The various gold rushes are what kept the monetary gold standard from turning deflation into something very bad. As noted in the introduction to 2020's "Crisis Chronicles: The Long Depression and the Panic of 1873"
This is what we would like to avoid.
For 24 years, until shaking off the 1893 panic, the world experienced a general decline in prices, the so-called "good deflation", accompanied by spasms of unemployment and enlivened by the inflationary gold rushes that expanded the money supply: South Africa, Deadwood, some of the later Australian strikes and culminating in the Klondike and Nome discoveries.
Combined with the price-reducing effects of the second industrial revolution it was a recipe for disruption.
That was written on March 15 of last year as an oblique explainer of what the powers-that-be had to be thinking as the S&P 500 crashed from its February 19 all-time high of 3393.52 to its Panic low of 2191.86 on March 23, a 35.4% drop in 33 days.
And the headline story from CrimeReads, April 14:
America was on edge, inequity was bringing about class warfare. And then there was news of gold in Alaska.
America’s Gilded Age was always rotten at the core. Glittering estates and palaces of commerce for the Vanderbilts and the Carnegies, the squalid tenement and factory floor for the masses. Two entire generations of workers had been sacrificed to that grinder to make the Rockefellers rich. But when the gleaming veneer cracked, the whole system fell apart, and the country lapsed into a stupor like it had never known. The Panic of 1893 was the worst depression the United States had yet endured.
The railroads—the revolutionary technology of the age, and engine of overnight trade and communication—had been overvalued and overbuilt, growth fueled through acquisitions that hid inherent instability. Companies like Union Pacific were so big, no one thought they could fail, and yet one by one they crumbled. Over 150 railroads would go bankrupt by the end.
Entrepreneurs had borrowed heavily to fuel their expansions, but eventually the speculative financing imploded. Wall Street suddenly realized it was overleveraged and many companies’ paper worth far exceeded the reality. Bankers got spooked and stopped lending money, businesses of all kinds started to go broke, workers lost jobs, homeowners defaulted, and then the banks fell too. In 1893 alone, nearly six hundred banks and fifteen thousand businesses went bankrupt.
Those who lost their homes went west. They settled in Seattle, Portland, San Francisco, Los Angeles. They went west because Americans had always gone west for opportunity but this time they didn’t find any, because the Panic had hit the fragile new economies in Washington and California especially hard. Machines took jobs from skilled workers, as everything from shoes to wagon wheels was now made in factories. Global markets were increasingly tied together, and while business owners made record profits, real wages for average workers declined. Homes lost so much of their value that across the country mortgage debt far outstripped equity. The unemployment rate hit nearly 20 percent. A deep and wide depression took hold of the country and did not shake its grip for years.
When these pillars toppled, the public lost faith in institutions of all kinds. The Senate was so packed with the wealthy elite that it was known as the Millionaires Club. The politicians were seen as protectors of the monopolies, the banks, and the Wall Street magnates, and the gap between rich and poor was a widening chasm.
There was a great uprising. The movement was called Populism, and in their call to action they proclaimed that “The fruits of the toil of millions are boldly stolen to build up the colossal fortunes for a few.” William Jennings Bryan, their firebrand senator, crisscrossed the country, packing halls with the power of his oration, railing against businessmen and government inaction alike. The “soldiers” of Coxey’s Army—hundreds of out-of-work protesters demanding jobs—marched on Washington in 1894, and St. Louis and Baltimore were set ablaze by rioters after young men on union picket lines were shot in the streets by police.
The contrast between tycoons and tramps was embodied in the dual financial systems that existed simultaneously. The United States used two types of dollars, those backed by gold and those backed by silver. While the two should nominally have been worth the same, in practice there was one system for the rich and another for the poor. A gold dollar was worth more than a silver dollar. The government set a firm exchange rate of sixteen ounces of silver for one ounce of gold, but while silver was available widely, gold was scarce on commodity markets and in government treasuries. So for all practical purposes, a silver dollar was worth only 85 cents, and thus the rich hoarded the full-worth gold dollars for themselves, and left the cheap silver for everyone else.
When the Panic originally struck, the Congress and President Grover Cleveland moved to restore business confidence at the expense of workers. The Populists called corporations the root of the problem, acting as overlords and masters of the people, and said that Washington had sold out to J. P. Morgan and the rest of the Wall Street bankers, who only grew wealthier making personal loans to the government.
The old-time political machines and pundits got nervous, as the Populists gained in the polls. In a rebuke to the party establishment, the Populist hero Senator Bryan gained the Democratic nomination for president in 1896. In response, massive corporations like Standard Oil and the Chicago meatpackers funded William McKinley, the Republican nominee who promised to keep the strong gold dollar and impose high tariffs to protect American businesses. John D. Rockefeller and his fellow industrialists spent unprecedented millions of dollars in an effort to put their man in office.
It worked. The old line held. The Populists lost in the presidential election of 1896, and the depression dragged on.
In a last gasp America’s Gilded Age had finally come to an end. A subdued and burdened malaise smothered the nation. The country had lost hope. And the desperate poor seemingly powerless to change their fate.
And then, in July of 1897, the answer to all of America’s problems appeared on the front page of every newspaper in the country....
....MUCH MORE
2018's "Norway to Map Deep Sea Mineral Deposits"had this:
....Meanwhile, at the other end of the Northern Sea Route, also via Maritime Executive:
Dredging for Gold in the Bering Sea
The snow has thawed enough for the gold dredging season to kick off, and dredgers in Nome, Alaska, are ready to be on the water in search of hidden treasures on the Bering Sea floor. With boats in the water and deckhands aboard, these gritty and independent men and women are ready to hit the season hard in hopes of finding their lucky cache.I still have trouble wrapping my head around the Nome gold rush.
However, before these pioneers can seek out their awaiting treasures on their unique vessels, they must first obtain an inspection from the U.S. Coast Guard. An approved Coast Guard vessel inspection is also required by the Department of Natural Resources in order for dredgers to obtain a seasonal permit to dredge in Nome. They are off to a later start than usual this year, which made for a bustling week of inspections that picked up steam as the week went on...MORE
Compared to the horrors of walking to the Dawson/Yukon/Klondike gold rush:
Where most of the 100,000 or so adventurers struck out completely and those that did find some 'color' suffered freezing in the winter and mosquitos in the summer along with backbreaking labor to vary the misery, the discovery of gold at Nome was a day at the beach.
From Wikipedia:
The Nome Gold Rush was a gold rush in Nome, Alaska, approximately 1899–1909.[1] It is separated from other gold rushes by the ease with which gold could be obtained. Much of the gold was lying in the beach sand of the landing place and could be recovered without any need for a claim....Although some who had come up the Dawson trail and failed ended up crossing Alaska along the Yukon river, other later arrivals took ships up from Seattle which deposited them at the beach.
That was followed by "Max Hirschberg’s 1,200 mile bike odyssey to the Klondike Gold Rush in 1900" , along with a few others over the years.
