 James Marshall's life seemed to be one unending stream of bad luck. He was born in New Jersey in 1810, and when he was in his early 20s, his father died, leaving behind only a pile of debt. So Marshall decided to move west in search of new opportunities. Eventually he landed in Missouri where he tried to start a farm. He fell in love with a young lady who shared the name of his state, Missouri Green. But before he could enjoy his new situation, he came down with malaria, and his physician advised him that if he wanted to get better, he would have to relocate. During his illness, Missouri Green left him for a physician, possibly the same one who was treating him, but the records are unclear on that. So like many Americans who were hoping for a better life in the 1840s, James Marshall joined a wagon train on the Oregon Trail. Over a long and painful journey, he and his companions arrived at Sutter's Fort, located in part of the Mexican Territory on the Pacific Coast in July of 1845. John Sutter was not only the owner of the fort, but he was also the appointed governing official of the Mexican government, and he welcomed to the party, hoping they would be able to supply him with the labor he needed to finish some of his construction projects in the undeveloped region. Marshall was handy as a carpenter, and he was one of the few skilled workers Sutter had encountered in the area. He was able to work around the fort in exchange for wages and cattle, allowing him to start a ranch of his own. But his bad luck was not yet behind him, because only the year after his arrival, the United States went to war with Mexico. A patriot, Marshall joined the military to serve under Captain John C. Vermont. He was fortunate enough to see very little fighting, but his military duties took him away from his cattle. For long enough that when he returned, Marshall discovered that all of his cows had either been stolen or wandered off. Unable to pay the mortgage on his ranch, Marshall once again went to Sutter for work. This time, Sutter was in the market for somebody handy enough to help him build a sawmill. Marshall wasn't ideal. In Sutter's home country of Switzerland, he would have easily been able to find a worker more familiar with the construction of water-powered mills. But he wasn't in Switzerland. Marshall's skill as a carpenter made him the best available worker for the job. So Sutter offered a partnership with Marshall to scout out a location to build the sawmill. Sutter would provide the workers and the materials, and Marshall would use his skills as a carpenter to construct the mill. Once completed, they would use it to cut lumber that they would float down the American River toward the town of Yerba Buena, which some people were starting to call San Francisco. And they would split the profits 50-50. People couldn't pass up the opportunity, so he started looking for a worthwhile location. He needed to find a place that was on the river, but also had close access to a source of lumber. This combination was actually more difficult to find than you might expect, but Marshall finally found a suitable spot 40 miles upstream from Sutter's fort, at a place the local Indians called Kaloma. For labor, Sutter was fortunate enough to have a group of Mormons from the New Salt Lake settlement looking for work to help provide for the struggling community. Sutter hired them in September of 1847, and the Mormons proved to be hard workers, but the autumn weather was unfriendly, and the workers kept getting sick, having to constantly travel the Sutter's fort to recuperate. By December, Marshall was getting nervous about the ability to complete the mill. During all these other troubles, Marshall came to find the Mormon workers themselves conducting their own rebellions against their cook, Ginny Wimmer, who used her control over the food as a way to exercise control over the men. Finally around Christmas, the Mormons mutinied against Wimmer and demanded that they be granted enough time away from constructing the mill to also build new living quarters independent of the tyranny of Ginny Wimmer. Marshall had little choice but to allow them to do so, as there was no possibility of replacing them. So by January, the construction of the mill was continuing, but the prospects of success were looking fragile. Marshall reacted to this by keeping constant supervision of the construction. In the morning, he would take a walk down the channel to observe the progress that had been made in construction the day before. But one morning, usually dated as January 24th, though the exact date is uncertain, Marshall spotted something during his walk. About 200 yards from the mill, his eye caught some sparkles shining in the morning sun. He went to investigate, and he ended up pulling a couple of small yellow nuggets from a shallow part of the river. James Marshall had discovered gold. I'm Chris Calton, and this is the Mises Institute podcast Historical Controversies. In today's episode, we are going to look at California's rapid move towards statehood and the critical role it would play in the sectional crisis of 1850s. John C. Framont was a captain of the U.S. Army in the mid-1840s, and he led his band of cavalrymen across the Rocky Mountains and into the Mexican territory in California. Ambitious, Framont was anxious to liberate California from Mexico. In 1846, before receiving any word that the U.S. had declared war on Mexico, Framont took action. Hearing rumors of the commandant of California, Jose Castro, was