The 1800s were a time of expansion for the United States of America. With the annexation of land from the Louisiana Purchase and Mexican-America War, the United States had an expanse of land that was largely remote and uninhabited. In order to move Americans west, incentives had to exist. Some believed in Manifest Destiny while others took up various government officials' incentive offers to move west. The most compelling incentive of moving westward, however, surfaced in 1848 when John A. Sutter and James W. Marshall discovered the concentrated presence of gold in California. Historical accounts show exactly how John A. Sutter and James W. Marshall discovered the gold, the initial skepticism of the public, the eventual flood of hopeful goldminers, and the impact the Gold Rush had on the economy.
The Mexican War of Independence resulted in the transfer of Spanish North American territory to Mexico in 1821. The area of present-day California and its surroundings remained largely remote and sparsely populated for the decades following this event. Although the territory of present-day west United States was under Mexican control, it was known to be de facto American territory by Americans. During the time between 1821 and 1848, the year gold was discovered in California, only a few hundred Americans resided in this territory. This was largely due to high risk of travel with low incentive to travel so far west. Land was still abundant in the Mid-West, so there was no rush to California. In 1846, a settlement of Americans in Sonoma rebelled against Mexican control. This was the catalyst to the Mexican-American War, which eventually resulted in an American victory and the Treaty of Guadalupe Hidalgo in February of 1848. Thus, the United States of America had claims of the Arizona, California, Colorado, Nevada, and Utah territories. Right before the official annexation, gold was discovered in present-day Coloma, California. The discovery, although first seen as skeptical by citizens of San Francisco, drew people from all around the world within the year. People would go to extreme lengths to reach California. The large influx of people in Northern California sparked tension and saturation. Americans found reasons to expel Native Americans, Latin Americans, and Chinese from the area. Additional, impromptu supply ships had to sail to San Francisco to accommodate the massive expansion. Two years after gold was discovered, the territory went from accommodating a mere few hundred people to many thousands. This influx of people and gold would go on to stimulate the American economy, sparking needed economic revival.
It was known across the country that if one was to travel west, he or she had best stay in accommodation at Sutter's Fort. Sutter was known for his unquestionable hospitality to travelers in the region. A newspaper article in the Detroit Free Press, written in April of 1849, shows Sutter's endeavors and hospitality prior to the emergence of the Gold Rush: "What can I do, Sir – they come here, eat, drink and sleep; and sometimes not even thanking me – but what can I do? I cannot turn them out in the wild forest." He would shelter pioneers in an adobe fort that would later become the foundation of Sacramento. Known as a generous and kind-hearted man, his land was largely respected by outsiders. Sutter ran multiple businesses and was considered to be one of the most established in the area. The fort would later become a major accommodation ground for merchants, miners, and traders.
On January 28th of 1848, Marshall came with news for Sutter at Sutter's Fort. As Sutter's employee, Marshall would search the mountains for lumber among other activities. The entry in Sutter's diary describes how Marshall explained how he came on official business and insisted to speak privately. Marshall explained how he found thought he found gold near the sawmill and Sutter, under further examination, believed it to be true. They went to investigate following after Sutter gave orders to his employees. Following the discovery of gold, Sutter made plans to adjust his businesses accordingly.
While Marshall and Sutter were transparent in the few months that followed the discovery, the public was skeptical. This can be seen by observing the population of San Francisco during this time. An entry in the short-lived California Star newspaper depicts the state of San Francisco in terms of American population during 1848. The California Star would only last through the years of 1847 and 1848. The entry lists that there were 575 males, 177 females, and 60 children. It notes that about a year before the population was half that. This goes to show how populated California was at the time when its largest city represents roughly 800 people. The newspaper entry was sent out in March of 1848, a month after the discovery of gold by Marshall and Sutter. Seeing this, the discovery of gold was held with skepticism amongst those who reside there. Newspapers were not reporting it and the word wasn't being spread, so outsiders had no idea that there was an incredible amount of gold sitting in California a month after its discovery. The only newspaper that was reporting at the time was the California Star, and it failed to recognize the reality of the gold. The San Francisco skepticism briefly delayed the emergence of the Gold Rush. It would not be until a few months later that California would receive an influx of people from all across the world.
A lease agreement between James W. Marshall, John A. Sutter, and the Yalesummi Tribe shows Marshall and Sutter's realization of what they found. Although work had already begun on building the desired sawmill, Marshall and Sutter desired to increase legitimacy of their land holdings by brokering a deal with the Native Americans in the Coloma area. The main incentive for doing this, however, was to protect the boundaries of the land that contained gold that was found eleven days earlier. Marshall and Sutter were aware of the attention the land would receive once others heard of the gold. They wanted official ownership of land in the new state of California immediately after its conception. Because California was now recognized as a state, the lease was ultimately rejected by the military governor of California because he would not recognize the rights of Native Americans to buy or sell land.
Word of gold discovery spread towards the end of 1848. This can be seen through a New York Daily Herald Newspaper entry written in December. Being the first major newspaper to report on the discovery, it stated that "doubt soon became belief, and a change almost magical in its nature pervaded the whole population." The article continues describes how substantial pieces of gold could be simply picked up from the water and entire nearby towns were emptied completely of people who sought to become rich. This led to the degradation of some towns, such as Sutter's Fort, and the growth of others, such as San Francisco. Nearly everyone dropped everything and went west to find gold.
Some made their riches through finding gold in California while others, such as Marshall and Sutter, made theirs off exploiting those people. The discovery of gold highlights a key trend of psychology in America that subsists to this day: fear of missing out (FOMO). Spontaneous decisions to salvage or territorialize a newfound market drove rapid growth throughout the region. People risked their lives and gave up everything they owned because they were driven by fear and greed. In today's society, this behavior is extremely prevalent. Financial markets are often not driven by rational decisions, but rather by human emotion. This idea is just as much prevalent today in markets such as cryptocurrency just as it was in 1848 with gold. The impulsive nature of the widespread migration for riches is truly ingrained in the American society, whether physical or mental.