On the East Coast and in Europe the confused reports of California gold had been discounted as mere hearsay. That changed when US president James Polk announced the discovery of gold in December 1848 during his "State of the Union" address. The trip to California was long and dangerous but in 1849 the dream of getting rich overnight attracted about 90,000 people (the so-called "49ers" or "argonauts"), of which only about 55,000 were US citizens. They may have been motivated also by the terror created in towns and cities by the cholera epidemic that had started in Europe and was spreading to the USA in 1849: thousands of 49ers died on their way to California.

The trip from the East Coast to San Francisco still took 4-8 months. There were still the same three routes: by sea around the Cape Horn, by sea to Panama's Atlantic Coast and then by sea again from Panama's Pacific Coast, and overland to Oregon or southern California, from where steamships sailed for San Francisco. A British-born New Yorker, George Gordon, pioneered an alternative steamer route by way of Lake Nicaragua instead of Panama. Disease and "Indians" made each route more or less dangerous. Diseases spread more easily in ships. Indians often attacked caravans. Europeans had to travel first across the Atlantic Ocean to New York. It is not surprising that among the first gold diggers there were many from the Sandwich Islands (as James Cook called Hawaii): they only had to cross the Pacific Ocean, and they had been doing so for a long time (Polynesians were the preferred sailors for Pacific Ocean routes). Most of the "49ers" arrived via ship, entering the Bay Area at the strait that used to be called "Boca del Puerto de San Francisco" and had been renamed "Golden Gate" by Fremont (not because of the gold but because of the "golden" trade with China). And thousands of Chinese went through the same gate.

The ones arriving overland by wagon followed rudimentary maps that still said "unexplored" for most of the territory east of the Sierra Nevada.

The total amount of gold found in this relatively small region was colossal: $10 million in 1849, $41 million in 1850, $75 million in 1851, and $81 million in 1852; but it was distributed among a rapidly increasing number of miners. While in 1848 the amount of gold dug by a miner was enough to make him rich, and in 1849 the amount of gold per miner was more than enough to pay for food and supplies, within two years the amount per miner was barely enough to survive, given also the inflated prices of all items. The real beneficiaries of the mass migration were the businessmen who sold food, supplies, machinery and services to the miners. Miners lived in camps that soon became boomtowns. They were mostly men (possibly a 10 to 1 ratio). San Francisco itself was mostly a tent city. The weather was harsh in the winter. There were no hospitals and few doctors: even trivial injuries could lead to death. Even money was not widely available: many goods were paid for with gold until 1854, when the newly established San Francisco Mint started minting gold coins (that the USA adopted for national circulation). Drinking, gambling and violence made those towns unsafe. As profits decreased, crime increased. When Marshall discovered gold, California was still in a limbo, not ruled by Mexican authorities anymore but also not ruled by US authorities yet. Technically speaking, there weren't even laws in California. The US armies and private militias maintained some kind of order. There was no parliament to enact laws and there were no judges to enforce them. And, technically speaking, most goldfields were on public land, land that belonged to the government. Since there was no police force and no army presence, vigilante groups were organized. Victims included the indigenous populations, who were helpless against the wave of armed intruders. Thousands may have been killed during the Gold Rush. The Chinese were also frequently victims of violent crime because in 1854 the California Supreme Court decided that the Chinese did not have the right to testify in a California court against white citizens, including those accused of murder. That decision de facto legalized white violence against Chinese immigrants. Joaquin Murrieta was a legendary outlaw of the era.

A letter written by an unnamed immigrant describes the human toll of 1849: “Of course there is a great deal of suffering; a large number die every day, whose deaths are not published; several bodies are found every morning on the beach, and under carts where they have crawled for shelter. The principal disease is Dysentery, although dissipation and exposure kills a great many. Indeed, I never have seen so much dissipation in my life as prevails here. Every one drinks, and gambling is going on in almost every house, from eight in the morning until two and three at night, Sundays not excepted, and thousands change hands every day.”

