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California Gold Rush

How did the gold rush help the California economy grow?


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June 11, 2015 9:49PM

The California Gold Rush began with the discovery of gold at Sutter's Mill on the American River, about 40 miles east of Sacramento, in January 1848. John Sutter, an immigrant from Switzerland, had founded the small farming village of Sacramento and needed additional lumber from the nearby forests in the foothills. John Marshall took a crew of men to the American River and built a sawmill powered by a waterwheel. Digging out the trench for the waterwheel, Marshall discovered gold flecks in the mud, and took the news back to his boss Sutter, back in Sacramento.

They tried to keep the news secret, but as Benjamin Franklin wrote in "Poor Richard's Almanac", "Three may keep a secret - if two of them are dead." News slowly spread back East, and the gold rush was on. The next spring, in 1849, wagon trains full of prospectors eager to find gold and make their fortunes. These were the "49'ers".

Not everybody came to search for gold, though. Many people came to sell things that the gold miners would need. Ships filled with mining equipment sailed around Cape Horn to San Francisco, and ships full of eager entrepreneurs came as well.

Between the influx of new people and new products, California jumped from being a quiet backwater to a booming economy in just a few decades.