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Impact of the Gold Rush

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Most of the gold extracted from California has since been returned to the earth, sealed in the well-guarded vaults at Fort Knox. At the time, the discovery of Gold in California, coupled with gold finds in Australia, significantly increased levels of circulating specie worldwide. But gold in 1849 was winding down a 5000 year long career as a medium of economic exchange. In 1862, the U.S. government issued its first unbacked currency—"greenbacks." The gold-standard ruled supreme briefly in the 19th century, protecting US currency against inflation, much to the chagrin of agrarian activists who clamored for free silver. Yet the 20th century dealt gold heady blows, with Franklin Roosevelt taking the U.S. briefly off the gold standard, and banning domestic transactions with gold. In 1971, President Richard Nixon took the U.S. permanently off the gold standard, allowing the dollar to float unbacked on international currency markets.

The worth of all the gold mined from California between 1849 and 1862, about $10 billion in 2002 dollars, pales in comparison to the current worth of California's annual agricultural output, in 1992 a heady 19.2 billion dollars. For the nation, the Gold Rush was merely an interesting news story, a pleasant diversion from the escalating sectional tensions that were tearing the nation apart. It may in the end have only exacerbated those tensions, as California's sudden demand for statehood as a free state in 1850 caught Congress ill-prepared to deal with the troubling problem of slavery in the territories wrought from Mexico. In 1849, many miners claimed that they had "gone to see the elephant," in the distant gold fields, an expression conjuring the awe and fear of seeing the massive circus beast. A dozen years later, a new batch of men wrote that they "had seen the elephant," this time on the battlegrounds of the Civil War.

The impact of the Gold Rush on California was dramatic. Undoubtedly, California, so well endowed with the blessings of climate, soil, oil, timber, harbors and other natural resources would have developed its current prosperity without the Gold Rush. However, the dramatic population boom precipitated by the Gold Rush ensured California's early admittance into the Union, bypassing completely the territorial phase and becoming the 31st state in 1850. Had the population only been supplemented by a gradual filtration of hardy pioneers, rather than a sudden influx of miners, it's likely that California's admittance would have been significantly delayed.

California agriculture was jump-started by the Gold Rush. Agriculture during the Mexican period had been sorely neglected, with the rancheros content merely to breed cattle. The Americans who arrived in California prior to 1848 seemed to continue this trend, raising cattle and practicing subsistence agriculture to meet their own needs. However, foothills filled with 100,000 hungry miners produced a demand for agricultural products, and California farmers, some busted miners who remained to till the soil, responded.

The Gold Rush also ensured that the first transcontinental railroad would have its Western terminus in California. Had California remained in pastoral state, it is likely that the first railroad might have instead run to Oregon, in 1847 the preferred destination of cross-country migrants.

Three California cities were transformed by the Gold Rush. San Francisco went from being a quite hamlet with fewer than 500 inhabitants to a booming city and the commercial and financial center of the West Coast. Sacramento begun as a tiny settlement centered on Sutter's great estate of New Helvetia, developed into a modest metropolis that would become the state's capital in 1855. Sacramento growth sprang primarily from its position as a conduit for supplies from San Francisco up the Sacramento River to the northern diggings. Likewise, Stockton grew as the way station for goods heading up the San Joaquin River to the Southern Diggings. Ironically, the cities that grew and flourished in California were not those whose economies were based not on gold, but rather on commerce, business, and finance. Gold towns boomed, but their wealth evaporated once the precious ore was extracted. Today the Mother Lode region represents one of the most economically under-developed regions of the state, still relying on the legacy of gold to lure tourist dollars.

People, and not gold, are the most precious asset of California. The siren song of gold brought those people. It brought the first wave of Chinese, who would eventually build the transcontinental railroad though the Sierra. It brought the Big Four to California, whose ruthless energy would make that road possible. It brought Samuel Clemens, who launched himself to fame with the colorful short story "The Celebrated Jumping Frogs of Calaveras County." It brought 300,000 other people to the state, who once the gold ran dry turned their attentions to agriculture, industry, and business.

In many ways, gold, and the greed it inspired was a grossly destructive force. It ravaged the environment, leaving areas that to this day are scared by piles of mining debris. It decimated the native population. It ruined thousands of lives, luring men away from their families, cajoling them to make the dangerous passage to California, corrupting them with the vices of mining life, and breaking them with brutal and often disappointing toil. But the Gold Rush did ultimately have a constructive end, other than contributing to the dank vaults of Fort Knox: it was the beginning of the flourishing and mature state of California.

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