Ironically, one person who lost money due to the gold rush was Sutter himself, who had even run for governor. He lost many of his employees who joined the gold rush, he was swindled by investors, and a tidal wave of gold prospectors and miners settled illegally on the land of his ranch even stealing his crops and animals. In December 1848 his son John Sutter Jr and Sam Brannan designed a new city, Sacramento, near the original New Helvetia, at the confluence of the American and Sacramento rivers. It proved a strategic location, the ideal jumping-off point for the gold region. One of the new immigrants, stagecoach driver James Birch, arrived in Sacramento in 1849 to start his own stagecoach business, the California Stage Company, providing both transportation and mail delivery. Sacramento grew rapidly, despite a cholera epidemic in 1850 and the great fire of 1852.

Sacramento, serving the gold-mining community, quickly became a center of commerce to rival San Francisco. While most of the miners wound up broke, the merchants got rich selling mining equipment and supplies. Among the early arrivals of 1849 were two young men from New York: Collis Huntington, who traveled overland with his wife, and Mark Hopkins who traveled alone by sea via Cape Horn. They opened stores and in 1855 they merged into the Huntington and Hopkins Hardware Store, which quickly became the largest hardware, iron and steel house of the entire West Coast, also known as "the 54K company" because it was located on (54 K Street). Charles Crocker and his two brothers arrived from Indiana to El Dorado County (near Coloma) in 1850, quickly gave up mining for the easier business of store owners in Sacramento, and Charles became one of the city's most prominent businessmen and politicians. Leland Stanford, a lawyer from Wisconsin, and his wife Jane, having lost all their possessions to a fire, and Leland's five brothers moved to El Dorado County in 1852, opened a general store for miners and in 1856 moved to Sacramento. The lives of these four immigrants would soon intersect and then shape the future of California.

The ones who got rich in the 1850s were those who had business acumen and invested in mines rather than mining themselves. For example, George Hearst, a poor immigrant when he arrived in 1850, who started out prospecting, selling supplies, farming and raising livestock, and invested his savings into mines, until in 1859 he struck it rich in the legendary Comstock Lode. He became partner with San Francisco lawyers James Haggin and Lloyd Tevis (a former 49er), who had started their law office in Sacramento in 1850, invested in gold mines and moved to San Francisco in 1853. Their firm Hearst, Haggin, Tevis and Co went on to become the largest private mining firm in the USA, controlling dozens of gold, silver and copper mines scattered between Alaska and Chile, including the world’s largest silver mine, the Ontario (1872) in Nevada, the world’s largest gold mine, the Homestake (1877) in South Dakota, and the world’s largest copper mine, the Anaconda (1880) in Montana. Tevis got so rich that he acquired shares in the California Steam Navigation Company, the California State Telegraph Company, stagecoach lines, streetcar lines and ranches, and even gained control of Wells Fargo in 1870 and co-founded the Pacific Oil Company in 1879. What he didn't achieve as a miner in 1849 he achieved as an investor in other people's mines. With the profit from mining, Hearst purchased a huge piece of land in San Simeon, near San Luis Obispo, which his son would make famous.

Charles Lux (born in a German-speaking part of France) was one of the young men who traveled from New York to San Francisco in 1849 and did not become a miner but instead opened a butcher shop. Henry Miller (born Heinrich Kreiser in one of the German kingdoms) was another young New Yorker who had arrived in 1850 and had the same idea to open a butcher shop. Both purchased a lot of land: Lux south of San Francisco (today’s South San Francisco, Burlingame, Millbrae and San Bruno) and Miller in the Central Valley (much of the San Joaquin Valley, even owning water rights to the San Joaquin River). They got together in 1858 and created a classic case of integrated meatpacking business: they raised cattle in Miller's ranches, drove them to Lux's ranches, and turned cattle into meat at their San Francisco slaughterhouse. Miller survived Lux by 30 years, expanded to other states and eventually owned a million cows. Meanwhile, Miranda Lux, who had married Charles Lux in 1857, became one of the Bay Area's first philanthropists: she financed schools for children and personally ran an orphan asylum.