encouraging local Indians to attack him and his men, Framont decided to strike preemptively, attacking the Indian village, slaughtering as many as 175 of them. Framont was hoping he would provoke a reaction from Castro that would allow him to act in a way that he could call self-defense, but his provocation did not work. So after heading up north to Oregon for a while, Framont led his men back to California, where he continued attacking Indian villages, avoiding confrontation with Mexicans, until the war with Mexico had officially started. But the war still hadn't started when some American settlers in California appealed to Framont for help. They had started a rebellion, now known as the Bear Flag Revolt because of the flag raised by the Americans against the Mexican government in June of 1846. Congress had actually declared war against Mexico the previous month, but news of this declaration would not reach California until August. So if Framont were to help these settlers fight, he would be doing so without permission from the U.S. government. But Framont was impatient, and this gave him an excused act. He and his men entered the conflict, and Framont seized Sutter's Fort. The Bear Flaggers announced the Republic of California. But this was to be short-lived after word came that American forces had secured Monterey as part of the Mexican War. Now Framont could officially join the war against Mexico, so he raised a regimen of American settlers, including James Marshall, and led them to Monterey. But by the time they got there, the fighting was over, so Framont went looking for action elsewhere. He joined Commodore Robert Stockton in San Diego and marched with him toward Los Angeles, where they secured the city. Then, in order to recruit more troops, Framont went north only to find out that fighting had resumed in Los Angeles, and he was missing out on the action, so he quickly raced back to help put down the uprising. Thus, Framont was seen as a liberator of California, and Stockton rewarded him by making him governor of the territory. An office Framont would enjoy for two months. But when Army General Stephen Kearney showed up, he tried to take control of California from Stockton. This led to a dispute between the two authorities over who outright whom, and most people believed that Stockton was the senior officer, including Framont, who sided with Stockton and the Navy over his own branch of the military, which was the army. Unfortunately for Framont, Kearney won the fight for authority and had Framont arrested for mutiny and insubordination, basically, in that he showed a lack of solidarity with the army that both he and Kearney were a part of. Now, this hero of California faced a military court, which found him guilty on all charges, but President Polk muted Framont's sentence, saying that he was guilty of insubordination, but innocent of mutiny, and he was going to allow Framont to return to military service. But Framont took insult at being declared guilty of any wrongdoing at all, so he resigned from his post, determined to pursue his ambitions elsewhere. After the war, John Sutter regained control of his fort. Although he had been acting as a Mexican official, the Swiss held no real loyalty to either government. James Marshall was back in his employ, as you'll remember from the opening anecdote, when Marshall discovered gold, the United States and Mexico were still technically at war. After showing his findings to some of his workers at Coloma to verify that what he found was indeed gold, Marshall reminded his men that their job was to construct a sawmill, and if they wanted to pan for gold, they would have to do so in their off hours. Then Marshall made the trip to Sutter's fort and shared the discovery with Sutter as well. Marshall had only left Sutter's fort two weeks prior when he was received, so Sutter knew something was up. The fact that Marshall was behaving oddly only added to the curiosity. The situation made Sutter so nervous that according to his own account of the event, he actually glanced to see that his quote, rifle was in its proper place, end quote. Finally Marshall revealed why he was so excited and he allowed Sutter to verify the gold himself by testing it with nitric acid. Sutter measured the density and the weight of the nuggets and declared that the gold was quote, of the finest quality of at least 23 carats. Back at the sawmill, the news of the gold discovery was slowly leaking out until it finally reached one of the Mormon settlers who had recently opened a general store there, named Sam Brannon. Up to this point, people were at least trying to keep the gold discovery quiet so that they would have less competition for it, but Brannon was in a different position. Since he owned a general store, he liked the idea of new customers, so he purchased a jar of gold dust and departed for San Francisco. Once he got there, he advertised the discovery by walking around the town, waving his jar of gold dust, shouting, gold, gold, gold from the American River. Now this was actually quite smart for Brannon and the years to come, there would be a few people who would get lucky in their search for gold, especially those who got there first, but most of the 49ers that were about to rush to California hoping to strike it rich would end up lucky if they found enough gold dust to scrape by before finally resorting to wage labor for larger mining organizations. But there were some people who did very well during the gold boom. One very lucrative occupation