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When most people think of the California Gold Rush, they envision nothing more than black-and-white photos and western towns. A particular few may even think of the 49ers football team. Unfortunately, many folks fail to realize just how significant this event was for America.
It’s been over 170 years since gold was found at Sutter’s Mill, yet the event still plays a significant role in American life. There’s very little doubt that — had the discovery never occurred — the United States would look very different today.
The California Gold Rush still affects everything from state politics to modern bullion coinage. The way in which this event changed our country showcases how precious metals can literally alter history. All the outcomes of this event — both good and bad — still reverberate through history.
The Gold Rush and Western Expansion
Perhaps the most significant effect of gold’s discovery in California is western migration. In March 1848, there were only about 157,000 people living in the territory. The population of New York City alone had nearly 400,000 more people. This all changed thanks to gold’s discovery in 1848.
Prior to the California Gold Rush, only 800 people in the territory were non-Native Americans. Less than two years later, this 800 became 100,000. By the mid-1850s, this grew to 300,000. At that time, one out of every 90 U.S. residents called California home.
The onslaught of people seeking gold caused environmental damage to the area. Without this influx, however, statehood may have remained outside of California’s grasp for decades. The quick expansion caused by the Gold Rush also had significant effects on the world:
- Development of more sophisticated mining methods
- Steamships became more widely used around the globe
- Construction of railroads from the eastern United States to California
- Minting of American gold dollars in $1 and $20 denominations began
- California achieves statehood less than two years after gold’s discovery
While these were certainly significant events, they are far from an exhaustive list of outcomes. These are merely the effects on expansion and travel. Even the production of gold coins — which required transporting nuggets to the east coast and coins back — brought new people out west.
The California Gold Rush caused the largest mass migration in American history. This alone would be enough to solidify the event’s place in history. As scholars can tell you, however, the effects went far beyond population growth and western expansion.
The California Gold Rush Created a Melting Pot
Most people heard America referred to as a “melting pot” from their youngest days. People often think of Ellis Island and the east coast when they imagine immigrants coming to America. Many people fail to realize, however, that the gold in California also played a huge role.
It wasn’t just American citizens who made their way out west. By 1850, over one-quarter of California residents had not been born in America. Immigrants from China were among the first to arrive, and there were more than 25,000 of them by 1852.
The following regions made up most of the immigration related to the California Gold Rush:
- Europe
- China
- Australia
- Latin America
Before many of these folks arrived, however, immigrants from the Sandwich Islands made their way to California. Most people now know the island chain by its modern name: Hawaii. To put it simply, the discovery of gold brought people from around the world to the continent.
California is the most diverse state in America. There’s little doubt that this is in large part due to immigration during the California Gold Rush.
The Construction of San Francisco
San Francisco is one of the most populous cities in California. It’s such an important place in America that one of the country’s popular $5 commemorative gold coins features the city’s mint. Of course, it wasn’t always like this.
In 1846, San Francisco only had 200 residents. By the time 1852 rolled around, there were 36,000 residents. Not only did the Gold Rush bring people to the city, but it also literally helped to build the city.
That’s because most of the ships that arrived in San Francisco’s port simply got abandoned. Many people had no plans of returning to where they came from. As the city grew, carpenters used wood from the abandoned ships to construct homes, hotels, saloons, jails and other structures.
The California Gold Rush is literally built into the bones of San Francisco.
A Merchant Class Emerges
There have been merchants throughout the ages, but something special happened when gold was discovered in California. While it’s easy to envision pioneering settlers striking it rich out west, that’s typically not what happened. In fact, it was merchants who profited the most.
Many people realized that finding gold was difficult, so they shifted to offering services instead. More folks became rich by doing this than by panning for gold. In fact, the following massive institutions all got their start during the Gold Rush:
- Levi Strauss
- Wells Fargo
- Studebaker
- Armour and Company
Some of these companies have especially interesting stories that started during this time. For instance, the creator of Studebaker automobiles started by supplying wheelbarrows to California gold seekers. Levi Strauss started by making work pants that could handle mining work.
It’s strange to think that more millionaires came from Gold Rush services than actual gold. For an event that changed American history to this degree, though, it’s little surprise that this is where some of the biggest companies on earth got their start.
Gold Coins From the California Gold Rush
The U.S. government had discussed creating a dollar gold coin for decades before gold was discovered in California. Nothing came of these discussions until the discovery significantly increased the supply of the precious metal. This would lead to America’s first $1 and $20 gold coins.
Of course, miners and prospectors didn’t need the U.S. government to tell them gold held value. That’s why the U.S. Mint’s coins weren’t the first time gold from the California hills was used as currency. They weren’t even the first issued coins stemming from the Gold Rush.
The following is a brief history of how gold currency made its way out of California.
Gold Dust and Nuggets as Currency
It wasn’t the easiest thing to get currency out west, so people needed a way to engage in commerce. While most folks didn’t have U.S. coinage, they had gold dust in pouches and tiny nuggets. This was better than cash back during those days.
Privately Minted Coinage of the Gold Rush
Most of the currency circulating throughout the frontier was silver foreign coins. Of course, an economy built on gold dust and foreign currency can only go so far. Even when the San Francisco Mint opened in 1854, it only produced 15,000 $1 gold pieces its first year.
In 1855, no gold $1 coins came out at the mint — and only $150,000 in small silver coins got struck. This left a need for currency during the California Gold Rush, and private producers stepped in to fill the void. These coins ranged from 14 to 22 carats and often varied due to hammer strike minting.
Official Gold Coinage
In 1849, long before the San Francisco Mint opened its doors, mints out east began producing the first $1 and $20 gold coins. These had a difficult trek back to California, so they rarely did much good as currency out west.
The $20 coin produced — the first double eagle — would eventually change to the Saint-Gaudens double eagle. This remains one of the most popular coin designs in history, and it even gets used on modern American Gold Eagles.
The gold coinage eventually produced at the San Francisco Mint holds a special spot in the California Gold Rush. Due to the small production numbers, the coins are extremely rare. In fact, some coins produced during the mint’s first year can sell for millions of dollars.
Gold Coins from Assay Office
Years before the San Francisco Mint opened, Congress set up an Assay Office in the city. This allowed for the striking and distribution of special-issue gold coins. These came in $10 and $20 denominations, but their production only lasted from 1851 to 1853.
If you find one of these Gold Rush coins, you likely have something special. Most of them ended up melted down and later used in official American coinage. These assays exist in the gray area between U.S. currency and private mint releases, so they hold a significant place in history.
Buy Gold Bullion and Keep History Alive
America certainly wasn’t founded on gold. It’s hard to look at our history, though, and not recognize the role played by the precious metal. Without the discovery of gold at Sutter’s Mill, today’s America would look very different. It’s likely that our coinage would as well.
After all, only a fraction of the world’s gold reserves remains unmined. This means many of today’s modern bullion coins may link directly to the Gold Rush. In fact, owning certain historic coins (e.g., 1849-1854 gold dollars) nearly guarantees you have a piece of the California hills.
At Silver Gold Bull, we know that knowledge is an important part of making informed investments. Understanding the effects of the Gold Rush may not influence your precious metal investing, but it can give you a greater appreciation for history.
Visit our Gold Bullion Products page today to find your own little piece of history.