Many of the travellers who witnessed the Gold Rush wrote accounts of it: Edward Gould-Buffum's "Six Months in the Gold Mines" (1850), Walter Colton's diary "Three Years in California" (1850), Jacques Antoine Moerenhout's "The Inside Story of the Gold Rush" (published only in 1935), John Swan's manuscript “A Trip to the Gold Mines of California in 1848”, Heinrich Lienhard's manuscript only partially published as "Californien Unmittelbar vor und nach der Entdeckung des Goldes" (1898) and as "A Pioneer at Sutter's Fort 1846-1850" (1941), James Carson's "Recollections of the California Mines" (1852) and Chester Lyman's diary "Around the Horn to the Sandwich Islands and California, 1845–1850" (only published in 1925), the latter written by an astronomer of Yale University. Marshall's discovery was documented in the diary of the Mormon soldier and laborer Henry Bigler, never published in book format (Bigler soon left to join the Latter-day Saints Church that had settled in Utah, but in October 1849 the church sent him back to California to mine gold on behalf of their leader Brigham Young).

Soon, land speculation was also thriving and new towns were being created. A pioneering speculator was the lawyer Horace Carpentier, who arrived in 1849 not to search for gold but to buy land and founded the city of Oakland across the Bay from San Francisco.

The California constitution was written (in 1849 in Monterey) by notables like John Sutter, Thomas Larkin, army captain Henry Halleck, ranch owners like Abel Stearns, and some Californios. Halleck became rich after he joined the law firm of Frederick Billings and Archibald Peachy, which specialized in adjusting the old Mexican land grants to California land titles. In 1853 Halleck hired architect Gordon Cummings to build a four-story Italianate building known as Montgomery Block, possibly the largest west of the Mississippi, conceived for law firms and newspapers (although located near the "Barbary Coast" red-light district).

The German immigrant Carl Weber, who had arrived in California with Bidwell in 1841 and who in 1845 had acquired Rancho Campo de los Franceses on the San Joaquin River, quickly realized that it was more lucrative (and safer) to sell supplies to gold miners than to be a gold miner. Realizing the strategic location of his ranch, in 1849 he founded a new town, Stockton, a natural gateway to the rivers of the gold country (the Calaveras, Stanislaus, Tulomne, Merced and Mariposa Rivers). It was the first town in California to have an English name. In 1850 he built the home that is now known as Weber Point Home: it was built with redwood lumber transported by cart from the village of Woodside (today, one of the richest cities in the world) to the port of Redwood City and then by barge to the San Joaquin River and the Stockton Channel. Thousands of Chinese came to Stockton from Guangdong province, and remained after the Gold Rush, so that Stockton was home to the third-largest Chinese community in California.

The White miners coming from the East Coast or Europe rarely mined in groups of more than two or three. The Chinese, instead, were more likely to partner with several fellow Chinese either because they belonged to the same "clan" back in Guangdong province or because they had created the typical bonds of immigrants who speak the same language and have the same traditions. Working in groups allowed the Chinese to build dams and canals (an art likely mastered back in China) which brought water to their mining operations and in some cases diverted water from the riverbeds to make it easier to find the gold.

Hundreds of Chinese men settled in Camp Washington (today's ghost town of Chinese Camp near Yosemite), further up into the hills, between Stockton and the gold mines.

Thanks to the mines and to the port (and later to the railways), San Francisco was also becoming an industrial city. The area around Potrero Point (today's Pier 70) witnessed a boom of industrial activity.

In September 1849 Domingo Marcucci, a 22-year-old Venezuelan-born 49er who arrived from Philadelphia in a steamship of the Pacific Mail Steamship Company, started a shipyard in San Francisco to build or remodel ships for Pacific Mail, starting with the Captain Sutter, the first steamboat to run between San Francisco and Stockton.

