San Francisco 1848 - Fixing the price of gold

[RWB]

Two important dates in California Gold Rush history.

 

"JULY 31, 1848 – His Excellency Governor Mason consents to receive gold dust in payment of duties at the custom house at a low rate [note: this was about $10 per ounce], with right of redemption of the whole by the payer, within one hundred and eighty days, or of the half within ninety days, upon giving the proper amount in gold or silver coin. Several public meetings have been held on this subject, in which the community was much interested.

 

SEPTEMBER 9 – A great public meeting was held to consider how best to fix the price of gold dust at a certain reasonable amount, to pass as a currency in the country, during the scarcity of coin, and until a branch Mint could be established. This was supposed to be the largest meeting that had ever assembled in San Francisco, most of the old inhabitants having returned for a season from the mines. Dr. T. M. Leavenworth was called to the chair, and Mr. J. D. Hoppe appointed secretary. The meeting unanimously decided and resolved that sixteen dollars an ounce was a fair price for gold dust, and that it ought to be taken in all business transactions at that rate. A committee was also appointed to urge upon Congress the immediate establishment of a branch mint at San Francisco."

 

[Prior to this meeting, gold dust (actually, small granules and flakes) passed for between $14 and $15.75 per ounce, but occasionally as low as $4 for an ounce. The accepted price of $16 placed the content of dust at 0.800 fine, but the actual was about 0.890 gold with the balance silver. Private coin issuers made a profit on the spread between the local price and the US government price of $20.67. Once the US Mint opened, gold was paid for at the legal rate and this drove private minters out of the market. – RWB]

 

[KeyMan64]

Cool

[tenacious]

I read the thread title and before I looked at who posted it I thought, "That sounds like a RWB thread."

 

Thanks for all of your informative and enjoyable posts.

[SkyMan]

Interesting!

[GoldFinger1969]

I take it the wide disparity between California gold prices and the official price from the U.S. Mint was because alot of gold was 'stranded' out West, much like natural gas and/or oil can sometimes sell at a big discount if it can't get to market ?

 

Plus, information moved much slower if at all back then. The price of $4/oz. though seemed very wide, wonder how long that persisted. But I would think a price in the high-teens might stay for a while given all the risks out West.

[BillJones]

I recall from when I was reading about the 1848 CAL. quarter eagle that territorial governor Mason added an "oyster can" full of gold from the San Francisco custom house that he acquired at $10 and ounce. He added it to the 228 ounces (net amount that arrived in Washington, DC) that he set east that would eventually be made in the 1848 CAL. quarter eagles.

[johnny9434]

a cool read rwb, thanks

[DaveG]

GoldFinger1969,

 

I take it the wide disparity between California gold prices and the official price from the U.S. Mint was because alot of gold was 'stranded' out West, much like natural gas and/or oil can sometimes sell at a big discount if it can't get to market?

 

The price differential had more to do with the unrefined gold being of uncertain purity (and, therefore, value) than the gold being "stranded." After all, every ship that came into port had cargo on which the miners and San Franciscans could spend money. Also, once the initial pressure eased, crews stopped jumping ship and could, therefore, take the gold to civilization. The oversupply of gold was more expressed in high prices for everything the miners bought rather than a low price per ounce.

 

Once the private refiners got going (and especially once the mint was established) the price of gold would have risen to its proper value.

 

 

Plus, information moved much slower if at all back then. The price of $4/oz. though seemed very wide, wonder how long that persisted.

 

Information always moves by the fastest available means, which was pretty fast, even back then. I expect that the $4/oz. price only happened in isolated incidents.

 

[GoldFinger1969]

Thanks Dave...I gotta get that From Mine To Mint book soon.

[RWB]

The OP quote is from "The Annals of San Francisco" (1855) by Frank Soule, John H. Gihon and James Nisbet.