was prostitution as most of the new California settlers would be young unmarried men. The other lucrative occupation would be the one held by Sam Brannon, and that would be the owner of a general store who would profit from selling supplies to the new inhabitants. Sam Brannon's plan worked and it was his marketing in San Francisco that truly set off the rush to California. When the territorial governor of California, Colonel Richard Mason and his adjutant, William Tecumseh Sherman learned about the gold discovery, they made their way north to see it for themselves. The first group they found digging for gold was the 300 Mormons digging on what was being referred to as Mormon Island. Sam Brannon was among them collecting Thai, this which upset enough of the Mormons that one actually approached Colonel Mason to ask for intervention and reply, Mason said, quote, Brannon has a perfect right to collect the tax if you Mormons are fools enough to pay it, end quote. Because the Treaty of Guadalupe Hidalgo had recently been signed, Mason saw the territory of California and therefore the gold in it as being the property of the American government. But because he considered it beneficial for the country that miners were extracting the gold, he chose not to interfere. In fact, he told Sherman to draft a letter to Washington to let the president know about the gold discovery. In it, Sherman reported that as much as $50,000 in gold was being extracted every day, if not more. Sherman also suggested to Mason that he take some gold along with the letter to add credibility and Mason agreed to send 200 ounces in a metal container. They then gave the letter and the gold to Lieutenant Lucian Loser, I don't know if I'm pronouncing that right, it's spelled L-O-E-S-E-R, with the instructions to deliver them to Washington as quickly as possible. When Polk received the message in November of 1848, he announced the gold findings in California and this is often pinpointed as the start of the gold rush to California, but word had already been spreading, so Polk's announcement only served to hasten the gold rush. Word of the gold discovery wasn't confined to the United States either. Settlers came from South America, Europe, East Asia and Australia to name just some of the more significant places. One newspaper in Australia tried to make fun of the people rushing off in hopes of finding gold. It referred to the gold mining there as diggins and the article was written as sarcastic Q and A. What class ought to go to the diggins? It read, then answered, persons who have nothing to lose but their lives. Another question was, what is the best thing to do when you get to the diggins? And the answer given was, go back home. The final question and answer in the article was, what will be the ultimate effect of the discovery of the diggins? To raise prices, to ruin fools, to demoralize a new country first and settle it afterwards. This was actually more prescient than anybody at the time could have realized, but it nonetheless failed to deter many hopeful Australians who figured that California couldn't be worse than the Australian Outback. But most of the 49ers were Americans. Some sailed around South America, which was a trip that cost about $300. Others opted to go over land, which required a capital investment of more than $300, but the supplies purchased would be able to be sold in California to make the overlander out cheaper in the long run. Americans taking both routes raced into California to try their luck. While the news of the gold was exploding around the country, John C. Vermont was hoping to find adventure elsewhere in the American West. In 1849, well after the gold rush had already begun, he was returning to California from the Rocky Mountains, where he nearly lost his life to the cold, a fate that some of his men did not escape. On the road back, he ran into a group of Mexicans also headed to California, which seemed odd now that California had been acquired by the U.S. So, Vermont asked why they were headed there. They were taken aback by the question. They were going to dig gold, of course, just like everybody else. This was the first Vermont had heard of the gold discovery, so he continued to ask them more questions about it, but the Mexicans couldn't offer much in the way of answers, so Vermont continued his journey back to California, now eager to find out more. Although he did not know it at the time, luck was on Vermont's side. Before he left California, he had given $3,000 to an American consul named Thomas Larkin to purchase from Vermont some land to start a ranch on near San Francisco. Larkin did not follow these instructions, though, and instead he purchased a tract of land that Vermont wouldn't even see for another year, located in the Sierra Foothills, called Mariposa. The location was far away from civilization and Vermont had essentially been swindled. But when he finally arrived at Mariposa, he found more Mexicans in the area and immediately hired 28 of them to dig gold and do other work for him. If they found gold, he would split the profits. This turned out to be very lucrative for Vermont. The first share of gold he and his wife, Jesse, received was worth about $18,000, and more gold would come in quite regularly, quickly making Vermont one of the richest men in the state. What would later be discovered is that from Vermont's Mariposa estate was connected to a system of gold veins that ran from Mariposa to Coloma, and it was this set of veins that they named the Motherload if anybody is ever wondering where we get that phrase from. In the summer of 1849, the new acting governor, General Bennett Riley, called for a convention to draft a constitution for California. This was actually a pretty big deal because the U.S. government hadn't even organized a territorial government yet, so this was the first time that a state was going to try to bypass the territorial phase altogether. So 48 delegates came together at Monterey, California in September. 