In 1849 Irish immigrants Peter and James Donahue started Union Brass & Iron Works in San Francisco that quickly turned to making machinery for mining and agriculture (and later, when acquired in 1864 by Henry Booth, locomotives, and, finally, when reorganized in 1884 by Irving Scott, ships and even submarines as one of the USA's best shipyards).

Johan Nordtvedt arrived in California from Norway in 1850, changed his name to John North, and, having failed at gold mining, in 1852 opened the first major shipyard of Potrero Point, which went on to build river steamboats and ocean schooners.

In 1852 George Johnson, a sea captain who had journeyed to San Francisco with the 49ers, established George C. Johnson & Company with partner George Gibbs to sell steel, iron and hardware.

In 1852 Lewis Coffey and John Risdon founded Snow Boiler Works, which in the late 1850s, renamed Coffey & Risdon’s Boiler and Steamboat Blacksmith’s Works, became the largest foundry and equipment manufacturer in California, mainly for steamboats, while providing most of the iron pipes in the hydraulic mines.

The Pacific Rolling Mill Company, the first major iron and steel mill in the Far West, was founded in 1866, in San Francisco by investors such as bankers Darius Mills and William Ralston, railroad tycoon Leland Stanford, mining tycoons James Fair, James Flood and Alvinza Hayward.

The chief building material (and the largest single industrial sector) was wood, transported by lumber schooners from the Pacific Northwest. When the Gold Rush started, lumber was imported from the East Coast but it was obviously a long and expensive journey. The first ones to realize that it made more sense to use the forests north of San Francisco were Andrew Jackson Pope and Frederic Talbot, both from families who owned sawmills in Maine, who founded Pope & Talbot the moment they arrived in 1849 with their load of lumber, purchased timberland in the north on Puget Sound and even their own ships.

In 1857 William Fuller and Seton Heather formed a company in Sacramento to import paint. In 1862 Fuller moved the company to San Francisco and in 1868 formed the company Whittier, Fuller & Co with former rival William Whittier, which rapidly became the the largest paint dealer of California.

The industrialization of San Francisco consisted mainly in the processing of wood and metal, but also of food. Italian-born Domenico Ghirardelli, owner of a coffee and chocolate store in Peru in the 1830s, arrived as a 49er but in 1852 opened a store in San Francisco that replicated his Peruvian success and in 1866 established a chocolate factory (on Jackson Street, designed by Mooser) that made him the largest producer on the West Coast. In 1867 the Prussian immigrant Claus Spreckels opened the California Sugar Refinery to process Hawaiian sugarcane (in 1878 he even founded in Maui the town of Spreckelsville, which became the largest sugarcane plantation in the world), and later started growing sugar beets in the Salinas Valley and processing them in Watsonville.

Even more important for the region were the canneries. Daniel Provost is credited as being the first one, in 1856, to pack California fruits and vegetables so that they could be sold far away. The need was particularly felt in the south bay, in the Santa Clara Valley, where orchards were spreading fast and producing more than California could use. Being able to export to distant markets the fruit bounty of the valley represented a big business opportunity. The solution was to dry and pack the fruits, using the canning method invented in 1810 in France by Nicolas Appert. In 1860 Francis Cutting, based in San Francisco, began exporting processed fruit to the East coast and Europe. In Santa Clara Valley the business was pioneered by physician James Madison Dawson, who in 1871 shipped his first canned fruit, and whose company evolved into the San Jose Fruit Packing Company. Within a decade, Santa Clara Valley boasted dozens of small family orchards and canneries. In 1891 the Del Monte Hotel of Monterey licensed the Oakland Preserving Company, a cannery founded by San Francisco grocer Frederick Tilmann, the right to use “Del Monte” on their products, as the name was becoming popular. In 1899 18 canneries, representing the majority of all California canning, including the San Jose Fruit Packing Company, the Cutting Fruit Packing Company and the Oakland Preserving Company, merged to form the California Fruit Canners Association, later renamed the California Packing Corporation or Calpak with its headquarters in San Francisco, and marketing its products under the Del Monte brand name.

