When the Gold Rush began, California was a peculiarly lawless place. On the day when gold was discovered at Sutter's Mill, California was still technically part of Mexico, under American military occupation as the result of the Mexican-American War. With the signing of the treaty ending the war on February 2, 1848, California became a possession of the United States, but it was not a formal "territory" and did not become a state until September 9, 1850. California existed in the unusual condition of a region under military control. There was no civil legislature, executive or judicial body for the entire region. Local residents operated under a confusing and changing mixture of Mexican rules, American principles, and personal dictates.
While the treaty ending the Mexican-American War obliged the United States to honor Mexican land grants, almost all of the goldfields were outside those grants. Instead, the goldfields were primarily on "public land," meaning land formally owned by the United States government. However, there were no legal rules yet in place, and no practical enforcement mechanisms.
Gold miners excavate a river bed after the water has been diverted into a sluice alongside the river.The benefit to the forty-niners was that the gold was simply "free for the taking" at first. In the goldfields, there was no private property, no licensing fees, and no taxes until a government formed. The forty-niners resorted to making up their own codes and setting up their own local enforcement. The miners essentially adopted Mexican mining law existing in California. For example, the rules attempted to balance the rights of early arrivers at a site with later arrivers; a "claim" could be "staked" by a prospector, but that claim was valid only as long as it was being actively worked. Miners worked at a claim only long enough to determine its potential. If a claim was deemed as low-value—as most were—miners would abandon the site in search for legendary bonanza sites. In the case where a claim was abandoned or not worked upon, other miners would "claim-jump" the land. "Claim-jumping" means that a miner began work on a previously claimed site. Disputes were sometimes handled personally and violently, and were sometimes addressed by groups of prospectors acting as arbitrators. This often led to heightened ethnic tensions.
The rules of mining claims adopted by the forty-niners spread with each new mining rush throughout the western United States. The U.S. Congress finally legalized the practice in the "Chaffee laws" of 1866.
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