From the very beginning, it was apparent that the new wing failed to satisfy even minimal expectations. The finished wing entailed "nothing but bare stone walls, roof, floor, fourteen brick cells, six by eight feet, in the clear--with nothing between them and the roof, and only gratings for the lower windows."
At the time, William F. Wheeler served as U.S. Marshall for Montana Territory. Wheeler recollected that the Prison "opened for the reception of territorial and United States convicts on the 2nd day of July 1871, on which day I received nine convicts." The first prisoner was
Samuel E. Hughes who was serving a year's sentence for armed assault. Montana Territorial Governor Potts later reduced Hughes' sentence to 23 days with a pardon.
The Department of Justice deemed the Prison's operational costs exorbitant and excessive. For instance, the Prison's maintenance expenses from November, 1872, to July, 1873, totaled $21, 429.00. Shockingly, only one Federal prisoner was incarcerated at Deer Lodge. The rest were Territorial convicts.
The imbalance in prison attendance prompted the U.S. Congress to transfer the penitentiaries in Montana, Idaho, Wyoming, and Colorado to their respective Territories by Congressional mandate in January, 1873. The government, however, retained legal title to the property. On May 15, 1873, the Federal government relinquished the Deer Lodge Penitentiary and its twenty-one inmates to the Territory of Montana.
The Legislative Assembly authorized Governor Benjamin Potts to appoint a three-member directors' board and a warden to oversee the new Territorial facility. Hugh Duncan, J. H. Robertson, and Granville Stuart served as directors, while Potts appointed C. B. Adriance as warden. As their first act, the new directors petitioned for additional cells.