California was recognized early on as an ideal land for raising sheep and by 1867 there were about two million sheep, but until 1859 all wool clipped in California was shipped abroad. In 1858 a H Heynemann and his partner Pick opened the first woolen mill on the West Coast, the Pioneer Woolen Mills, using mostly Chinese labor. When the original wooden building at Black Point (today's Ghirardelli Square) burned down, the Swiss-born William Mooser (the patriarch of the Mooser architectural firm) replaced it with a red brick building (later purchased by Ghirardelli in 1893). The Mission Woolen Mills opened in 1861, also using Chinese labor.

Wine was originally a southern California affair, but George Yount, a fellow traveler of Wolfskill who had received a land grant from the Mexican authorities of Sonoma (which makes him the first resident of Napa Valley), had already planted grapes in Napa Valley in 1839. Wine production picked up in earnest only in the 1860s. John Patchett started Napa’s first professional vineyard in 1854 and started selling wine in 1857. Sam Brannan of gold fame, already a rich man, opened a vineyard in 1859 in a place that he named Calistoga, and then built the Napa Valley Railroad in 1863. Charles Krug started his Napa winery in 1861, and his success inspired Jacob Schram (1862), John Lewelling (1864), Hamilton Crabb (1868) and many others to start wineries in Napa Valley.

In 1850 California became a state of the USA, with its capital in San Jose', the 31st state, while the Utah Territory was being hijacked by the Mormons and would take a while to be split into the states of Nevada (1864), Utah (1896) and Colorado (1876). The New Mexico Territory was later split into Arizona and New Mexico, both of which became states only in 1912. John Geary, a hero of the conquest of Mexico City in 1847, was appointed postmaster of San Francisco in January 1849 and was elected the first mayor of the city in January 1850. In 1850 the population of San Francisco was 25,000 (36,000 in 1852). San Francisco was the biggest city of the gold region, Sacramento the second biggest, and possibly third was Marysville, the main supply center for the northern mines (founded in 1850 at the junction of Yuba and Feathers rivers by land speculators led by lawyer Stephen Field).

In April 1850 one of the first laws enacted by the state of California, ironically titled the "Act for the Government and Protection of Indians", de facto granted US settlers the right to abuse indigenous people, which led to a cultural, economic and physical genocide. The law was proudly signed by California's first governor Peter Burnett, who held a messianic belief in the destiny of the white race to colonize California. In 1851 the state of California enacted another law: a tax on foreign miners, targeting mainly Latinos and the Chinese. The tax convinced many Chinese to move to San Francisco and open laundries and restaurants, and others to find employment in agriculture and fishing. Point San Pedro (now China Camp) in San Rafael, along the shores of San Pablo Bay, 30 kms north of San Francisco, became one of the centers of shrimp fishing in the 1860s (the village is still standing in China Camp State Park), and dried shrimp was also exported to China. Shrimping villages appeared from Hunter's Point (bay side of San Francisco) as far south as Rincon Point (on the coast north of Los Angeles, today famous for surfing).

Whether they got rich or poorer, the immigrants transformed San Francisco into one of the most cosmopolitan cities in the world with a diversity of people and cultures that rivaled London and New York. Two Chinese-language newspapers were founded, both run by Christian missionaries: The Golden Hills' News (April 1854) and The Oriental (January 1955). In less than a decade, San Francisco became one of the world's main seaports, certainly the main one on the Pacific Coast.

