Hernando Montañez.
Gold is a chemical element with an atomic number of 79. It is a yellow metal that is highly malleable, ductile, and resistant to corrosion. Throughout human history, gold has been valued as an ornament and as a medium of exchange. The settlement of the Caribbean island of Dominica by Spain in the 1490s was spurred by the discovery of gold there by Christopher Columbus in 1492. There was a series of gold strikes around the world in the nineteenth century, two of the most notable being the California Gold Rush of 1838 - 1845, and the discovery of gold in Russian Alaska by Kramer Associates in 1896.
California Gold Rush[]
The California Gold Rush began on 2 February 1838 when a Mexicano subsistence farmer in Santo Tomás named Hernando Montañez found small nuggets of gold in a creek that ran through his farm. Word of the discovery quickly spread, and by the middle of February dozens of gold-seekers were panning for gold in the creek. Word spread to the rest of California by April, to Mexico City in early May, and to the Atlantic coast of the Confederation of North America by June.
President Andrew Jackson of the United States of Mexico was initially uncertain how to respond to events in California, but in September 1838 he sent most of the Mexican Army to the state to assist local authorities in sealing off the state to outsiders. Jackson declared, "This is Mexican gold, and will be used to serve Mexicans. All others will be given a clear notice: leave or be shot."
John Mason of California.
Travel to the gold fields was initially hampered by the depressed state of the economy in the wake of the Panic of 1836. However, an enterprising cotton planter in Jefferson named John Mason was able to make his way to the gold fields and stake a claim that quickly made him a wealthy man. Jackson's declining health left the Continentalist Party in disarray, and Mason was able to use his sudden wealth and fame as a successful prospector to gain the party's presidential nomination in July 1839. Mason proved to be a poor campaigner, and he led the Continentalists to defeat at the hands of Senator Miguel Huddleston of the Liberty Party. Huddleston was inaugurated as president on 5 September 1839.
California had few transportation links to the rest of the U.S.M. at the start of the gold rush, which prompted a group of businessmen from Jefferson and France, headed by Jethro Baker and Maurice Duforge, to organize the Jefferson and California Railroad Company in 1838. The J & C Railroad began laying tracks from Henrytown on 4 February 1839, and from San Francisco on 11 April, supervised by French engineers. Although the railroad would not be completed until 1848, it opened the western states to settlement by Jeffersonians and European and North American immigrants. Other railroad and steamship companies were organized in the 1840s, resulting in a sudden demand for coal and iron, which was initially met by French imports, but ultimately led to the creation of mining and smelting industries in Jefferson, Mexico del Norte, and California. The discovery of gold, along with Jackson's retirement in 1839, resulted in a railroad boom in the U.S.M. By 1875, the U.S.M. had more railroad miles per capita than any nation in the world.
Following the economic recovery of 1840 - 1841, thousands of North Americans attempted to make the trip to the California gold fields. Although many were unable to make it past the Army cordon, thousands were able to evade or bribe the soldiers, most notably a German miner named Bernard Kramer. Thousands of would-be prospectors also traveled to California from the rest of the U.S.M. The population of Jefferson City and other cities in the cotton region of Jefferson fell during the gold rush, and by 1844 even the plantation owners were talking about leaving their fields for California.
The discovery of gold in California changed the political balance of power in the U.S.M. Within five years of the discovery at Santo Tomás, California had become the second most populous state, and California gold had surpassed Jeffersonian cotton as the country's most valuable export. The port of Henrytown became the center of banking and commerce in Jefferson, leaving the state's cotton aristocracy suffering a loss of wealth and prestige. This set the stage for Pedro Hermión's rise to leadership of the Continentalist Party.
| Year | Population | Gold Production |
| 1838 | 45,000 | 5 |
| 1839 | 47,000 | 486 |
| 1840 | 106,000 | 1,260 |
| 1841 | 198,000 | 1,320 |
| 1842 | 258,000 | 1,334 |
| 1843 | 407,000 | 1,293 |
| 1844 | 598,000 | 1,592 |
| 1845 | 665,000 | 1,929 |
| 1846 | 712,000 | 2,004 |
| 1847 | 902,000 | 1,892 |
| 1848 | 1,110,000 | 1,692 |
(Gold production in thousands of Fine Troy Ounces.)
