A Series of Unfortunately-Timed Events, or Captain John Sutter—Almost the World's Richest Man In 1849

John Sutter was born in 1803 in what is now Germany, very near the Swiss border.  After a few odd jobs, a marriage, and four kids, he fled from his creditors and sailed for America, leaving his family behind.  He was never really a “Captain” of anything, military or naval, but he called himself that because he believed that the title gave him status.   He made his way to the West Coast in 1838 and, after trips to Hawaii and Alaska, in 1839 he washed up in San Francisco, then called Yerba Buena.  Venturing inland, he settled in the Northern Central Valley near the confluence of the American and Sacramento Rivers in what is now downtown Sacramento.  He started farming and trading, mostly using Native American labor.

John Sutter

Sutter became a naturalized Mexican citizen in 1840 and persuaded Governor Mariano Alvarado, the Mexican governor of Alta California, to grant to him 11 leagues of land—about 49,000 acres.  It was a lot of land, but California was huge; the population was sparse, and the Mexicans, already sensing trouble with the United States, were trying to solidify their hold over fertile and resource rich California.

By 1847 Sutter was well situated, powerful, and wealthy.  He had built a secure trading post on his Sacramento land, and it was the only game in the Northern Central Valley.  In late 1847 he made a minor business decision that would rock the world.  He hired a transplanted New Yorker, James Marshall, who was a capable carpenter and mechanic, to build a water-powered sawmill on the South Fork of the American River, about forty miles upstream from Sutter’s headquarters location in Sacramento.  Marshall, in turn, hired four other local American adventurers who had come to California seeking their fortune to work on the mill.  They were named Bigler, Johnson, Smith, and Brown.  History, however, remembers them as the “Pesky Witnesses.”


                                                      The Pesky Witnesses

Sutter and Marshall sited the mill on a bend in the American River where there would be ample water force for the mill wheel to turn the saw, but where there was also some level ground for the mill building and the expected lumber output.  The site was also far enough up in the Sierra Nevada foothills that trees were available nearby, but not so far up river that the lumber could not be barged to Sacramento and perhaps even on to Yerba Buena.  It was a well-chosen location.  (Today the place is called Coloma.)  Sutter was a man with an eye toward opportunity.

A Photograph of the Mill Site Taken A Few Years After the Gold Discovery

Construction of the mill progressed rapidly and was essentially complete in late January, 1848.  It was then that things went very wrong, or perhaps they went very right.  Can that be correct?  Either very wrong or very right?  Sounds impossible.  But not so.  Right and wrong, in some things, can very much be in the eye of the beholder.  From Sutter’s perspective as a land owner, farmer, rancher, logger, things went very wrong.  From the perspective of the 200,000 people who rushed to California to find gold and make their fortunes, those same events went very right!

Marshall was inspecting progress on the mill’s construction on January 23, 1848 when he decided to walk along the bottom of the still--dry millrace.  Just downstream from the mill itself he noticed a loose granite outcrop in the middle of the millrace.  He broke off a few pieces of it with his hand and then sent for a pick.  A worker chipped up a few pieces of the rock with the pick.  Marshall examined them and became convinced that gold lay within that outcropping, although nothing was found that day.  Overnight, water was let through the race, but blocked again the next morning.  When Marshall examined the millrace after the water ran off he found flakes of gold near the rock outcropping.  Excited, he foolishly told the Pesky Witnesses and the nearby Native Americans that he had found gold in the millrace.  The date was January 24, 1848.  Keep that date in mind, dear reader.  It will be critical to our narrative.  It is also important to remember that on the same date in a place far away from the American River, the United States was at war with Mexico.

Marshall quickly made plans to travel to Sutter’s trading post and tell him of the find.  Sutter and Marshall tested the flakes on January 28 with a little nitric acid Sutter had available.  The flakes were inert to the acid, and were also malleable, and Sutter correctly concluded they were truly gold.
So the news was good, and the news was also bad.  Another--eye--of--the--beholder problem.   The good news was the flakes were really gold; Sutter’s men found it on land Sutter was using to build a mill; and only a handful of people knew about it.  The bad news, in fact, the really bad news, was THE MILL WAS ON LAND NOT INCLUDED IN SUTTER’S MEXICAN LAND GRANT.

California was huge.  Land grants did not have clear legal descriptions, were approximate in location, and certainly not fully fenced.  Grantees typically found the best land in the general vicinity of their grant and used it.  After California statehood this would lead to much litigation, but in 1848 there was no one to complain about it but the Native Americans.  Sutter’s mill site was miles off Sutter’s land grant.  Perhaps he thought of “shifting” his grant a bit so that the mill was inside its limits.  After all, the grant was 49,000 acres, but to do so he would have to give up some of the rich, level Central Valley land he was farming and ranching.  Wheat and cattle were sure bets and profitable.  A gold strike evidenced by a few flakes of gold found in a stream was an unknown.  