The gold rush created business empires of all sorts: in 1852 Henry Wells and William Fargo started a service to ship gold, which became a bank, Wells Fargo; and in 1853 Levi Strauss, a German immigrant, started selling canvas pants called "jeans" to miners. Charles Gillespie, Marie Seise's employer, founded in 1848 the Western Title Insurance Company for residential real estate, the predecessor of Fidelity National Title Insurance Company. In 1852 Joseph Eastland, a foundry engineer of Union Iron Works, had the idea to install street lamps using "brilliant gas" (instead of oil lamps) and formed the San Francisco Gas Company with investment from his employers (the Donahue brothers), and in 1854 the streets of San Francisco were for the first time lighted by gas. His boss Donahue became an industrial and transportation baron. In 1860 he started the Omnibus Railroad that provided the first major horse-drawn streetcar lines in San Francisco, as well as the San Francisco and San Jose Railroad (today's Caltrain). As the price of everything skyrocketed, Brannan became California's first millionaire. He bought land in both San Francisco and Sacramento. In 1861 he also bought land in Napa Valley, hired Japanese gardeners, and built a hot springs resort, Calistoga, inaugurated in 1862. In 1868 he also inaugurated a railway, the Napa Valley Railroad, to bring tourists from the port of Vallejo (connected by ferry to San Francisco) to his resort.

The Gold Rush boom was so bizarre that San Francisco welcomed all sorts of eccentrics. Among the 49ers was Joshua Norton, raised in British South Africa, who left in late 1845 and reached San Francisco via Liverpool and Boston in November 1849, rose as a real-estate investor but went bankrupt as a commodity trader, and in 1859 declared himself "Emperor of these United States". Having nurtured a network of friends in the press, he was tolerated and even respected by the citizens until the end of his life. The official 1870 census listed his occupation as "emperor".

Sacramento was no less cosmopolitan. In 1852 there were 814 Chinese (804 men and 10 women), 1371 in 1870 and 1781 in 1880. They settled in the old Sutter Slough, which became known as the China Slough, a swamp that they turned into a waterfront district of shops (notably laundry services), restaurants and theaters. In fact, the first Chinese-run Chinese-language newspaper of the USA, The Chinese Daily News 沙架免度新录, appeared at the end of 1856 in Sacramento. Like the San Francisco ones, all the Chinese-language newspapers of Sacramento lasted only a few months.

In 1851 gold was discovered also in northern California (today's Siskiyou, Shasta and Trinity regions), generating the boomtown of Shasta. Chinese miners built the Taoist temple in Weaverville, a boomtown on the Trinity River.

The demographic problem was that most immigrants were men. A partial census in 1850 found only 5,500 women over the age of 15 (which at the time was old enough to get married) out of 200,000 people. Many of them were widows: men died during the journey (of accidents, diseases, Indian attacks), men died in the mines, and men died in the lawless boomtowns.

First and foremost, the booming population needed food, which resulted in a boom in agriculture in the old ranches. For example, Italians from the Liguria region jumpstarted agriculture in the Sierra Nevada foothills.

The infrastructure too was improved greatly. In 1851, the US Post Office contracted George Chorpenning to deliver mail from Salt Lake City (Utah) to Sacramento, initially via a route cursed with hostile Indians and severe winters. Later, another route, via the Mormon Trail was used.

In July 1851, the first university in the state of California was chartered: the California Wesleyan College, soon renamed University of the Pacific, in the tiny town of Santa Clara.

In 1852 there were more than 200,000 non-indigenous people in California. In 1852 John Bigler was elected governor of California and moved the capital to Sacramento in 1854.

The decline of California's gold economy started in 1853. Not only did the yield keep declining, other gold mining areas were discovered, such as in Australia's New South Wales in February 1851, which made California's gold mines less relevant.

