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Another Perspective

Money in California in 1851

One of the challenges I faced while writing Hangtown was how to describe financial transactions. Exchanging money for goods was more difficult in the 1850s than it is today. Here’s why.

The first complication was paper money was outlawed: the California Constitution of 1850 prohibited it. Paper money at the time was regarded as nothing more than an I.O.U. issued by a bank for the gold or silver it received in a deposit. Because banks frequently went out of business, the paper money they issued was worthless.

A second problem involved the use of coins. In 1851, the United States was just beginning to recover from a 30-year coin shortage. In 1795, gold speculators acquired every U.S. coin they could and shipped them to Paris where they sold them for a profit. To curtail this practice, President Thomas Jefferson in 1804 ordered a halt to the production of U.S. gold coins. Nevertheless, by 1813 98% of all U.S. gold coins had been sold abroad for a profit. The same was true for U.S. silver dollars: none was produced between 1804 and 1840, which left little cash in circulation. Consequently, outside of cities, cash was rarely used and when it was, gamblers hoarded it for their own use.

This meant most financial transactions were carried out in some other way, usually by bartering. In Hangtown exchanging gold dust for goods was also common. Every merchant (and often the miners too) had a scale they used for weighing the gold dust and the calculation they used was one once of gold dust equaled $16 dollars.

Besides U.S. gold or silver coins, bartering, and the use of gold dust, there was another means for transacting business: foreign coins. At least half of the gold rush population came to California from other countries and they brought with them money from home and from the countries they passed through on their way. While silver coins from Mexico (Reales) were utilized the most, coins from Peru and the Spanish West Indies were in large supply too. Merchants also dealt with shillings (England), francs (France), florins (Florence), pesetas (Spain), guilders (Netherlands), and rupees (India).

Instead of getting bogged down in these details each time a financial transaction occurred in the story, I chose to ignore the problem.

When it comes to financial transactions, we’ve come a long way in the last 164 years, haven’t we?
This information came from Old Sacramento Living History Program, 101 I Street, Sacramento, CA 95814.
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