The Gold Rush — The Frenzy of Striking It Rich

Up to the previous episode, we watched how gold and silver flowing from the New World into Europe set off a price revolution, were drawn into Ming China and India, and shaped the first global economy. But the gold of that story was something that passed through the hands of a limited few — kings and conquerors, merchants and states.

In the middle of the 19th century, a new protagonist steps onto the stage: ordinary people. Farmers, artisans, shop clerks, immigrants, even rough-and-tumble men — with nothing but their own bodies, they might stand by a riverbank and dig gold from the earth with their own hands. That dream drove the world westward and northward.

What we are about to tell is the story of an age when gold was believed capable of changing one person’s fate overnight — the story of the gold rush.

The placer gold at the sawmill — California 1848

It all began, so the story goes, with the glint of a single small flake of gold.

On January 24, 1848, in what is now Coloma, California — northeast of Sacramento, at a sawmill built on the bank of the American River — a carpenter named James Marshall is said to have found a thin flake of gold gleaming at the bottom of the millrace. The owner of the sawmill was a pioneer named John Sutter.

The rumor leaked out, try as anyone might to hide it. In December 1848, when U.S. President James K. Polk referred to the discovery of gold in an address to Congress, the frenzy spread at once across the whole United States, and beyond, across the seas. The following year, 1849, people dreaming of sudden riches poured into California from around the world. After that year they would come to be called the ‘forty-niners.’

The number of people who flowed into California is said to have reached roughly 300,000, from within the United States and beyond. In 1849 alone more than 80,000 arrived, and in 1850 more than another 90,000 are said to have streamed in. Because of this sudden surge in population, California was rapidly elevated to statehood within a political arrangement known as the Compromise of 1850.

Placer gold gleamed mixed in among the gravel of the riverbed. Early mining was a simple labor called ‘panning’ — scooping up earth and sand in a bowl-like dish and washing away the lighter sand with water to leave only the heavy gold behind. The stake required was small; what was needed was stamina and luck. That is precisely why anyone could dream. But once the gold of the riverbanks was dug out, mining gradually transformed into an industry requiring large capital and machinery. The age of individual dreams did not last long.

The fever spreading worldwide — Australia and the Klondike

The frenzy of California leapt to places around the world as though it were contagious.

In 1851, gold was found one after another in New South Wales and Victoria, Australia. This discovery is said to have transformed the continent’s population. According to records, Australia’s population is said to have swelled roughly fourfold between 1851 and 1871, from about 430,000 to around 1.7 million. Immigrants poured in from all over the world, and among them were many Chinese miners. The discrimination and clashes they faced would cast a long shadow over later Australian society.

And at the end of the 19th century, the last great rush occurred in a land of the far north. In 1896, gold was discovered in the Klondike River basin of Canada’s Yukon Territory. About 100,000 people are said to have set out dreaming of sudden riches at the news, but only some 30,000 of them are said to have managed to reach the site, crossing frozen mountains and rivers. Many of those who arrived only learned that the promising claims had already been seized by those who came before.

Towns were born together with the gold. When several thousand, even tens of thousands of people flowed in all at once, there arose saloons and lodgings, shops, gambling dens, and lawlessness. But once the gold ran out, people left to chase the next dream, and the bustling town turned into a ghost town with the wind blowing through it. Towns that were born and then vanished — that was the landscape symbolizing the age of the gold rush.

The other face of the golden dream

The gold rush is often told as a tale of adventure and success. But behind that glitter there was another face, one less easily spoken of.

First, those who laid hold of wealth are said to have been only a tiny handful. Many miners used up their stamina and savings in exchange for a little placer gold. Indeed, it is said that those who profited for certain were not the ones who dug the gold itself but the merchants who sold the miners shovels and jeans, food and liquor. Not the ones selling the dream, but the ones selling tools to those who dreamed, prospered — such a pattern could often be seen.

And what must not be forgotten is the fate of the indigenous people who had originally lived on that land. The gold rushes in various places are said to have deeply wounded indigenous societies through the violence of the settlers, the seizure of land, and the diseases brought in. In Victoria, Australia, for example, the indigenous population is said to have plummeted from an estimated 3,000 to 5,000 in 1851 to fewer than 2,000 by 1861, with causes said to be compound — disease, violence, being driven from their land, forced relocation. There are various views on the numbers, but the fact that the rush dealt a grievous blow to indigenous society is itself widely acknowledged.

Even so, the fact that the gold rush changed the world stands unmoved. The flow of people gave birth to new cities, laid railways, and wrote the frontier onto the map of the economy. Both San Francisco and Melbourne are cities that grew greatly amid this frenzy.

And there was one more enormous consequence. An immense quantity of gold that had slept in the ground in places all over the world was dug out and flowed into the market in the span of just a few decades. In the latter half of the 19th century, an unprecedented mass of gold had piled up in human hands.

This vast quantity of gold did not simply vanish into ornament and savings. It became the foundation of a grand mechanism that would bind the world’s currencies together by a single common measure — gold. In the next episode, let us turn our gaze to the age when that gold became the anchor of the world economy: the story of the gold standard.