Sutter, however, was shrewd.  He realized he did not need to own the gold field to profit from it.  All he needed was the right from the “owner” to mine the gold.  So Sutter sent Marshall back to the mill site to negotiate a mining license deal with the Native American tribe that lived in the vicinity of the mill.  The deal Marshall struck with them gave Sutter a “preemption” (a Mexican law legal concept similar to an English common law lease) on an area around the mill site.  The preemption permitted Sutter to mine the gold.  Sutter, of course, had no clue that his find was merely one manifestation of one of the biggest gold fields ever found, the Mother Lode of the Sierra Nevada.  If he had known that, his strategy might have been different.  He might have gotten a larger territory or approached other tribes, but he had no way of knowing, and, in the end, it made no difference.

The Preemption

Sutter's Letter

The preemption was back dated to January 1, 1848 so that it predated the discovery of gold, but was actually signed on February 4.  In fact, it said so in its text.  Keep that date in mind.  It, too, is critical to our narrative.

Sutter realized that, even with the help of his American employees, he alone could not keep squatters who learned eventually of the gold discovery off his “preempted” land.  He needed more than 6 employees with revolvers, so he sent another American employee, Charles Bennett, with the signed preemption and a letter explaining the situation to the only authority Sutter knew that might be able to help him protect his find.  Sutter wrote the letter to United States Army Colonel Richard Barnes Mason in Monterey, California, the Mexican capital of the province of Alta California.  

Early in the Mexican American War the U.S. sent naval forces to land at Monterey and displaced the Mexican authorities.  Eventually, Colonel Mason was sent to be U.S. Military Governor of Alta California.  He brought along a recently minted West Point graduate as his adjutant:  Lt. William Tecumseh Sherman.  Sherman, who later would command an entire army as it marched across Georgia and South Carolina, burned Atlanta, captured Charleston, threatened Richmond Virginia from the rear as General Grant attacked frontally, and, shortly after Lee’s surrender to Grant at Appomattox Courthouse, accepted the surrender of the Confederacy’s second largest army to effectively end the Civil War, acted as Mason’s secretary and aid-de-camp.

Knowing that Sherman had a bit of legal training, Colonel Mason left the Sutter matter to him.  Years later, Sherman reported the event in his memoir:
“Colonel Mason then handed me a letter from Captain Sutter, addressed to him, stating that he (Sutter) was engaged in erecting a saw-mill at Coloma, about forty miles up the American Fork above his fort, New Helvetia, for the general benefit of the settlers in that section; that he had incurred considerable expense, and wanted a ‘pre-emption’ on the quarter section of land on which the mill was located, embracing the trail-race in which this particular gold had been found.  Mason instructed me to prepare a letter, in answer, for his signature.  I wrote off a letter, reciting California was yet a Mexican province, simply held by us as a conquest; that no laws of the United States yet applied to it, much less the land laws, or the pre-emption laws, which could only apply after a public survey.  Therefore it was impossible for the governor to promise him a title to the land; yet as there were no settlements within 40 miles, he was not likely to be disturbed by trespassers.  Colonel Mason signed the letter, handed it to one of the gentlemen, who had brought the sample of gold, and they departed.”

So Sutter’s plea for approval of his preemption was rejected by Sherman on the grounds that Alta California under international law still belonged to Mexico, and that U.S. was in control of it only by right of conquest.  U.S. law did not apply and, under the laws of war, the military governor’s authority was limited with respect to civilians.  After all, Alta California might be peacefully returned to Mexico if the U.S. lost the war or if it agreed to give up Alta California as one of the terms of a peace treaty.  Sherman understood all that well.

His idea rejected, and no help from the U.S. military forces available to protect his claim, Sutter was soon overwhelmed by hordes of gold seekers.  The first to arrive came from Yerba Buena.  They were told of the discovery by the Pesky Witnesses, themselves the first claim-jumpers, and by a local newspaper man, Sam Brannan, who got wind of the find, visited Coloma, saw the gold for himself and went back to Yerba Buena to sell papers exposing the find to everybody in town.  Thousands more arrived from all over the west in the next few months.  Within a year another 90,000 arrived with more to follow.

Not only was Sutter’s hope for a fortune in gold destroyed, his wheat, cattle and leather empire was swept away by the gold seekers who simply took what they wanted and squatted where they wanted.  He moved 100 miles north to reach some safety, but it was all over for him.  He eventually moved to Lititz, Pennsylvania where he died a pauper.  A century later his grave was finally marked to show he was the man who started the gold rush and made California what it is today.

A sad, sad story indeed.  Bad news for John Sutter; good news for the tens of thousands of gold miners who collectively made a lot of money, and good news for California, which proved itself for the first of many times to be the land of opportunity.

But the story doesn’t end there.  Remember February 4, 1848, the date the preemption was signed?  Well, it matters that the preemption was signed that day and that Mason’s letter to Sutter drafted by Sherman refusing help Sutter in protecting the gold fields was written a week or two later, say February 15.  But why?

We must go back to Thomas Jefferson to fully answer that question.  The problem is that SHERMAN WAS WRONG.  He made a serious mistake.  How can that be?  His logic seemed perfectly correct.  His LOGIC was perfect, but his FACTS were wrong.

