California gold rush

The gold rush era led to the creation of the institutions that still govern American mining, sparked the development of the American West, brought rapid population growth to Sacramento and San Francisco, and created demand for transcontinental railroads and telegraphs and for international shipping between California and all parts of the world.

On January 24, 1848, a carpenter working on a millrace found a piece of gold about half the size of a pea, exclaimed “Boys, I believe I have found a gold mine,” and launched the California gold rush. Nine days later, before news of the discovery reached the outside world, Mexico ceded California and much of the American West to the United States to end the Mexican War.California gold rushGold rush;California

The Rush

As the news spread around the world, California’s population grew from a few thousand to twenty thousand by the end of 1848; ninety thousand people arrived during 1849 alone. Hundreds of thousands more came over the next decade, transforming a sleepy backwater into a major population center with thriving businesses. Most important, the gold rush occurred in an institutional vacuum, because miners started mining long before California’s government was established. Indeed, the population boom outpaced Congress’s ability to decide how to organize the newly acquired territories, and California ultimately entered the union as a state without first acquiring territorial status.

Creating Mining Law

The gold rush produced institutions that would continue to govern hard rock mineral Mining industrymining in the United States. Because gold was discovered before the United States had organized its new acquisition or even established the basic functions of its government, miners were able to create their own institutions. Through camp meetings, miners established simple rules: a system of private ownership of mineral rights based on discovery, a sparse set of prohibitions on violence enforced through group action, a property registry, and respect for contracts. By simply moving onto the land and engaging in mining, they established de facto the principle of free access to public land for those seeking minerals.

Because California became a state almost immediately after gold’s discovery and because miners dominated early California politics, mining interests enjoyed vigorous representation in Congress. This representation enabled them to stall efforts to assert federal ownership of the mineral resources of the newly acquired West. Furthermore, as gold prospectors spread to other locations, following other mineral booms, they carried the institutions created in California with them. As a result, by the time the federal government finally legislated on mining in 1866, it had little choice but to accept the existing mining practices. (Congress consolidated federal mining law in the General Mining Law of 1872.) Thus, the gold rush decisively shaped the laws governing the mineral industry in the United States. Both critics and supporters of the 1872 General Mining Law of 1872General Mining Law agree that it originated in the gold rush, even as they disagree about whether maintaining that statute in the twenty-first century is appropriate.

Creating the California Market

The creation of the state of California itself was a major contribution of the gold rush. The state’s vibrant economy (if the state were an independent country, its economy now would be the seventh largest in the world) and its sprawling cities make it hard to imagine the time during the mid-nineteenth century when the Mexican territory of California was a backwater populated at most by a few thousand ranchers and missionaries, as well as roughly 150,000 Native Americans. Because the region was too far from Mexico’s centers of population to play a major role in supplying agricultural goods to urban centers, its major economic activity consisted of raising cattle for the production of hides and tallow.

The gold rush brought not only miners but also businesspeople and farmers to supply the miners. For example, San Francisco grew from a collection of ramshackle buildings to a thriving city of over fifty-six thousand in 1860, one of the fastest rates of growth of any city in history. Modern California’s lucrative agricultural sector has its origins in the production of food for miners.

Although most miners went to California intending to stay only a year or two before returning to their homes in the eastern United States, Australia, Britain, Chile, China, Mexico, and elsewhere, many found the mild climate, fertile soil, and growing business opportunities to be reasons to stay in the state even after they left the mines. With the mining population providing a large market with money to spend, California’s business community grew almost as rapidly as did the mines. The lure of California’s riches led to the construction of transcontinental railroads and telegraph lines, as well as luring ever more migrants to the new state. In many respects, the gold rush created America as a transcontinental nation.

Further Reading

  • Clappe, Louise Amelia Knapp Smith. The Shirley Letters: From the California Mines, 1851-1852. Berkeley, Calif.: Heyday, 1998. Insightful and entertaining collection of first-person reports from the gold fields by Dame Shirley, one of the first women visitors to the goldfields during the early 1850’s.
  • Holliday, J. S. The World Rushed In. New York: Touchstone, 1981. Thorough synthesis of thousands of letters, diaries, and other primary source documents; brings the gold rush alive and offers a perceptive account of the miners’ experiences.
  • Leshy, John D. The Mining Law: A Study in Perpetual Motion. Washington, D.C.: Resources for the Future, 1987. Leshy, later general counsel for the U.S. Department of the Interior, takes a critical view of the history of the gold rush and the resulting statutes.
  • Morriss, Andrew P. “Miners, Vigilantes, and Cattlemen: Overcoming Free Riders in the Private Provision of Law.” Land and Water Law Review 33, no. 2 (1998): 581-696. Focuses on the economics of the institutions the miners created and provides a guide to the secondary literature through footnotes.
  • Umbeck, John. A Theory of Property Rights with Applications to the California Gold Rush. Ames: Iowa State University Press, 1981. Umbeck examines hundreds of mining camp records and explores the spontaneous order that arose in the chaos of the gold rush.

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