Economy in California Gold Rush
Twenty Dollars A Day
Comparatively few of the prospectors who flooded into California in the years after the discovery at Sutter's Mill fulfilled their most extravagant dreams by finding instant wealth sparkling in the bottom of a pan. While a few miners—mostly early arrivals—did indeed strike it rich, most found more modest, but still substantial, returns in the Sierra diggings. In 1849, miners were able to average $20 a day, an amount unlikely to mint many millionaires but still many times the national average wage. By 1853, when much of the placer gold had already been carted off, miners' average yield had fallen by more than two-thirds, to less than $6 a day. After 1853, placer mining became mostly unviable and many independent miners actually lost money or signed on as wage laborers in industrial mines. While large quantities of gold continued to be excavated from the Sierra foothills through the 1850s, the profits after 1853 accrued almost entirely to the holders of capital who invested in large-scale mining enterprises.
Mining the Miners
Many of the greatest beneficiaries of the Gold Rush were not miners at all, but rather the savvy entrepreneurs who went into business providing the miners with services and supplies. California's first millionaire was Sam Brannan, an ex-Mormon who hyped the Gold Rush in his newspaper, The California Star, then profited from it by supplying miners—at extravagant prices—through his general stores in San Francisco and Sacramento. For a time Brannan's sales topped $5000 per day—the equivalent of $125,000 in today's dollars. Others made their fortunes by supplying miners with vital goods (food, liquor, clothing, shelter, hardware) and services (transportation, assay, laundry, entertainment, sex). Notable among those in the business of "mining the miners" were Levi Strauss, whose miners' trousers—tailored of heavy cotton cloth, with riveted pockets to hold heavy ore without tearing—have since become the quintessential American fashion item, and "The Big Four" Sacramento merchants—Charles Crocker, Mark Hopkins, Collis P. Huntington, and Leland Stanford—who parlayed the capital accumulated in their grocery and hardware stores into a transcontinental railroad empire.
All in all, the California Gold Rush contributed about $465 million to the national economy. The influx of gold from California, and the intensification of investment to unearth, process, and transport it, provided another impetus to the ongoing process that was already transforming an agrarian republic into an industrial colossus. Large-scale ventures rooted in the California experience—particularly the railroad organized by The Big Four—would play a central role in the development of modern corporate capitalism later in the century.