On January 24, 1848, California was still a part of the Mexican Republic - barely. In just over a week's time, The United States of America and Mexico would sign the Treaty of Guadalupe Hidalgo, formally recognizing the conquest by the United States of the Mexican territory of California. So it was technically in Mexico that James Marshall first noticed gold in the race of a sawmill he was supervising construction of along the American River
Marshall thought very little of his discovery. People had found gold in other parts of California previously, but the discoveries had amounted to very little. As his construction crew (made up of Mormons who had come west looking for work, having been run out of US territory) had moved tons of gravel without happening upon any other gold, Marshall assumed the couple of nuggets he found were a fluke, and urged his men back to work. The Mormons did wrangle the concession from Marshall that they could search for gold on "odd spells and Sundays," but ultimately went back to work on the sawmill.
It wasn't until four days later that Marshall travelled to New Helvetia, the fort that had been built by his employer, John Sutter. Sutter quickly realized the import of the discovery, at least to the point of sending emissaries to the man in charge of the American occupation force, Colonel Richard Mason. They were there to request preemption rights to the land at Coloma on which Sutter's Mill stood. Mason's adjutant, William Tecumseh Sherman, explained that with the war not officially ended, and prior to a public survey by the United States government, land titles could not be awarded in California.
Marshall's Mormon laborers quickly found quite a bit of gold. Another Mormon, Sam Brannan, had opened a general store at Sutter's fort, and was one of the first to hear of the gold discovery. Realizing that prospectors would be ideal customers, he purchased a jar's worth of gold dust and travelled to the small but growing seaport of San Francisco. There, he confirmed rumors that had already been spreading, going about town yelling, "Gold! Gold! Gold from the American River!" The town's small population left virtually as one for Sutter's mill. Before long, the news spread down the coast, depopulating all of the major towns in California.
The resulting commotion prompted an investigation by Mason and Sherman, who travelled to Coloma and met, among other people, Brannan, who had taken it upon himself to collect tithes from the Mormon prospectors. Upon seeing the rate and relative ease with which the gold was had, Mason purchased about 200 ounces of gold dust and instructed Sherman to send the dust, along with a letter explaining the situation, to Washington. Sherman's estimate was that the value of the gold in California would have paid for the cost of the Mexican war a hundred times over. This estimate was likely conservative.
By the time Sherman's letter reached President James K. Polk in Washington, the rush to California had already begun. Due to the lack of easy overland routes to the new territory, trips between the east and west coasts of the United States involved a trip around Cape Horn, through the Strait of Magellan or (better for small groups) across the isthmus of Panama. Australia, China, Mexico and most of the Pacific coast of South America were all far closer by sea.
It comes as no surprise, then, that the first wave of gold-seekers was not Americans, but was, instead primarily Mexicans, Chileans, Australians and Chinese. By the time the Americans began to arrive, whether via overland or sea routes, they found that these somewhat faster immigrants were already hard at work mining the gold fields. Wave after wave of American immigrants soon displaced Latin Americans as the largest ethnic group. The American immigrants paid little attention to the land claims of those who had arrived previously, whether it was other miners or property holders under the old regime (Including Sutter, who would find most of his land lost before his death).
As previously mentioned, there were two ways to come to California - via an overland trek, or via the oceans. Both carried their dangers, depending upon one's starting point. To come overland from the eastern US, one had to travel over both the Rocky Mountains and the Sierra-Nevada Mountains, as well as through the Great Basin, which lies between them. The going was slow, and water was scarce in the Basin. However, as the tale of the Donner Party reminded potential immigrants, making the journey during the rainy months was impossible, for getting stuck in either mountain range during the winter was a veritable death sentence.
While the trip from any nation bordering the Pacific Ocean was reasonably easy, coming from Europe or the East Coast via ship was also perilous. If one chose to make an entirely shipboard journey, one had to sail all the way south to Cape Horn, braving the storms and icebergs there. On the other hand, one could sail to Panama and cross the isthmus, having only to contend with any number of tropical diseases, and the likely possibility (in the early days of the rush) of not being able to find a ship in to complete one's journey at the other side.
Nonetheless, hundreds of thousands made the journey. California's population, which had numbered less than 30,000 in 1848, expanded to a quarter of a million by 1853. Historian H.W. Brands estimates that by this point, the population broke down to about 66% Americans, 10% Latin Americans, 10% Europeans, with less than 10% Chinese, and about 3% Australians. These numbers are approximate, and don't include Native Americans, because, particularly outside the coastal areas, their 1853 population is largely unknowable.
Of course, by this point, the easiest veins of gold had already dried up, and panning or simply digging had given way to larger, capitol-intensive operations, frequently involving hydraulics or deep mine shafts. As a result, immigrants to California had already begun to get out of the gold business, settling down to farm, or going into business in the growing cities of Sacramento and San Francisco.
The rapid growth California had experienced was wholly unprecendented in American history. As a result, in the summer of 1849, the territory's acting governor, General Bennett Riley, summoned a constitutional convention. The convention, which had not been authorized by the federal government, convened and drafted a constitution. After ratification by voters, it was sent to Washington, along with two senators elected by the voters of the "state", John C. Frémont and William Gwin.
The two senators left California for Washington, but found they couldn't be seated in the Senate until the congress approved California's admission under the constitution as drafted and ratified by that state. This proved to be troublesome, for the constitution prohibited slavery. As part of California fell south of the Missouri Compromise line, Southern congressmen felt that this was a threat to the balance that had existed since the Compromise, and attempted to torpedo California's admission into the Union. The Compromise of 1850 was eventually hammered out, putting off the final resolution of the sectional crisis for one more decade - though ultimately, California's electoral votes would help Lincoln win in 1860, and California's gold would help fund the Union victory in the American Civil War.
More than a few people made their fortunes in the goldfields. Frémont, for one, became incredibly rich, though he lost nearly all of his wealth before his death.
Another was George Hearst, every inch the grizzled prospector, from the filthy clothes to the unkempt, tobacco-stained beard. In spite of these qualities, Hearst was a phenomenonally successful miner. He started out in California, but found that the best veins were already played out. Eventually, however, he caught wind of a mine on the eastern side of the Sierra-Nevadas, and bought a share in the mine, called the Ophir, using knowledge he had picked up mining lead in Missouri to build the mine into a multimillion-dollar venture. He would later follow other leads, culminating in a massive operation that yielded tens, and ultimately hundreds of millions of dollars, in the Black Hills of the Dakota Territory. Hearst's Black Hills mine produced gold all the way until the beginning of this century, when it was finally closed. His fortune would later allow his son, William Randolph , to build a vast media empire.
Another famous name to make his fortune in California was Leland Stanford. Stanford did not have the mining skill that Hearst had, but he made up for it with shrewd business sense. As a Republican governor of the state and a founding member of the Union-Pacific Railroad, he was instrumental in the building of the first trans-continental railroad, which unified the United States into the world's largest single market economy. Stanford's only son died as a teenager, and so Stanford donated his fortune to create the university that bears his name today.
The Gold Rush was a dividing event in history. The United States before the rush was a slowly-industrializing agrarian society, and one of the last in the world to allow slavery. California (albeit unintentionally for almost every party involved) forced an end to the discussion over slavery, and funded the transformation of the American economy into an industrial one.
BRANDS, H.W., (2002) The Age of Gold. New York: Doubleday
LIMERICK, P., (2000) Something in the Soil. New York: W.W. Norton & Co.