13 of the delegates, including John Sutter, were not born in the United States, and some of them had only been in California for as little as four months. They assembled in Colton Hall in a room decorated with an enormous portrait of George Washington surrounded by two American flags draping down from each side. The first thing they did was to adopt a bill of rights for California, which was similar to and modeled after the U.S. Bill of Rights, but it had an important difference. It had a clause saying, neither slavery nor indentured servitude and less for the punishment of crimes shall ever be tolerated in this state. This clause was actually a bit of a surprise. The original draft didn't include anything about slavery because there were a respectable number of Southern delegates, but an Irish New Yorker named William Shannon offered the amendment, and every delegate voted in favor of it, Northern and Southern alike. Like many of the anti-slavery people in the country at the time, the primary reason that this clause was so readily supported was because it would prevent slave labor from competing with free labor. Another clause was proposed that added, quote, nor shall the introduction of free Negroes under indentures or otherwise be allowed, end quote. This addition, which was a common law in territories that prohibited slavery, sparked a fierce debate in California. William Shannon opposed the clause, saying that, quote, free men of color have just as good a right and ought to have to immigrate here as white men, end quote. Another delegate named Kimball Demick, also of New York, backed him up, he argued, quote, let it not be said that we, the first great Republican state on the borders of the Pacific, who have it within our power to spread the blessings of free institutions even to the remotest shore of the Eastern world, let it not be said that we have attempted to arrest the progress of human freedom, let this constitution go forth from this convention and from the new state, a model instrument of liberal and enlightened principles, end quote. The debate on the settling of free blacks was heated and continued for hours and the provision was voted into the constitution but was dropped at the last minute so it did not make it into the final draft. The convention lasted for six weeks and the completion of the Monterey Constitution, as it was called, was celebrated by throwing a great ball in the city in which delegates showed up in their military uniforms. They feasted and drank until midnight. John Sutter, who had originally sided with the Mexican government, drunkenly proclaimed it to be the happiest day of his life and it was Sutter who was elected to lead the delegates to General Riley's quarters to present him with the completed constitution. General Riley selected John from Mont who is now among the most prominent men in California to take the new constitution to Washington. Despite his trial and embarrassing resignation from the military, many saw him as the liberator of California and the wealth he had accrued by lucking into ownership of much of the mother load represented exactly the kind of success people imagined for themselves in California. Nobody else better represented the dreams that accompanied California settlement so they elected him as their first senator. Also part of his appeal and being elected senator was the fact that he opposed slavery. This was a position that would be very important in how he is remembered today since he would become a union general in the Civil War. But while he never seemed to have been pro-slavery, his principle to anti-slavery position was something he gained through marriage. His wife was the daughter of Thomas Hart Binden, an anti-slavery senator from Missouri, though Benton's anti-slavery views were also more of an extension of his wife, Jesse Framont's mother, who had freed her own slaves as a matter of moral principle. Thomas Benton was hardly so passionate but he stood by his wife's principles and they were passed down to their daughter, Jesse, who made very clear when she married Framont that she would have nothing to do with slavery and neither would he. During the Monterey Convention, anti-slavery delegates frequently met at the Framont household and this played a large role in helping Framont gain one of California's two Senate seats in December of 1849. So Framont took the Constitution to Washington as a man of gold rush success, a military hero in the eyes of his constituents and the first senator-elect and the son-in-law of prominent senator from Missouri as well as an anti-slavery politician. Until John arrived in Washington to seek admittance for California as a free state, the debate over the Wilmot Proviso that was proposed at the beginning of the Mexican American War was purely abstract. Now Congress had to face the real prospect of admitting a free state which would upset the balance in the Senate between the free and slave states. This application reopened the sectional disputes that had already been mended twice