California gold production continued uninterrupted during the Rocky Mountain War with the C.N.A. between 1845 and 1853. Since the North American naval blockade prevented the export of the gold, it remained in Mexico until the fighting ended. The government of President Hector Niles was able to use these gold reserves as reconstruction capital to repair the damage caused by the war and stimulate the Mexican economy.
Yukon Gold Strike[]
K.A. President Diego Cortez y Catalán.
The presence of gold in Russian Alaska was unsuspected until the 1890s. Diego Cortez y Catalán, the President of the Mexican corporation Kramer Associates, wished to send a prospecting team there in 1894 to search for copper, which was in high demand due to the growing electrification of the nations of Europe and North America. Cortez contacted the Russian Foreign Minister, Prince Pyotr Sviatopolk-Mirsky, to arrange for K.A. to receive the mineral concession in the Yukon area of Alaska. Under the terms of the agreement, K.A. would search for copper "and whatever other minerals might be found," and would pay all operational costs while sharing any profits evenly with the Russian government. A prospecting party led by Winston Carew entered the area the following spring, but initially had no luck. Over a year went by until Carew's crew struck a vein of gold in July 1896.
News of the discovery soon reached the Russian government, and Tsar Nicholas II sent his personal congratulations to Cortez and Carew. However, the Tsar eventually had second thoughts about allowing a foreign company to control the Alaskan gold fields. On 21 October 1897, Sviatopolk-Mirsky drafted a memorandum to Cortez in which he claimed that the Alaskan mineral concession covered only copper. "Since little or no copper has been discovered in the Yukon region, the mines, when opened, will be controlled by the Imperial government." K.A. would be allowed to operate the mines, "for which the company would, of course, be well-compensated."
When Cortez received Sviatopolk-Mirsky's telegram, he ran shouting from his office. Cortez immediately telephoned Mexican Chief of State Benito Hermión and arranged for a meeting in Mexico City on 25 October. The two men met twice that day, and although no record exists of their discussions, Hermión evidently refused to confront the Russians over the matter.
Governor Alberto Puente.
Cortez then began plotting to provoke a war between Mexico and Russia, sending his private secretary Russell Smith to meet with Alberto Puente, the Governor of California, on 7 November to arrange matters. Four months later, on 27 February 1898, Puente notified Hermión of "repeated violations of the border by Russian Imperial forces." Hermión sent a team (presumably of Constabulary agents, although Sobel does not say so) to the area to investigate the situation. However, suspecting that Cortez might be behind Puente's message, Hermión telephoned him and informed him that "under no conditions will you involve Mexico in a squabble with the Russians. If you start trouble with the Russians, you will have to end it, and not I."
The investigative team reported its findings on 15 March, noting that violations of the border had in fact taken place, and that the Russian officer in charge of the border, Captain Boris Tschakev, had been "most uncooperative throughout." As a matter of form, Hermión sent a mild note of protest to St. Petersburg. When the Russian response was received, Henry Wilson, the chief Russian translator at the State Department, apparently mistranslated it to make it sound more belligerent. Sobel notes that Wilson was a former K.A. employee, and admits that it was "entirely possible he exaggerated the tone of the Mirsky telegram."
Pyotr Sviatopolk-Mirsky.
