Private Assayers and the San Francisco Mint
On January 24, 1848, James W. Marshall stumbled upon gold at Sutter’s Mill in Colona, California. At first he didn’t realize the magnitude of the find. Mr. Marshall was a sawmill operator who viewed the shiny flakes in the ground as a mere curiosity. Amusingly, he told his employees to only search for gold if they had free time. While Marshall may have largely dismissed the discovery, his fellow Californians—and the nation—correctly saw it as a pivotal event. The ensuing California Gold Rush would have a profound and lasting impact on American history. In particular, it resulted in the (temporary) creation of numerous private minting operations—and the eventual establishment of a new mint.
Soon after the yellow metal was discovered, an immediate need developed for gold coinage. An incredible amount of gold entering the marketplace and San Francisco was a rapidly growing commercial center. This combination meant that trustworthy gold currency was badly needed. Private assayers and refiners began issuing coins and ingots, but their acceptance was mixed. Even if an assayer was known and trusted in San Francisco, that did not mean a merchant in Boston—or Brazil—would accept gold with their stamp.
The State of California was the first government agencies to act. They quickly opened an assay office in San Francisco to convert raw gold dust and nuggets into bars and ingots. Incredibly, they accepted a whopping 5,000 ounces of gold in their first day of operation! The state office was fairly accurate in their assays; the actual gold fineness/composition was often quite close to the markings on the bars. Nonetheless, their gold products were trading at a discount in the marketplace. Merchants and banks wanted more trustworthy currency.
As an interim solution, California gold was being transported cross-country to the Philadelphia and New Orleans Mint for conversion into coinage. This was an incredibly arduous, dangerous and time-consuming journey in the 1850s. Before the Panama Canal, a ship leaving San Francisco could reach China faster than Philadelphia! Since the transcontinental railroad had not yet been constructed (and was 15+ years away), a cross-country land journey took four months across rough, challenging terrain.
Finally, it was decided that an official United States Mint was badly needed in San Francisco; the facility came to fruition in 1854. Within its first year of operation, the San Francisco Mint converted $4 million in gold bullion into coins. The new facility also rendered many of the private operations obsolete and unnecessary. Many independent assayers, refineries and minters slowly ceased operations in the early 1850s as the San Francisco Mint became the dominant processor of gold in the area.