinsdale County, was discontinued in October 1920. Capitol City holds the distinction of being the only town in Hinsdale County besides Lake City to have been incorporated.
By 1930, Capitol City had become a ghost town, its once-vibrant streets now silent and deserted.
Over the years, the celebrated Lee Mansion gradually fell into ruin, stripped of its once-elegant furnishings. Today, nothing remains of the structure. Of all George Lee’s investments in Hinsdale County, only the Rose Lime Kiln remains.
Today, the remnants of the old mining camp consist of the old post office and Lee’s Smelter Stack. Aspen, mountain willows, and evergreen trees have reclaimed the rest of the townsite. Several private homes and vacant parcels of private property are in the Capitol City area, upon which visitors should not trespass.
Capitol City is located at an elevation of 9,480 feet at the forks of Henson Creek, nine miles west of Lake City.
Capitol City stands as a testament to the ephemeral nature of boomtowns and the enduring allure of the American West. Its story serves as a reminder of the dreams, ambitions, and hardships that shaped the history of Colorado and the countless individuals who sought their fortunes in its rugged landscapes.