On this day in economic and business history...
There have been two iconic gold discoveries made on the North American continent in the last 200 years. You almost certainly know of the California Gold Rush, but the Klondike Gold Rush, which took place a half-century later, deserves its own special place in history.
The gold rush of the Great White North officially began on Aug. 16, 1896, when a prospector from Seattle named George Carmack and two Tagish Indians found a nugget in a creek near the Klondike River while fishing for salmon. For months, little news of this discovery reached the mainland United States. However, when a steamship arrived in Seattle in the summer of 1897, bearing more than a ton of gold from the Yukon town of Dawson (a settlement established near the site of Carmack's initial discovery), word began to spread like wildfire, and the Yukon Gold Rush was truly on. Gary L. Blackwood, writing in Wild West magazine, offers a fascinating retelling of the initial rush:
The fever quickly reached epidemic proportions. Like a worn-down body that's susceptible to any disease that comes along, the country was particularly susceptible just then to gold fever. The amount of gold in circulation had dropped, helping to cause the deep economic depression that had been eating at the United States for 30 years. The Pacific Northwest had been hit especially hard. People were tired of being poor; many who had jobs quit them for the promise of greater rewards. Streetcar drivers abandoned their trolleys; a quarter of the Seattle police force walked out; even the mayor resigned and bought a steamboat to carry passengers to the Klondike.
Those who had no jobs mortgaged their homes or borrowed the $500 or so needed to buy an 'outfit' -- a stove, tent, tools, nails and enough supplies to last a year. A proper outfit tipped the scales at nearly 2,000 pounds -- though one fast-talking salesman began hawking a valise that he claimed contained a year's worth of desiccated food and weighed only 250 pounds! He was just one of a growing number of enterprising citizens who realized there was a fortune to be made right here at home, simply by selling a product, however dubious in value, with the name Klondike attached. There were Klondike medicine chests, Klondike electric gold pans, Klondike mining schools, a Klondike bicycle, even a portable Klondike house purported to be 'light as air' when folded up -- a doubtful claim, considering it featured a double bed and an iron stove.
Inventors dreamed up devices that promised to make the task of digging gold positively pleasant. Nikola Tesla, one of the pioneers of electricity, promoted an X-ray machine that would supposedly detect precious metals beneath the ground without all the trouble of digging. A Trans-Alaskan Gopher Company proposed to train gophers to claw through frozen gravel and uncover nuggets. Clairvoyants touted their abilities to pinpoint rich lodes of gold. Several ventures were under way to invade the Klondike by balloon.
An estimated 100,000 prospectors set off for the remote Yukon, but less than a third that number made it to Dawson, and fewer still achieved any golden success. Still, so many surged into Dawson and the surrounding region that the Yukon became a separate Canadian territory two years after the initial gold discovery, much as California had been fast-tracked to statehood soon after the strike at Sutter's Mill. Within three years of Carmack's discovery, about 165,000 pounds of gold had been dug out of the Yukon, an amount equal to nearly 3% of all the gold held by the world's central banks just before the discovery. A second discovery near Nome, Alaska, in 1899 added another 6,500 pounds of gold to this tally in its first summer of prospecting.
The sudden, dramatic influx of gold had far-reaching effects on both the economy and the politics of the U.S. A "free silver" movement that would have put inflationary pressure on the dollar died down as tons of gold flowed into the coffers of American banks. Deflation was finally checked, and after three decades of declines, the money supply finally began to grow again at the turn of the century. Seattle and Alaska both boomed, setting the stage for later economic growth in the Pacific Northwest and in the Great White North.
The economy as a whole also began to boom again -- the Dow Jones Industrial Average (DJINDICES: ^DJI ) began to rise a week before the first Klondike gold discovery and didn't let up until 1899, when the first wave of miners had carted off all the easy gold. The importance of "prospecting goods" is reflected by the composition of the Dow during this period: The Dow's first 12 components include a leather manufacturer, a rubber maker, a "whiskey trust," a tobacco trust, and a sugar trust. By the turn of the 20th century, two rope makers and a West Coast steamship line for mail service had done brief stints on the index as well.
The combined gold-production of the Klondike and Nome regions has thus far amounted to nearly 738 tons. In present-day terms, that much gold would be worth almost $32 billion. The Klondike continues to lure ambitious prospectors to this day -- a GQ feature, published in 2012, discusses the new Klondike gold rush, which is now a lure for hundreds (perhaps thousands) of gold-loving young men to root around in the frozen soil for a slim shot at a big score. None of them are likely to do so well as the Klondike's best-known cultural legacy: Scrooge McDuck's origins are found in the original Klondike rush.
Dangers of the sun
The only known example of a stock market shutdown from outer space took place on Aug. 16, 1989. That day, a coronal mass ejection from the Sun triggered a major geomagnetic storm that crippled large parts of Canada. More than 6 million Canadians were without power for much of the day, and the floor of the Toronto Stock Exchange was forced to close for three hours. The exchange's microchips were fried, and it was later discovered that both primary and backup storage systems at the exchange had gone down at the same time. With so much more of the world's trading infrastructure now dependent on digital technology, it may only be a matter of time before another solar storm causes even greater damage.
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