since the ratification of the Constitution. Henry Clay was the driving force in passing the Missouri Compromise of 1820 that officially defined the North-South divide over slavery and Henry Clay was the driving force behind the compromise of 1833 over the tariff of abominations that quelled their nullification debates between John C. Calhoun and the Jackson administration. Once again, Henry Clay would step up to propose a compromise that would hopefully diffuse the tensions between the slave and free states one last time. Clay's compromise included concessions to both the North and the South. First, it would admit California as a free state. Next, it would finally address the question of what to do with the rest of the Mexican session which was the territory acquired by the U.S. after winning the war against Mexico. Clay proposed organizing it under the territories of New Mexico and Utah though at the time these territories were larger than their modern boundaries and these new territories would not have a restriction on slavery. Instead, the issue of slavery would be decided by popular sovereignty meaning that the people of the territory could vote on whether or not they would allow slavery into their new state when it became a state. Third, he addressed the border dispute between Texas and New Mexico. The Texas boundaries would not include any of the New Mexico territory that they were claiming but in exchange the United States government would assume $10 million of Texas's debts. Fourth, the District of Columbia would outlaw the slave trade though slavery itself would still be legal. This was important in the North because slave auctions took place very near the capital where foreign visitors could see them which was embarrassing to the anti-slavery citizens. And finally, the provision that would prove to actually exacerbate rather than quell attention over the next few years a new fugitive slave law was proposed. There was already a fugitive slave law that was passed in 1793 but the slave state politicians felt it to be too weak. The new law stipulated that fugitive slaves would no longer be tried in front of state officials and instead would be tried in front of federal judges. As a blatant example of negative incentive it also stipulated that a judge who ruled the slave to be free would be paid $5 but if the judge ruled that the slave was the legal property of the slaveholder making the claim of ownership the judge would be paid $10. This was weakly justified on the grounds that such a ruling required more paperwork. The new fugitive slave law would also legally compel citizens of the North to help apprehend runaway slaves which many Northerners saw as an assault on their own liberties regardless of their feelings on race and slavery. But I'll be talking more about these controversies in the following episodes. Henry Clay did not want these provisions passed as a single bill but the compromise was put in the hands of a committee called the Committee of 13 who organized them in a single bill called the omnibus bill. The debate over the bill was heated. John C. Calhoun represented the opposition to Clay's compromise. He said that California did not even have the right to form a constitution because the US had not organized it as a territory yet. Had they won their independence from Mexico, he claimed, like Texas did, then it would be legitimate for them to form their own government and apply for statehood. But Clay said, quote, the individuals in California have usurped the sovereignty of the state and the authority of Congress and have acted in open defiance of them both, end quote. This kind of stuff is important to keep in mind with Calhoun. He was a state's rights guy or at least that's how he's known. But at the degree that he was a state's rights guy, he was not a dissentralist. He was not an individualist. He did not believe in self-government. What he believed was that the states, being the governments within them, had power. So when people talk about state's rights today, it's usually a call for shrinking of the federal government and a decentralization of authority. But that wasn't really what Calhoun was concerned with when he talked about state's rights. The citizens of California did not have the right, in Calhoun's view, to draft a constitution because it usurped the authority of Congress. He asked, quote, can you believe that there is such a state in reality as the state of California? Then he answered his own question, no, there is no such state. It has no legal or constitutional existence. It has no validity and can have none without your sanction, end quote. So his view on state's rights was that if the territory was not a state, the people in it did not have rights unless those rights were granted by the government. My view of Calhoun is more just that he was a sophist with an agenda and he supported state's rights when it suited him. He supported nullification when it suited him. But he also supported centralization and national sovereignty when it suited him which would be the case when Northern states started to nullify the fugitive slave law as we will explore in the next episodes. So while I think Calhoun was right about certain things such as his compact theory of the constitution and nullification, he was right for the wrong reasons. And as an extension to this, he was wrong about a lot of things as well. So I'm not willing to accept him as any kind of principled, limited government person because it just doesn't seem to be the case. But