The original technology of gold mining was "placer mining", which simply consisted in looking for nuggets, flakes or dust of gold in flowing creeks. Placer mining moved higher and higher into the mountains after the miners discovered that gold could be found also in the creekbeds of extinct creeks, creeks that had existed millions of years ago. However, this kind of placer mining was more complicated because typically the gold was buried under deposits of minerals that accumulated over the ages. This required hydraulic mining (perhaps California's first technological innovation) or drift mining. Even more sophisticated was quartz-lode mining. Within a few months it became difficult to find gold the easy way (in flowing creekbeds). But the miners knew that the surface gold came from deep quartz veins and started digging for subterranean veins of gold-bearing quartz. This required know-how, heavy equipment (like stamp mills to crush ore) and chemical processing, i.e. financial backing. The first stamp mill was possibly the one used by John Fremont and Kit Carson after they discovered the Mariposa Mine in 1849 on land owned by Fremont. In 1849 gold had been found northeast of San Francisco on the western slopes of the Sierra Nevada at Deer Creek Diggings, which the following year was named Nevada City. In 1850 gold-bearing quartz was discovered underground (the Gold Tunnel vein). Charles Marsh built here a 15-km ditch in 1850 that became the first section of the vast network of ditches of the South Yuba Canal. In 1853 Edward Matteson pioneered hydraulic mining at American Hill Diggings, just north of Nevada City. When Marsh's original Rock Creek Water Company evolved, in 1870, into the South Yuba Canal Company, the "canal" consisted of 400 kilometers of ditches, 20 reservoirs and dozens of flumes that carried water to hundreds of hydraulic mines. But the first important gold-bearing quartz vein was discovered in 1854 near the trading post erected in 1848 by Rhode Islanders Henry and George Angel (today's Angels Camp). Technically speaking, this is the "Mother Lode", a system of linked gold-quartz veins that extends 200 kms north from Mariposa (although "Mother Lode" came to be used as a generic term for the gold country). It is not a coincidence that nearby in 1854 the blacksmiths J.M. Wooster and Andrew Gardiner built the Altaville Foundry and Machine Shop to produce the stamp mills and the mining machinery for the Mother Lode mines (the foundry was later acquired by David Durie Demarest).

In 1850 lumberman George Roberts discovered gold-bearing quartz on Ophir Hill in Grass Valley north of Sacramento and several competing miners arrived to dig, but their hard-rock mines were short-lived and in 1852 were consolidated by a John Rush in the Empire Quartz Hill. The mine was rich but mining it required a high-pressure steam engine to pump water out and then later provide electricity. (It was acquired in 1869 by William Bowers Bourn).

California's Gold Rush affected the whole country in other ways than just mass migration. The demand for mining machinery (like stamp mills to crush ore) and hydraulic equipment (like steam-powered pumps to drain water from mines) fueled progress in iron technology all over the country. Even picks, shovels and pans had to be imported, since California had minimal industry. The Gold Rush also led to increased production of lumber for houses, mines and stores, and more efficient methods were developed to produce lumber and transport it. All these immigrants needed to eat, and California had little agriculture. Therefore those who failed in mining found lucrative opportunities in agriculture and this required irrigation and transportation. Soon the region was producing massive amounts of fruits, vegetables and grains. Roads and bridges had to be constructed. Better wagons and better steamships had to be produced rapidly. Old international trade routes were revamped and new ones discovered. Merchants, bankers and investors created a new financial world. The USA enjoyed a prolonged economic expansion between 1841 and 1856, and the "Gold Rush" was one of the factors because it stimulated so many sectors of the economy.

California's gold was a major motivator for the construction of the Panama Railroad, inaugurated in 1855 after five years of work, so that those going to California didn't have to spend a week in canoes and on mules but simply spend a day in a train. But perhaps the real motivation was not the passengers but the cargo: California gold could now be transported safely and quickly through Panama. At the same time, steamships replaced sailing ships.

In 1856, California inaugurated its first railway line, a railroad from Sacramento to Folsom, the Sacramento Valley Railroad, the first railroad west of the Mississippi.

In 1857 the US Post Office contracted with James Birch a new route for mail delivery between Texas and San Diego: the first letters in July took 53 days to travel the 2,000 kilometers. A few days later, in September, Birch drowned in the famous shipwreck of the "Central America" en route from Panama to New York (400 passengers died and its cargo of gold was lost, resulting in a financial panic).

