The Gold Rush, and the Growth of Industries

There was always the hope that there was gold in North America. In the 1840s, traces of gold were
found in the USA, in California. This led to the ‘Gold Rush’, when thousands of eager Europeans hurried
to America in the hope of making a quick fortune.

The California Gold Rush of 1849-1855 radically transformed California, the United States and the world.
It prompted one of the largest migrations in U.S. history, with hundreds of thousands of migrants across
the United States and the globe coming to California to find gold in the foothills of the Sierra Nevada
mountains. This led to the establishment of boomtowns, rapid economic growth and prosperity, as well
as the building of railroads, churches and banks to accommodate the newcomers. The significant
increase in population and infrastructure allowed California to qualify for statehood in 1850, only a few
years after it was ceded by Mexico, and facilitated U.S. expansion to the American West.

The California Gold Rush took place against the backdrop of the Industrial Revolution and served as an
accelerant for U.S. economic development in the 19th Century. The influx of gold resulted in the
expansion of manufacturing and the service industries, as many entrepreneurial newcomers took
advantage of the demand for mining materials, lumber, clothing and transportation. Agriculture and
retail also experienced exponential growth during the Gold Rush and led to California becoming an
economic powerhouse by the end of the century. Some of today’s most recognizable brands,
businesses, and icons got their start during the Gold Rush. Henry Wells and William Fargo saw an
opportunity to provide financial services to gold seekers and started a bank, Wells Fargo & Co.; Levi
Strauss, a German immigrant, identified miners’ need for sturdy clothing and created canvas pants that
would withstand the punishing hours involved in gold mining.

Brief History of the Gold Rush

In January 1848, James Marshall, a carpenter, was building a sawmill for Swiss immigrant and pioneer
John Sutter at Sutter’s Fort, a trade and agricultural colony, when he spotted something shiny in the
American River. Not sure of what he had found, he collected the apparent gold flecks and ran some
rudimentary tests on them—including biting them and hitting them with a hammer. When their
appearance did not change, Marshall confirmed they were genuine gold and quickly notified John Sutter.
Sensing that the discovery would negatively impact the building of his sawmill and bring a large number
of squatters to his land, Sutter swore all his employees to secrecy. However, news of the discovery
quickly got out and spread across the region, including nearby San Francisco (known as Yerba Buena at
the time). Soon, gold seekers from across the region swarmed Sutter’s Fort, and just as Sutter had
feared, his employees all left to look for gold. By many accounts, once news of the discovery reached
San Francisco, the city quickly emptied, with workers deserting their workplaces, stores and ships to
look for gold.

Effects of the Gold Rush

With the massive influx of migrants, California underwent a radical transformation in a very short
amount of time. It changed from a sparsely populated region to a territory with enough people to
constitute a state. At the time, the population of California was still predominantly Mexican; however,
the arrival of many U.S. migrants quickly reshaped the local demographics. The newcomers often
wanted to keep in touch with family around the United States and pushed for the development of new
communication and transportation tools that would help them bridge the distance.

Effects on Manufacturing and Industry

The Gold Rush led to an explosion in manufacturing for mining machinery and equipment for hydraulic
operations, which were often used in the mining process and had previously been supplied by the East
before the Gold Rush prompted newer, more immediate demand. The Gold Rush also led to increased
production of lumber and the creation of new flour mills. The need for clothing increased dramatically,
and the leather industry experienced significant growth. Wholesale and retail developed at this time and
were instrumental in helping meet the growing demands of consumers.

Effects on the Development of Agriculture

The rapid development of agriculture—thanks to heightened demand and the availability of more
sophisticated tools—was another major outcome of the Gold Rush. In fact, many who did not succeed in
mining turned to California’s “green gold”— taking full advantage of the state’s favorable climate to
produce massive amounts of fruits, vegetables and grains in order to feed denizens of the mining
communities. Enterprising newcomers from Europe also saw an opportunity to satisfy demands for
wine. They planted the first orchards and vineyards, and soon they were not only supplying locally but
also exporting to other countries; California varietals remain some of the most sought-after and highly
regarded wines to this day.

International Effects of the Gold Rush

California-based businesses weren’t the only ones benefiting from the Gold Rush, as foreign producers
and manufacturers found new markets for their products in the United States. Agricultural producers in
Chile suddenly had new consumers for their fruit; China started exporting significant amounts of sugar,
and Norway eyed California for opportunities to expand its naval shipping industry. All this economic
expansion necessitated new financial services, and several banks would also grow out of the Gold Rush
and its aftermath.

Negative Outcomes of the Gold Rush

The Gold Rush was not beneficial to all, however. It led to increased violence against Native Americans,
tens of thousands of whom are estimated to have lost their lives in clashes with settlers. Later in the
Gold Rush, immigrants from China often experienced intense discrimination. During the 19th century,
China struggled economically, and thousands of young Chinese men immigrated to California in the
hopes of earning enough money to support their families back home. Some Americans—unfairly
convinced that these Chinese immigrants were taking revenue and employment opportunities away
from other Americans—pushed to place restrictions on Chinese immigration and to create a tax on all
foreign miners working in California.The Gold Rush also had a severe environmental impact. Rivers
became clogged with sediment; forests were ravaged to produce timber; biodiversity was compromised
and soil was polluted with chemicals from the mining process. Additionally, the Gold Rush created a
severe lack of labor in the non-gold mining industries of not just California, but areas such as Great
Britain, China and Hawaii—all of which experienced mass emigration in the wake of Gold Fever.