Over the next six weeks, a series of ten telegrams were exchanged between Mexico City and St. Petersburg, each presumably mistranslated by Wilson, and each harsher and more belligerent than the one before. On 4 May, Hermión ordered extensive summer maneuvers by the Mexican Army, and ordered Admiral Ephraim Small to prepare the Pacific Fleet for a cruise to Hawaii. Prince Sviatopolk-Mirsky responded by ordering General Andrei Mishikov of the Alaska command to be on guard "against the possibility of sudden attack." There was a major incident on the Alaska-California border on 17 May, and four days later a Russian brigade entered California and began driving south for San Francisco. Diego Cortez had his war.
The California Guard, under the nominal command of Governor Puente, fell back before the Russian force for ten days, then made a stand twenty miles north of San Francisco while Puente sent a message to Hermión requesting "immediate and large-scale help." Admiral Small entered San Francisco Bay on 30 May, and landed a force of 20,000 marines, which joined the Californian and defeated the Russian brigade. The combined force then followed the fleeing Russian troops north, entering Alaska on 11 June. The marines and Californians were met there by an additional 40,000 Mexican soldiers under the command of General Richard Stockton.
Admiral Small's fleet landed an additional force of marines at the Russian port of Nikolaevsk on 5 July, which then advanced south towards the retreating Russians. The Russians were trapped, and General Mikhail Kornilov surrendered to General Stockton in August. Stockton sent troops to the Yukon gold fields along with engineering teams from K.A., in order to prepare for the establishment of mining camps the following spring. Meanwhile, Small landed more marines along the Alaskan coast, along with elements of the Caribbean Fleet under the command of Captain Nicholas Seger. By early October 1898, all of Alaska except the Aleutian Islands was under Mexican control.
Cortez's engineering teams accompanied Stockton's troops as they advanced into Alaska, setting up camps in the Yukon to prepare for mining operations the following spring. Carew's predictions proved correct, and as gold production increased in 1899 there were celebrations in San Francisco and Mexico City. By 1905, the Yukon fields were producing over 4,000 Troy Ounces of gold annually.
| Year | Production |
|---|---|
| 1897 | 449 |
| 1898 | 403 |
| 1899 | 1869 |
| 1900 | 2326 |
| 1901 | 2335 |
| 1902 | 2769 |
| 1903 | 3056 |
| 1904 | 3560 |
| 1905 | 4067 |
(In thousands of ounces.)
Fueled by the wealth of the Alaskan gold fields, K.A. expanded its operations outside Mexico, with total worldwide sales reaching $16.1 billion by 1910. By then, the company was the largest in the world, and four times bigger than the next largest firm. The company also accounted for over half of Mexico's gross national product, and its resources were greater than that of the government itself. When Hermión began acting contrary to Cortez's wishes in 1899, the company president began laying plans for his ouster, which he carried out in October 1901. Cortez then directed the re-establishment of republican government in Mexico, using his financial resources to ensure the election of friendly politicians including President Anthony Flores.
The election of Assemblyman Pedro Fuentes in 1926 saw for the first time a Mexican government hostile to the company. K.A. President John Jackson responded with a massive reorganization and global dispersal of the company in the early 1930s, culminating in the transfer of the company's headquarters to the Philippines in February 1936. Following the transfer, it soon became known that K.A. had been selling securities on the world's stock exchanges for weeks and converting the funds to gold. The price of gold on the London exchange began to rise from £7.23 per Troy ounce on 18 February to £7.65 on 23 February, £7.99 the next day. By the time trading was halted at noon on 25 February, the price of gold had risen to £9.56, and the financial shock set off the Panic of 1936, which plunged the world into recession and caused the bankruptcy of the C.N.A.'s National Financial Administration.
Sources[]
Sobel's sources for the role of gold in modern history include Evans Crawford's California Gold: Its Impact and Implications (Mexico City, 1894); Walter Ramspeck's The California Gold Rush of '39 (New York, 1956); Carl Needham's The Great Northern War (New York, 1963); Knute Neuberger's The Background of the Great Northern War (London, 1965); and Stanley Tulin's The Kramer Associates: The Cortez Years (London, 1970).
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