Most of us have heard about the California gold rush or perhaps the San Francisco 49ers football team named after the gold rush era. Have you really thought about what that meant?  There is an interesting book called The Age of Gold by H.W. Brands published by Doubleday, NY, 2002 that does. The gold find at Sutter’s Mills (not far from Sacramento – the state capital) brought California into the United States as well as made the US a wealthy country. The journey from New York to San Francisco is a long one because of the need to go around South America and it is not easy being close to the Antarctica – cold and heavy winds. The number of people going to the west would lead to the Panama Canal being built as people looked for shortcuts or seemingly shortcuts to the west. If you went by land, all was good until arriving at the Sierra-Cascade Mountain range where there are few passes and a desert known as Death Valley National Park. The desert has extreme heat in the day, cold in the evenings and lack of water almost everywhere  which few people would have known how to cross the land and many lives and cattle were lost.

Reaching California did not mean the end of the journey but the next step for it was an effort to reach the place to pan for the gold. Along the way, provisions were expensive both in terms of the high cost of transportation as well as high markups because of the high influx of people. Boomtown meant daily life is expensive however it is also the place where one hears of someone else gaining a rich strike  in a short time period. The stories were all over the place and some must be true. With the influx of people came the saloons and gambling. As thousands came to the state, most started with the intention to strike it rich and go back to where they started, however life happens. The people coming in needed services and living similar to where they came from – need housing, restaurants, financial services and safety. When people starting feeling safe, they built more permanent residences and soon there was a city rather than isolated sections. Similar to most cities people first went to the area where others from their country settled. The stories of people who did not go to the mines are with us today – Levi Strauss – built jeans with rivets so they did not fall apart. Leland Stanford owner of a general store which took stakes in mines as payment for goods. Stanford is known for the endowment of Stanford University. Charles Crocker eventually founded a bank which in the 1980’s merged with Wells Fargo; another bank which was formed at that time was Bank of America. Two other well known merchants were Mark Hopkins and Collis Huntington who teamed up with Stanford and Crocker to build the Central Pacific Railroad.

Linking to dividend paying stocks, often in boom times people focus on the commodity which is driving the boom and in many ways it is good thing to do. There is also money to be made servicing the boom and sometimes it is more patient and long lasting. Finding gold is wonderful, takes harder work, but can change your net worth very quickly; a slower way is to make money from the boom and be more selective on which of the quick get rich possibilities that seem to easily be found.

There are more questions than answers, till the next time – to raising questions.