Chinatown's bad reputation for crime, drugs and prostitution was surpassed by a new district. The sailors and miners who stopped in San Francisco needed women and entertainment and could find it in a neighborhood nicknamed "Barbary Coast" (after the Barbary Coast of North Africa where pirates and slave traders thrived). Barbary Coast became the "red-light" district of saloons, dance halls, brothels, vaudeville theaters and drug stores selling just that (drugs), all establishments that catered exclusively to a male clientele Barbary Coast was lawless, with frequent murders and robberies. This was also the origin of San Francisco's reputation as a hub of homosexual "depravation" (as it was considered back then). Young men made up the vast majority of the population, especially the transient one. It became normal in the world of entertainment that men would play women roles. Cross-gender dressing was funny and transgressive. Same-sex dancing was inevitable. The result was that homosexuality became more common than in any other city, and same-sex prostitution joined the ranks of regular prostitution.

But perhaps San Francisco's real problem was neither crime nor "amorality": it was corruption, which escalated rapidly out of control. After losing an election in New York, politician David Broderick moved to California as a 49er but instead of searching for gold he searched for political power. He was elected state senator in 1850 and became vice-governor in 1851 under California's second governor, John McDougal. In San Francisco he engineered a system of bribes and embezzlement that made him a rich and powerful man. In 1856 James King of the Daily Evening Bulletin, the only journalist to openly protest against Broderick's graft, was assassinated by James Casey, a politician who worked for Broderick (who was then lynched by a mob). Nonetheless, in 1857 Broderick managed to be appointed senator in Washington. The only thing that stopped his career was a pistol duel that he fatally lost in 1859.