Panic, Prosperity, and Progress: Five Centuries of History and the Markets

CHAPTER 6

California Gold

The California Gold Rush is one of the most universally known eras of American history, but it is also one of the most widely misunderstood. It obviously altered the importance of California (which today reigns as one of the most important technological and business powerhouses on Earth), but it was just as important to the history of the entire nation in the decades that followed gold’s initial discovery at Sutter’s Mill.

There were not any meaningful financial markets for it to affect, but the gold rush laid the foundation for some important personal fortunes and fundamental Californian characteristics that lived far past the middle of the nineteenth century.

■ An Empty State

It seems hard to believe that a state that presently serves as the home to over 38 million people was, not that long ago, almost entirely uninhabited. In 1848, California was still a Mexican territory, and of the 34,000 or so people in the entire state, 12,000 were Mexicans, 20,000 were Native Americans, and a couple thousand were white soldiers and settlers.

One of these settlers was a young man named Sam Brannan who had started a newspaper called the California Star in the tiny settlement of San Francisco (see Figure 6.1). Brannan later had set up a store near a lumber mill owned by John Sutter, another newly established businessman in the area. Brannan had traveled out west with his fellow Mormons and at one point urged the church’s leadership to establish its home in California ...