The U.S. had been at war with Mexico over Texas for some time.  Texas had seceded from Mexico, temporarily became the Republic of Texas, and wanted to join the US as a regular state.  Mexico threatened to retake Texas and sent in its military forces.  Remember the Alamo? Sorry.  That’s REMEMBER THE ALAMO!!  The U.S. responded by invading Mexico.  It was a successful fight for the U.S. and good practice for the American military forces that were soon to engage in bloody internecine warfare in the American Civil War.

Because of the early success of American forces in Mexico, President Polk determined to bring the Mexican war to an end.  He had what he wanted—Texas—which would immediately become a state, a slave state in fact, something he also wanted, although Congress and the rest of the country were divided on that point.  To get a peace treaty Polk sent an ambassador extraordinaire to Mexico to negotiate a deal.  The man he sent was a career government servant—Nicholas Trist.  You probably never heard of Nicholas Trist.  Sadly, few have.

So now back to Thomas Jefferson.  Trist was Thomas Jefferson’s secretary at the end of Jefferson’s life.  Trist married Jefferson’s granddaughter and was imbued by Jefferson with the concept of the Doctrine of Manifest Destiny—that the United States was destined to stretch from Atlantic coast to Pacific coast and from Canada to Mexico.  He served in several capacities in government and successfully got himself appointed by Polk as ambassador to negotiate the peace with Mexico.  He went to Mexico with Polk’s instruction to make a quick deal, accept the transfer of Texas to the U.S. and as little as 10,000,000 Mexican pesos compensation (not a lot of money even in 1848), and get it over with, but Trist promptly ignored Polk’s instructions.  Fired up by Jefferson’s Manifest Destiny ideas and his own substantial ego, Trist wrote a 60 plus page letter to Polk explaining why he was forging ahead in an entirely different direction, a direction Polk did not at all like.  Polk telegrammed him four times, each message more strident, but to no avail.  The last message actually recalled Trist, revoking his authority as ambassador.  It was all water off a duck’s back as far as Trist was concerned.  He was focused on an America that stretched coast to coast and Canada to Mexico.

Ignoring Polk’s recall, Trist used the victory of American forces over Santa Ana at the Battle of Chapultepec to conclude the treaty negotiations.  Beaten one last time, the Mexican authorities signed a treaty with Trist at Guadalupe Hidalgo, a suburb of Mexico City.  Thus, Trist put into practical effect Jefferson’s manifest destiny ambitions for the U.S.  He convinced Mexico to cede about half of its entire land area to the U.S.  Texas and every-thing north of a line pretty much between southern Texas and the town of San Diego on the California Pacific coast became part of the U.S., about 600,000 square miles, including, of course, all of California.  The U.S. paid Mexico $19 million, including the assumption of $4 million in debts that might or might not actually be paid.  That came to about $31.60 per square mile, a bit more than Jefferson paid France for the Louisiana Purchase, but still a great bargain, especially since at the time no one involved in the treaty negotiations knew about the California gold find.  Believe it or not, Polk stalled confirmation of the treaty, but the U.S. Senate had more sense, and it became effective.

The Treaty

So why does this matter to the story of Capt. John Sutter? The dates are what matters.  Trist and the Mexican authorities signed the Treaty of Guadalupe Hidalgo, as it later became known, on February 2, 1848.  Remember that it was on February 4, 1848 that Sutter’s representative, Marshall, and the Native Americans signed the preemption covering the mill site, and it was mid-February when Sherman refused to endorse the preemption as effective under U.S. law and protect Sutter’s property.  Sherman did that thinking that Alta California was still Mexican territory and in U.S. care only as a conquest.  But Sherman was dead WRONG.  Two days BEFORE the preemption was signed and 10 or more days BEFORE Sherman refused Sutter’s request for help, Alta California had became a territory of the United States under the terms of the Treaty of Guadalupe Hidalgo.  Colonel Mason had the authority to approve the preemption and send forces to keep order and protect Sutter’s legal rights because, unknown to Mason and Sherman, Mason was, after February 2, 1848, in effect, the acting territorial governor of the territory of California, then a brand new part of the U.S.  They did not know because nobody in California knew that 3,000 miles away at Guadalupe Hidalgo the treaty had been signed two days before Sutter’s preemption was signed in California.  So Sherman said “No” to Sutter, and Mason sent no troops, and the Pesky Witnesses told anyone who would listen that gold had been discovered at Sutter’s mill, and almost everybody who could walk or ride a horse took off to look for gold.  Even Sutter’s laborers took off.  The miners ate Sutter’s cattle and crops.  They cut down his trees and crowded into streambeds all along the Sierra Foothills on and near Sutter’s land.  Sutter lost everything to this onslaught.  

And so it all ended for Sutter.  But for Sherman’s “mistake” Sutter might have become the richest man in the world by controlling the California gold fields, signing leases with the Native American tribes, hiring them as labor, and living like a king.  Instead he fled and died a pauper in Pennsylvania.

Lends a whole new meaning to the adage that “timing is everything,” doesn’t it?