Gold Rushes Are All the Same

In this paper, Andrea G. McDowell compares the California gold rush with others around the world and finds important common traits. She finds that the governance structure of California mining claims has been replicated in gold rushes in Australia, West Africa, South America, and Southeast Asia. That governance structure, she argues (consistently with Clay and Wright), has never involved the simple imposition of secure property rights. Rather, gold-mining claims throughout the world have provided limited use rights, codified in local regulations. In each case, individuals have held small mining claims on condition of active use. Larger investors stay out of the gold region until surface mining by individuals is no longer profitable, so that capital can take advantage of superior technology, economies of scale, and lower wages.

McDowell suggests that a system of individual mining claims will generally emerge under circumstances like those in California, that is, where there is a lot of gold near the surface that individual miners can reach with little capital investment. As mining becomes more difficult- for example, when collective action is required to work deeper shafts or to reach gold underlying river bottoms- the internal organization of mining teams begins to vary from one gold rush to another. Indeed, from a comparative analysis, it appears that California mining companies were unusually democratic in their organization. However, surface mining claims at the height of gold rushes seem to be shaped less by local culture than by the physical proximity of gold to the surface.

This paper was presented at the Lincoln Institute’s conference entitled “Evolution of Property Rights Related to Land and Natural Resources” in 2010 and is Chapter 4 of the book Property in Land and Other Resources, edited by Daniel H. Cole and Elinor Ostrom.