Jefferson Smith was born on November 2, 1860, in Coweta County, Georgia, to a wealthy family. His grandfather was a plantation owner and Georgia legislator, while his father was an attorney. However, the Smith family was met with financial ruin at the close of the American Civil War and in 1876, they moved to Round Rock, Texas, to start anew. It was in Round Rock where Smith began his career as a confidence man. In 1877, Smith’s mother died and he left home shortly thereafter, but not before witnessing the death of the outlaw Sam Bass in 1878.

In 1879, Smith arrived in Denver for the first time and, by 1882, he had successfully built the first of his three empires. Con men usually moved from town to town to avoid the law, but as Smith’s power and gang grew, so did his influence at city hall, which allowed him to remain in the city, protected from prosecution. By 1887, he was reputedly involved with most of the criminal activities in the city. Newspapers in Denver reported that he controlled the city’s criminals and underworld gambling, and accused corrupt politicians and the police chief of accepting bribes.

In 1888, Smith opened The Tivoli Club—a combination saloon and gambling house—on the southeast corner of Market and 17th Street. Allegedly, a sign above the entrance to the gambling games read “caveat emptor”, Latin for “let the buyer beware”. Smith’s younger brother, Bascomb Smith, joined the gang and operated a cigar store that was a front for dishonest poker games and other swindles, which operated in one of the back rooms. Other operations included fraudulent lottery shops, a “sure thing” stock exchange, fake watch and diamond auctions, and the sale of stocks in nonexistent businesses.

In 1892, with Denver in the midst of anti-gambling and saloon reforms, Smith sold the Tivoli and moved to Creede, Colorado, a mining boomtown that sprang up on the site of a major silver strike. Using Denver-based prostitutes to get close to property owners and convince them to sign over leases, he acquired numerous lots along Creede’s main street and rented them to his associates. After gaining enough allies, he announced that he was the camp boss.

Creede’s boom quickly waned, and corrupt Denver officials sent word that the reforms in Denver were coming to an end. Smith returned to Denver and brought “McGinty” with him. He left at the right time, as Creede soon lost most of its business district in a huge fire on 5 June 1892. Among the buildings destroyed was the Orleans Club.

In 1894, Colorado’s newly-elected governor Davis Hanson Waite fired three Denver officials as part of anti-corruption reforms. They refused to leave their positions and fortified themselves in the Denver City Hall with others who felt their jobs were threatened. Governor Waite called on the state militia to remove them, which brought two cannons and two Gatling guns. Smith joined the corrupt officeholders and police at City Hall and was commissioned a deputy sheriff. Smith and several of his men climbed the City Hall’s central tower with rifles and dynamite to fend off any attackers. However, Governor Waite eventually decided to withdraw the militia and the battle was instead fought in the courts, in which Soapy Smith was an important witness. The Colorado Supreme Court ruled that Governor Waite had authority to replace the commissioners, but was reprimanded for bringing in the militia, in what became known as the “City Hall War.”

When the Klondike Gold Rush began in 1897, Smith moved his operations to Dyea and Skagway. His first attempt at occupying Skagway ended in failure when miners’ committees encouraged him to leave the area after operating his three-card monte and pea-and-shell games on the White Pass Trail for less than a month. He traveled to St. Louis and Washington, D.C., and did not return to Skagway until late January 1898.

Smith set up his third empire much the same way as he had in Denver and Creede. He put the town’s deputy U.S. marshal on his payroll and began collecting allies for a takeover. Smith opened a fake telegraph office in which the wires went only as far as the wall. Not only did the telegraph office obtain fees for “sending” messages, but also cash-laden victims soon found themselves losing even more money in poker games with newfound “friends.” Telegraph lines did not reach or leave Skagway until 1901. Smith opened a saloon named Jeff. Smith’s Parlor in March 1898 as an office from which to run his operations. Although Skagway already had a municipal building, Smith’s saloon became known as “the real city hall.”

During the Spanish–American War in 1898, Smith formed his own volunteer army with the approval of the United States Department of War, known as the “Skaguay Military Company,” with himself as its captain. Smith wrote to President William McKinley and gained official recognition for his company, which he used to strengthen his control of the town.

On July 4, 1898, Smith rode as marshal of the Fourth Division of the parade leading his army on his gray horse. On the grandstand, he sat beside the territorial governor and other officials.

On July 7, 1898, John Douglas Stewart, a returning Klondike miner, came to Skagway with a sack of gold valued at $2,700 ($82,620 in 2017 dollars). Three gang members convinced the miner to participate in a game of three-card monte. When Stewart balked at having to pay his losses, the three men grabbed the sack and ran. The “Committee of 101” demanded that Smith return the gold, but he refused, claiming that Stewart had lost it “fairly.”