at the end of his argument, Calhoun threatened secession if California was admitted. Quote, the cry of union, union, the glorious union, he said mocking Northerners, can no more prevent disunion than the cry of health, health, glorious health on the party of a physician can save a patient lying dangerously ill, end quote. Just like the tariff dispute from two decades earlier, Daniel Webster opposed Calhoun. Quote, I wish to speak today, Webster said, not as a Massachusetts man or as a Northern man, but as an American. Webster was establishing his argument as one of nationalism and his speech largely was made to address the threat of secession. In fact, Webster actually claimed that the Wilmot Proviso was unnecessary and acknowledged that the South had a right to be upset. However, Webster made clear they did not have a right to be so upset as to speak of secession. And he denied that a peaceful secession was even thinkable. He said, quote, peaceable secession. Sir, your eyes and mine are never destined to see that miracle. The dismemberment of this vast country without convulsion, the breaking up of fountains of the great deep without ruffling the surface. Who is foolish? I beg everybody's pardon as to expect to see any such thing. Sir, he who sees the states now revolving in harmony around a common center and expects to see them quit the places and fly off without convulsion may look the next hour to see the heavenly bodies rush from their spheres and jostle against each other in the realms of space without causing the wreck of the universe. There can be no such thing as peaceable secession. Peaceable secession is an utter impossibility. Is the great constitution under which we live covering the whole country? Is it to be thawed and melted away by secession as the snows on the mountain melt under the influence of a vernal sun disappear almost unobserved and runoff? No, sir. No, sir, I will not state what might produce the disruption of the union. But sir, I see as plainly as I see the sun in heaven what that disruption itself must produce. I see that it must produce war and such a war as I will not describe, end quote. This speech is important and in fact the invocation of war by Webster on the issue of secession is especially important in understanding Southern views when they finally would secede. Southern perception that there would be war waged by the North in 1861 was not delusional. It was rooted in a history of warnings by Northern politicians that this would be the exact result of secession. But for the time being, we still had the omnibus bill to deal with. Thomas Benton, from Mont's father-in-law, refused to support an all or nothing bill and he was enraged at the concessions of the slave holding South even though he was from a slave state himself. He was also an advocate of Western expansion and he did not approve of holding California statehood hostage against issues such as slavery in the District of Columbia even though it was a provision he would otherwise support. He also severely disliked the Mississippi Senator Henry Foote who is one of the drivers behind making the compromise a single bill. In fact, this feud between Benton and Foote became violent at one point. On April 17th, Foote called Benton a columniator meaning a person who makes false claims about somebody and Benton angrily rose from his desk and started storming toward Foote. Benton was much larger than Foote but Foote was armed so he pulled a revolver, cocked it and pointed it at Benton. Let the assassin fire! A pistol has been brought here to assassinate me. Foote claimed that he pulled a revolver in self defense which is plausible. It was not uncommon for members of Congress to be armed during this time and Foote was no match for Benton but Benton didn't buy it. No assassin he shouted has a right to draw a pistol on me. The incident was stopped by the intervention of other senators who took the revolver from Senator Foote but it illustrates the degree of hostility that existed in Congress during these years and it would not be the last act of violence to take place on the floor of the Senate either as we will see in later episodes. Ultimately the omnibus bill was voted down. Northern senators didn't want to be seen as voting for the concessions of the slave power in the South and Southern senators did not want to be seen as voting for concessions to Northern aggression as was the common phrase for the North's anti-slavery efforts. Henry Clay was disappointed but not surprised that the bill was defeated so he wanted to try it again as separate pieces of legislation but he was old and tired at this point so he let the mantle pass to a young ally named Stephen Douglas the Senator from Illinois. Douglas cut the bill up into each separate provision and saw that each one was voted on. This made it possible for Southern senators to vote against the admission of California for instance and Northern senators to vote against the fugitive slave law but as individual pieces each provision gained enough support to pass thus completing the compromise of 1850. Henry Clay lived to see this third and final compromise as the great pacificator pass but he died shortly after so he did not see how this compromise actually served to unravel the union rather than to save it. No provision in the compromise of 1850 caused more hostility between Northern and Southern interests than the fugitive slave law and that will be the subject of the next three episodes. For more content like this, visit Mises.org.