From Gold Rush to Ghost Town: California and Colorado

Introduction

Christopher Columbus came looking for gold in 1492 — but it was not until nearly 400 years later that gold was finally found. In 1848, in the Sacramento Valley, gold was discovered, and news of the event quickly spread like wildfire across the United States and then across the world. The following year, 100,000 newcomers had flooded into the California territory to lay their claim to the fortunes that lay beneath the ground.¹ They came from everywhere: the States, Mexico, South America, Europe, China, and Australia.² They were known as the '49ers — and a decade later, after a decline in gold discoveries, they would migrate again and be found in Colorado, where they were known as the '59ers.

For a brief period of time, the Gold Rush brought an economic boom to parts of the country that had beforehand been sparsely populated. Towns shot up virtually overnight — and then, when the boom went bust, they were vacated as quickly as they had been constructed. The remains were known as ghost towns: empty shells of a civilization in a hurry to make it rich, the remnants of a society consumed by a dream that had haunted it for centuries — wealth, riches, gold, glory.

The story of the Gold Rush is a story of the mad pursuit of what has always been the most popular of precious metals. It is a story of towns and ghost towns, of economic booms and economic busts. In this tale there is a moral — one that America would do well to remember today as its merchants and financiers, bankers and fund managers pursue a new kind of gold, whether in the form of high-yield investments, cryptocurrency, risk assets, or some other vehicle that one day promises great returns and the next gives nothing. The story of the Gold Rush is the story of every bubble that has ever appeared: it represents the mania and manic demand for riches. In the story of the Gold Rush, gold is only one side of the story — the other is the Ghost Town.

In the Beginning

The problem with the Gold Rush that began in California and spread to Colorado, Utah, Wyoming, and Idaho over the next few decades was both social and economic. It became political at certain points, but only because the first two factors necessitate political intervention sooner or later. That is precisely what happened in California as soon as foreign immigrants began showing up in force to stake their claims. As James Holliday notes, the flood of immigrants from around the world seeking gold in the Golden State brought fear and anger from American miners already there, which prompted the California legislature in 1850 to take action: it passed the Foreign Miners' Tax, which "decreed that only native or naturalized citizens of the United States would be permitted to mine in California without a license, the cost of which would be $20 per month."³ Foreigners were not happy about that.

The miners had no titles to the land, and claims to work the mines were settled informally among themselves through regulations that existed in the camps — regulations that differed from camp to camp. In an 1850 letter from William Swain to his brother George, William describes the moral condition of the camps: "We found the most extraordinary state of morals in the mines. Everything in this country is left where the owner wished to leave it, in any place no matter where, as such a thing as stealing is not known. Miners' rights are well protected. Disputes seldom arise and are settled by referees, as they would be at home."⁴ Essentially, if you were mining the earth for gold, you had a claim to it — and tools left on the site would typically serve as indication of that fact.

With the Miners' Tax going into effect to pacify American miners who felt that foreigners were stealing America's gold, foreign miners took to the streets of Sonora to protest the extremely high fee. They waved their guns and threatened worse — but a group of American miners banded together to form a makeshift armed force. A small skirmish ensued, and the foreign threat was suppressed by the American collective action of legislation and firepower. This was America's backyard, and foreigners who wanted to partake would have to pay a price.⁵

The moral condition of the camps described by Swain did not last. Discovered in 1848, gold had ushered in a brief moment of good times among the '49ers — but by 1850, with the arrival of so many competing miners from all over the world, those good times seemed like a distant memory. As one miner from Missouri put it, "Money is our only stimulus and the getting of it our only pleasure. Never was any country so well calculated to cultivate the spirit of avarice."⁶ This desire for riches is what drove hundreds of thousands out West. Sooner or later, there would have to be some form of community established for them all — and thus the boom town came into existence.

Mining Towns

Just as the Americans displayed a knack for instilling loose-fitting regulations that allowed them to maintain a semi-structured order among themselves as they mined the earth, their approach to building community within the vicinity of the mining activities quickly showed a greater tenacity and devotion to the Gold Rush. These were the gold mining towns — and they sprang up like weeds to meet the needs of the miners. They had everything to offer and were "complete with shops, saloons, brothels and other businesses seeking to make their own Gold Rush fortune."⁷ If proprietors could not make a fortune in mining, they would seek it by satisfying the miners' desires, one way or another. In short, the entire economy of these towns was dependent upon the success of the miners in the region.

If the morals of the camps, which started out respectable, were quickly eroding under the everyday pressures and tensions building up from conflict and competition on all sides, the towns were quick to reflect this decline in morality. Lawlessness was rampant: this really was the Wild West. There was "rampant banditry, gambling, prostitution and violence."⁸ The gold was also becoming harder and harder to reach. By 1852 in California, mining hit its peak "when some $81 million was pulled from the ground."⁹ It declined from there.

The gold rushers did not, however. They kept coming, and by 1860 there were nearly 400,000 people in California, most of them there to get rich. Unfortunately, they were now in the wrong place: in 1859, gold had been discovered in Colorado. The Colorado Gold Rush now went into effect, and Denver City came into existence as a result.¹⁰ Like San Francisco in California, it would be one of the few locales to actually develop into a metropolis. So many other mining towns would cease to bear any resemblance to a community: slapped together to fill a passing need for migrant miners, they would be abandoned at the drop of a hat as soon as the miners headed off for other parts of the country. Legislation like the Miners' Tax was meant to curb the immigrant problem that American miners wanted addressed — but it also had the added effect of incentivizing foreigners to seek their returns elsewhere, meaning that boom towns erected during the California Gold Rush had fewer souls to draw upon for economic support. That is one reason they went bust. The emergence of the Ghost Town was the direct result of too few souls sticking around: with nothing to nourish their bodies, there was no reason to stay.

Conclusion

The Gold Rush offered people from all around the world the opportunity to strike it rich quickly — so long as they got in on the action early and got rich along with the boom town entrepreneurs whose saloons and dance halls provided recreation for many. However, when the rush wore off, the temporary settlers of these boom towns sought new streams of revenue. The Gold Rush expanded to other parts of the West, and Colorado received many of the miners eager to continue the pursuits they had begun in California.

Boom towns turned to ghost towns: weather, wilderness, and a lack of underlying infrastructure — including transportation, economic foundation, and social value — plagued most of them. A few managed to keep their populace and establish a reason for being beyond the rush for gold. The story of the Gold Rush, and of the ghost towns it left behind, remains a cautionary tale about what happens when an economy is built on a single, exhaustible resource and the speculative mania that surrounds it.