PCGS The Standart for the Rare Coin Industry

When, on that day in January 1848, John Marshall discovered at Sutter's Mill, a small nugget of gold "half the size and shape of a pea" at the bottom of a ditch, no one could have foretold the profound effect it would have on the psyche and economy of the United States and its citizens. Although he and John Sutter tried to keep the discovery quiet, rumors spread, and before long locals were digging and panning the waters of the American River. The gold was seemingly inexhaustible, in every form imaginable: from specks of dust panned from the rivers to large nuggets wrested from the earth.

The effect was immediate and dramatic. Farmers left their fields, sailors deserted their ships (leaving a virtual fleet of abandoned ships in San Francisco harbor), and soldiers their companies, and prisoners slipped their fetters; all headed to the gold fields, which were rapidly expanding as more and more discoveries were made. In December 1848, the official report by the Military Governor of California, Colonel Richard B. Mason, was printed in eastern newspapers, and the California Gold Rush was on in earnest.

Thousands of young men, called Forty-Niners or Argonauts, made their way west, more than half of those in Oregon headed south; in two years the population of California increased fivefold and that of San Francisco swelled from less than a thousand to more than twenty-five thousand. All were answering the call of gold, but not all were prospectors. Some were businessmen hoping to supply food, liquor, cigars, and mining implements to those eager to search for the yellow metal; others set themselves up as bankers, assayers, and express companies to purchase the gold from miners transform it into coin or ingots, and send it back east.

Although many of the pioneer miners came well equipped, they soon discovered that they were not always fully supplied with basic necessities, and that wear and tear took their toll as well. With the increasing demand prices rose alarmingly, as some recorded 1848 prices indicate: eggs at $3 each; a barrel of flour at $800; essentials such as a miner's pan, a pick, shovel, pair of boots, or gallon of whiskey were each priced at $100; while the makings of a typical lunch for two could run to $43. A dozen shirts cost $20 to be washed so unsatisfactorily that wealthy miners sent their "linen underwear and boiled shirts by clipper ship to Honolulu or Canton to be laundered with proper care." (Until mid-1850 when prices came down to $5 and the Alta California was able to comment, "The effect of the reduction [in price] is already manifest - tobacco-juice-bespattered bosoms are no longer the fashion."). It is little wonder that some of the men who were the purveyors of these sundry goods were those who founded lasting fortunes.

Gold was needed to pay for these transactions, and so the miners had to have some degree of success. But all California gold was not created equal; its purity varied considerably depending on the discovery site from below sixty percent fine in Kern, to as high as ninety-eight percent in Butte. It came in all shapes and sizes as well, a nugget discovered in Calaveras in 1854 was the largest on record, weighing some 161 pounds (of which 40 was quartz), but that was the rare exception. While hundreds of nuggets over a pound in weight were recorded, much of the gold discovered was in the form of significantly smaller nuggets and dust. "Flour," "grain," "scale," "shot" and "thread" gold were among the highly descriptive terms used by the miners to describe the shape and size of their finds - but regardless of what they called its various forms, this dust was, and remains, the essence of the Gold Rush, and its romance.

Regardless of purity, size or shape, gold was, at first, the medium of exchange. It was cumbersome and inaccurate - a "pinch" of gold dust could be worth more or less, depending on the purity of the gold and whose fingers were doing the pinching. A solution was needed and, as with all such vacuums, speculators and entrepreneurs arrived to profit from the problem.

Back East, at the Philadelphia mint, California gold dust was valued at up to $18.23 per ounce. However, as more goods came West, more sellers wanted to be paid in gold or silver coins - these were a rarity and commanded a premium because of their value in trade. Speculators hoarding coins could pay miners as little as $6 an ounce, an enormous profit. A need for coinage arose, and it was filled by private firms; regardless of whether they were men of honor or scoundrels, between 1849 and 1855 coins of their manufacture, now among the rarest survivors of this period, filled a gap that not only greatly improved local commerce, but ensured that the miners would get a much fairer price for their gold.

As prices for the raw product became more stabilized, the miners had more outlets to which to sell their finds. Bankers such as D.O. Mills & Co. offered the "Highest Price Paid for Gold Dust," while express companies like Wells, Fargo & Co. not only offered safe delivery, but also traded gold dust and bullion. Some of the dust purchased by these commercial concerns was packed in bags and shipped directly east in its most primitive state. But in this form it was unwieldy, and its purity unknown.

Thus most of the gold dust found its way to assayers. These men took gold dust and nuggets, rendered them down in a crucible and transformed them into gleaming bricks. Some were pocket size, others massive - the size of loaves of bread. It was in this form that most California gold found its way East - there to be refined, purchased by banks, or turned into coin.

Eventually in 1854 the Branch Mint in San Francisco began operations, and it produced millions of dollars of gold coins. Many of these were Twenty Dollar pieces, or double eagles, the largest coin produced up until that time by the United States government; it was a denomination created only four years earlier, largely in response to the massive amounts of gold being recovered from California. With the establishment of the mint a sense of order was in place and some of the freewheeling nature of the local economy was held in check.

While the exact amounts of gold recovered during the heady days of the California Gold Rush remain speculative, it has been estimated that in 1848 as much as $10,000,000 (in 1848 dollars) was recovered. Output peaked in 1853 at $65,000,000; by 1856 more than three-quarters of the total recovered up until that time, some $331,000,000, had been exported from California. Most of this gold traveled east via the Panama Route; steamers left San Francisco amid fanfare, and the amount of gold they carried on board was a matter of pride. While it was an arduous journey, most ships made the trip safely and anonymously; those that did not became the stuff of history.