The Gold Rush economy is generally portrayed as a lawless free-for-all, with countless unaffiliated individuals scrabbling for riches. However, a couple of dynamics should be added to this picture.

First, there was a rapidly growing merchant class in settlements like Sacramento. These merchants, often former prospectors themselves, sought to “mine the miners” by exploiting a seller’s market for everything including shovels, flour, booze to sex. But behind this retail scrum was a movement into wholesale, which was less risky and often more profitable. And underlying that was a fierce and cutthroat scramble for land around this place, know as Sutter’s Embarcadero.

Land was important to provide the physical location for trade, but it was much more than that. A large swath of city was subdivided, eight parcels per block, and prices skyrocketed from $250 to as much as $8000. As its value rose, land also served as collateral for lines of credit, contributing to rapid inflation.

While everyone here was involved in some form of speculation, an elite of roughly two dozen men quickly emerged. They sought to distinguish themselves through ostentatious dress and other displays of wealth, but more importantly, they established a government to serve their own purposes, and support the highly questionable titles of those who bought land supposedly traced back to a Mexican grant to Johann Augustus Sutter and laid out in a crooked grid by Sam Brannan and his cronies.

The Sacramento Settlers’ Association attempted to work within the legal system created by and for the speculators, but by 1850 it was obvious to many that the deck was stacked. More than 1000 Sacramentans, perhaps a sixth of the population, joined the Settlers’ Association that year. They sought a more just land system and directly challenged the city government’s legitimacy. The settlers operated by consensus and tried to protect each other from evictions through strength of numbers. Famed journalist James McClatchy had been arrested here few days earlier. He had been collecting money to hire lawyers that August, when a faction finally lost patience and took up arms.

At 4th and J, right in the heart of town, two mobs collided. The mayor was shot off his horse, triggering two days of bloodshed in which eight people died, including the sheriff and assessor. Afterward the economy collapsed with the value of real estate held as collateral for incoming shipments of goods.

It would be decades before the city recovered.