Because they knew nothing of value would be lost? /jk

The choice of site might have been driven by the presence of the large salt dome within easy drilling distance of the surface. Salt domes are ideal for containing radiological contamination, because the salt does not have groundwater circulating through it (for obvious reasons), and because the salt is soft and will flow over time to seal up any small cracks, helping entomb the waste. This is why the DEP's Waste Isolation Pilot Plant near Carlsbad, New Mexico, is located where it is -- there's a large Permian-aged salt layer there. But why the government chose the Salmon Site out of of hundreds of other possible salt domes of similar size and mass is a mystery to me. And now that I think about it, most of the work on modeling salt domes as nuclear waste repositories wasn't done until sometime in the early 1980s anyway.

This site from the Mississippi State Historical Society gives a moderately detailed account of the nuclear tests and the reasoning behind them. I leave a more nuanced and detailed analysis to those who specialized in nuclear history (we know who you are).