The Curse of Gold

 In 1848, gold was discovered in the tailrace of a

sawmill in California. The mill was owned by John

Sutter, a wealthy businessman. Once the news

broke, hordes of fortune hunters invaded Sutter's

estate, driving him to the brink of ruin.

The discovery of gold nuggets in the American River meant dreams of untold wealth from a lucky strike for hundreds of thousands of prospectors. For John Sutter, owner of the land through which the river ran, it spelt disaster. Through a combination of hard work and good luck, Sutter, a Swiss emigre, had enjoyed a successful career in the New World and had established a small empire based on ranching and lumber. His vast estate centred on the American River, a tributary not far from San Francisco. Sutter's vast estate and enormous wealth had even earned him the nickname the 'Emperor of California'.


John Sutter was born on February 15, 1803. His ancestors had founded paper mills and printing presses in the towns of Alsace and Baden, and Sutter followed in the family tradition. But his firm went bankrupt and a warrant was issued for his arrest on charges of irregular financial dealings. So Sutter packed his bags and fled where Swiss law could not touch him - the west coast of North America.

Major gold strikes of the 19th century

Gold on three continents.

Gold was discovered in Australia in 1851, in Rhodesia in 1881, and in Siberia at the end of the 19th century.

The Black Hills of Dakota 

In 1875-76, in the wake of a military expedition led by General George Custer, the Black Hills of South Dakota in the USA witnessed a huge influx of gold hunters. This provoked conflicts with the indigenous Sioux Indian population - including the ferocious battle at Little Bighorn in 1876.


In Alaska, major gold strikes were found on the Yukon River in 1886 and on the Klondike River in 1896! The American writer Jack London gave a vivid account of the lure of gold and the frustrations of the gold hunter in his novel The Call of the Wild (1903).


Was very inaccessible in the early 19th century - almost 3000 miles of prairie and mountains separated it from the rest of the United States. The overland route was fraught with danger, as the trail passed through the territory of Indian tribes who were hostile to passing settlers, so anyone wanting to get to California had to go by sea. The voyage was long and risky - the Panama Canal had not yet been built - and many ships foundered off Cape Horn. But John Sutter was fortunate, arriving safely in California in 1839.

California comprised a long, narrow coastal strip, inhabited mostly by Spanish-speaking settlers. In 1821, Mexico had gained its independence and California became a province of the new state. The area immediately inland from the coastal strip was Indian territory, and it was there that Sutter went. With the permission of the Mexican governor, he bought a plot of land in the Sacramento Valley, about 60 miles east of modern San Francisco. The native Indians were expelled from the estate by force.

To begin with, Sutter's daily life involved cattle ranching, setting traps and trading in furs. Woodland was cleared to make way for grazing and the business grew. By 1845, Sutter's New Switzerland covered 230 square miles and was grazed by 12,000 head of cattle, 2000 horses and 10,000 sheep.


In 1847, Sutter decided to build a sawmill on the river that ran through his land and hired a carpenter, James Marshall. On January 24, 1848, Marshall climbed down into the American River to clear an object that had jammed in the mechanism of the mill. He saw something shining brightly in the water of the drainage culvert - gold.

Sutter immediately foresaw the effect that word of the discovery would have - hordes of gold hunters invading his land - so he did his utmost to stop the news from leaking. But some of the estate labourers couldn't resist having a go at panning for gold themselves, and they bartered the nuggets they found with Sam Brannan, a tradesman in Coloma, a settlement nearby.

Brannan had the same premonition as Sutter. He too envisaged gold diggers arriving in droves - but unlike Sutter he could see the potential to profit from the prospectors. The diggers would need equipment - and he would supply it. He put all the nuggets that the labourers had exchanged with him in a bottle, travelled to San Francisco and spread the word that sensational gold strikes had been made on the American River. As proof, he displayed the bottle of nuggets. This marketing exercise resulted in a mass exodus of many of San Francisco's residents - an exodus that had a serious impact on the city. Shops were forced to close because their employees failed to turn up for work; schools suddenly experienced a chronic lack of teachers, and sailors abandoned ships and hastened alongside deserting soldiers to the river of gold.


Things turned out just as Sam Brannan had planned. His business boomed and he became California's first millionaire. But John Sutter was not so lucky. His pastures were devastated and his cattle slaughtered by the incoming hoardes. People in the grip of gold fever were indifferent to one man's property rights. Ever more fanciful stories spread enticing more speculators to Sacramento. One gold hunter claimed that with just one thrust of his spade he had lifted 301b of gold nuggets; another claimed he had found gold inside a fish that he was cooking.

Despite the rumours, most people unearthed nothing and many of those who did simply gambled it away. The obsession with digging for gold caused other jobs to be neglected, and the prices of basic provisions rocketed. An egg cost $1, old newspapers were sold for $10 each and moneylenders charged 5 per cent interest on loans - every week.

The discovery of gold at Sutter's Mill led to a population explosion in the previously remote valley. According to some estimates, the population of California increased by 86,000 in two years.


Gold fever reached a peak on December 5, 1848, when President James Polk told Congress about the discovery of gold in California. The President's address opened the floodgates to a new deluge of fortune-seekers who became known as the Forty-Niners, named after the year they arrived in California. The overland trek, on foot or in or wagons, could take up to nine months. For those who came by sea, San Francisco was the most popular port of call, and its population exploded from about 800 in 1848 to over 50,000 in 1849. Only a handful of this new influx hit the jackpot, though, largely because few had the start-up capital needed to mine gold efficiently.

Violent crime was rampant, and most prospectors living conditions were so insanitary that there were frequent outbreaks of cholera - estimates suggest that one in every five miners who came to California in 1849 was dead within six months.

The businesses that sprang up to meet the needs of the gold diggers boomed. 

'California, here I Come. '  -   Shopkeepers, bar owners and prostitutes did well, and several entrepreneurs laid the foundations for successful business empires. Some of these businesses are still around today including Levi Strauss - whose rugged, hard-wearing trousers could stand up to the rigours of a gold digger's work and John Stetson, who manufactured a broad-brimmed hat to protect heads from the blistering Californian sun.

John Sutter lost most of his fortune, but he was not prepared simply to accept the loss of his property. He spent the rest of his life instituting legal proceedings to try and recover his land, but his claims for compensation were repeatedly dismissed. He died in 1880, still fighting.