In September 1858 John Butterfield, also under contract with the US Post Office, began mail delivery from St Louis and Memphis via Texas and the New Mexico Territory (literally along the Mexican border) to San Francisco, a distance of 4,500 kilometers covered in 24 days, New York Herald's reporter Waterman Ormsby joined the inaugural trip and wrote a famous series of articles.

In April 1860 the Central Overland California & Pike’s Peak Express Company, better known as "Pony Express", founded by three Missouri businessmen (William Russell, Alexander Majors and William Waddell), delivered its first mail in ten days from Missouri to Sacramento. Missouri was where the telegraph line of the east terminated. Its innovative service employed mounted riders rather than stagecoaches, followed a shorter direct route (via the Oregon, California and Mormon trails and then over the Sierra Nevada near Lake Tahoe). They changed horses at each of the 186 stations along the way in order to ride at maximum speed.

The Pony Express was in operation for only 18 months because in October 1861 the first transcontinental telegraph line (which followed the Oregon-California Trail) was inaugurated by Western Union, connecting San Francisco and the East Coast. San Francisco had already been connected to San Jose in September 1853 and Los Angeles in 1860. Note that most electrical devices and even wires were not manufactured in California: they had to be imported from the East Coast via Cape Horn. The first transcontinental telegraph message from San Francisco to Washington reached US president Abraham Lincoln who was busy with the Civil War (started in April).

San Francisco was a city without trees, a city of sandy beaches and barren hills with no significant creeks. There wasn't enough water to sustain a boom town. In 1860 George Ensign founded the Spring Valley Water Company and in 1862 his Prussian-born engineer Alexis Waldemar von Schmidt built tunnels and flumes to deliver the water of the Pilarcitas Creek in San Mateo County to San Francisco. This company held a monopoly on water rights in San Francisco until 1930. (In 1865 Schmidt formed the Lake Tahoe and San Francisco Water Works dreaming of bringing Lake Tahoe water to San Francisco through a system of tunnels, dams and canals, but the politicians never approved the project).

San Francisco's Stock Exchange was formed in 1862, the second oldest exchange in the USA after the New York Stock Exchange, and it specialized in mining stocks.

A railway was built in October 1863 connecting San Francisco to San Jose in the south of the bay, which had become the capital of California in 1850. Along the way they built a depot called Santa Clara. In the following years, orchards began to cluster around the Santa Clara depot.

In 1867 the port town of Redwood City became San Mateo County’s first incorporated city.

The Gold Rush didn't just change the economy and demographics of California: it also changed its natural environment. Besides polluting the rivers, the exponential increase of gold diggers in the mountains damaged fish and wild game populations.

So much was happening that the 380,000 people who lived in California (of which perhaps as many as 300,000 had immigrated during the Gold Rush) hardly noticed the Civil War of 1861-65 between the Union (northern states) and the Confederates (southern states). Henry Halleck and John Fremont (both already successful state politicians) were the most senior California officials in Lincoln's army during the Civil War. California was still largely isolated from the rest of the country, especially from the areas where battles were fought, and in 1861-62 a terrible storm caused widespread flooding in the Central Valley. California did participate on the side of Lincoln's Union. California sent a few volunteers to fight but mostly helped the Union with its gold. When Confederate general Robert Lee surrendered to Union's general Ulysses Grant in April 1865, San Francisco learned it right away thanks to the telegraph. A few days later the telegraph also brought the news of the assassination of president Abraham Lincoln.

To accelerate the settlement of California, the USA issued the Homestead Act of 1862, which granted public land for free to any citizen (and European immigrant) who committed to developing the land for five years. Married women did not qualify (their husbands did), but single women, widows and divorced women did qualify. While most of the land was swallowed by speculators, thousands of new immigrants moved from other states. In total 60,000 homesteaders took up 10% of of California's public land. The act excluded African Americans, Native Americans and Chinese Americans because they could not become citizens until, respectively, 1870, 1924 and 1943.