Entrepreneurs have played significant roles in the history of the United States throughout the centuries. Over the last 300 years, retailers, manufacturers, inventors, scientists, publishers, and other specialists have introduced innovative products, thoughts, and business strategies that have spread throughout the nation and around the world. Although America has always been a land of entrepreneurs, in the waning years of the 20th century, the internet and other technological innovations made it easier and cheaper for the average person to launch a business and compete in the global marketplace. As a result, since 2001, millions of Americans have started their own businesses, and more than 540,000 new startups are added every month. However, before rushing into entrepreneurship, it might be wise to consider some of the facts surrounding the rush to California triggered by the discovery of gold at Sutter’s Mill.
Pertinent Facts About the California Gold Rush
1. Gold was first discovered at Sutter’s Mill in 1848. Tales of gold nuggets that could be found on the ground or along riverbanks lured thousands of people from the United States and many other nations. Historians estimate that the population of what would soon become the 31st state swelled by more than 300,000 people during the years encompassing and immediately following the California Gold Rush. However, the surface gold was quickly exhausted, and the remaining gold required large groups of workers and costly machinery to extract. By 1855, major corporations had taken over virtually all of the mining operations in the area, bringing the gold rush to a close in California and leading individual miners and prospectors to search for gold and silver elsewhere.
2. Of the hundreds of thousands of people seeking their fortunes during the California Gold Rush, only a handful of individuals accumulated great wealth from their mining activities. After accounting for expenses, approximately half of those seeking gold earned a small profit. Between 1850 and 1855, most of the new arrivals either lost money or barely broke even.
3. Much of the wealth accumulated by individuals in the areas surrounding the gold fields was earned by those who supplied lodging, supplies, food, transportation, entertainment, and other services that the miners needed or wanted. Levi Strauss and Samuel Brannan are just two of the many individuals who earned their fortunes by mining for gold in the pockets of the miners.
4. The legal system in California was not a well-developed, universally enforced, cohesive set of laws. California was a part of Mexico until the treaty ending the Mexican-American War was signed in 1848. In September 1850, California became a state. The legal system was a mixture of American and Mexican laws, but there were no statutes covering property rights as they pertained to the gold fields during the early years of the California Gold Rush. A system for staking and recording claims was quickly developed, but disputes over the ownership of claims were common.
5. American gold seekers found themselves competing with immigrants from around the world who had arrived in California to seek their fortunes. People from China, Chile, Peru, Mexico, France, New Zealand, Australia, England, Brazil, Italy, and many other countries came to California to look for gold or provide support services to the miners.
6. Whenever news of a significant strike was released, people flocked to the area. Towns sprang up seemingly overnight, and tents were quickly replaced by buildings of wood or brick. Some of these settlements are thriving cities today, but many more of them were abandoned as soon as the gold ran out.
7. The gold found in California had a profound impact on the economy of the United States and other nations. For example, between 1848 and 1853, up to 12 million ounces of gold left the gold fields of California. That equates to more than $18 billion in 2019 dollars. Most of the gold found its way to brokerage houses and banks in New York City, but French merchants and prospectors sent an estimated $2.2 billion back to France. Since many miners carried their gold with them when they sailed for home, there is no way to accurately estimate where every ounce of gold went or how many national economies benefited from the California Gold Rush.
Pertinent Facts About the Modern Rush to Entrepreneurship
At this point, you may be wondering what parallels can be drawn between an event that happened in the middle of the 19th century and the modern movement toward entrepreneurship. Each of the seven facts about the California Gold Rush has a certain amount of relevancy if you are considering launching your own business.
1. In the early days of the internet, it was widely believed that the potential profits that could be earned online would be easily achieved. Many people believed that online stores were a lot like the gold nuggets that early prospectors had found strewn beside rivers. The nuggets were just waiting for someone to pick them up; customers were just waiting for someone to open an online store so that they could make purchases from the comfort of home. However, as an ever-increasing number of online stores opened, the competition became more intense. Whether they were selling products they manufactured themselves, reselling items purchased from a wholesaler, or promoting a service they offered, website owners soon found that the easy money had already been claimed. Unfortunately, there are still people who hold a similar belief about the ease with which they can start a profitable business from home in their spare time.
2. Recent surveys have found that entrepreneurs, their family members, or their friends furnish up to 82 percent of all funds used to start a new business. Approximately 30% of small businesses break even, 40% show a profit, and the remaining 30% show losses year after year. Only a handful will realize substantial profits within the first decade of their existence. Although the odds are slightly better for turning a profit as an entrepreneur than as a forty-niner, neither path could be considered a sure way to make a fortune quickly.
3. On average, the businesses supporting the miners earned heftier profits than the miners. Today, there are many entrepreneurs who cater to supporting other entrepreneurs. Various companies offer software for small businesses, books to guide fledgling entrepreneurs through the process of starting and running a business, seminars to help entrepreneurs find funding sources, or other products and services to educate or motivate people who want to launch a business. Some of these companies earn far higher profits than most of their customers. Although many of these companies offer valuable or even necessary services and products, entrepreneurs should carefully balance the costs against potential gains.
4. Laws related to online activities were extremely sparse in the early days of the internet, and the few statutes that existed were difficult or impossible to enforce internationally. Although the laws are constantly changing, the legal systems covering online activities remain a confusing collection of often-contradictory statutes that can vary widely between nations, especially when it comes to copyright or trademark infringements. California had to devise a legal system to manage matters related to claims staked in the gold fields; modern governments are still attempting to codify laws and create international organizations to enforce them. In the meantime, entrepreneurs must remember that selling to or communicating with a customer in another country may require conforming to an entirely different set of laws.
5. A century ago, the competition tended to be local. Even if the competition was part of a national chain, customers typically evaluated the advantages and disadvantages of just the stores that were located in their shopping area. Today, entrepreneurs are competing in a global marketplace. During the California Gold Rush, foreign competitors had to physically relocate to the United States; today, the competition does not need to ever leave home to secure orders from American customers. By the same token, small businesses based in the United States have the opportunity to secure orders from customers in virtually any country in the world.
6. Whenever someone devises an innovative method for making money online, throngs of people rush to imitate his or her method. The internet becomes flooded with newly launched businesses offering identical products or services in exactly the same way. A few of the participants may evolve into the human equivalent of a bustling modern city, but most of them will wind up as the human equivalent of a ghost town when news of the next innovative method begins to circulate.
7. It is not particularly difficult to estimate the economic impact of the California Gold Rush. However, it is a bit more challenging to quantify the economic impact of entrepreneurs. Nevertheless, the impact is significant, and it is easier to visualize if you consider the following facts.
• Over 99% of the firms registered in the United States have no more than 500 employees and are classified as small businesses.
• Small businesses account for the creation of approximately 1.9 million jobs annually.
• Small businesses employ more than 58 million workers, which is equivalent to about 47.5% of the total private workforce.
• About 75% of the small businesses in America have no more than 20 employees.
Entrepreneurs help drive economic growth and create jobs. However, anyone planning to launch a new business should carefully consider all that will be involved if the enterprise is to succeed. No one wants to be the modern-day equivalent of a prospector who arrived too late to stake a worthwhile claim, lacked the basic supplies to work a claim, found the gold fields overcrowded and the competition fierce, and ended up losing every penny invested in a quest to find a shortcut to riches.