The Rise of California as an Economic Powerhouse

It’s no secret that California has an incredibly large and prominent economy; if it was an independent nation, it would be the fifth largest in the world. While it may be easy to look at the endless torrent of article after article about every up and coming unicorn tech startup in Silicon Valley or upcoming actors and films within Hollywood, California’s strengths don’t stop there. It also has a myriad of additional advantages and industries that continue to drive its economy.

The Gold Rush

Initially starting off as a sparsely settled territory handed over to the US as part of the Mexican Cession in 1848 due to Mexico’s defeat in the Mexican-American war, California did not have much immigration appeal. However, this all changed quickly with the famous California gold rush in 1848-49, when gold was discovered in Northern California by Sutter's mill. This sudden influx of people and money quickly turned this once abandoned and isolated region into one of the most well known and sought after places on the planet.

With the influx of people, California quickly gained statehood status in 1850. With statehood, California could now easily organize its previously unorganized political and government system, and with new organization came numerous opportunities.

Taking advantage of the massive portions of wealth moving in the state, California quickly began to set up its education system, providing its citizens with free elementary schooling, paid for by taxes, and would later also spearhead the movement for higher education, establishing institutions like the California State University system, University of California system, and the California Community College system, with these colleges being recognized as among some of the best in the world.

The Transcontinental Railroad

Although the hype around the Gold Rush would die down around 1855, about five years later, California would then also go on to experience another stroke of luck: the Transcontinental Railroad.

The Transcontinental Railroad was a system of railroads built in the US by private companies, in order to transport goods, people, and materials in an efficient and inexpensive manner.

With the first transcontinental railroad connecting California to Iowa, commerce could now be more easily and efficiently transported across the US, allowing for California's goods, products, and industries to more easily reach markets on the other coast, enabling California to engage in trade with other states.

An Agricultural Economy

In addition to opening markets on the national level, California had also started to invest heavily in maritime trade, building ships, docks, and harbors to facilitate trade with other nations from Asia, Oceania, and South/Central America.

Despite its major investments in trade, California's economy at the time would rely heavily on farming. The state's temperate climates, ample water resources, and new agricultural techniques, such as the irrigation of farmland, allowed for an abundance of crops to grow, in stark comparison to the former Native American agriculture. Fast forward to today, the agriculture industry is still a major part of the California economy, generating at least $100 billion in economic activity annually.

Hollywood

Unsurprisingly, the movie industry also plays a huge role in the California economy. Hollywood alone has accounted for over $500 billion in economic activity.  Although many believe that the movie industry ended up in California because of its nice climate and geography, there were also other lesser known economic reasons. 

One reason was the Kinetoscope, invented by Thomas Edison as the first version of the film camera, was also patented by Edison. To avoid patent infringement lawsuits, many film studios and filmmakers moved to California, with the intent of getting as far away and as far from Edison as possible because during Edison's time, enforcing patents was much harder across the country, even though the intercontinental railway existed during this time. In addition to the additional efforts required to enforce these patents, California courts are also more favorable to filmmakers, making it more likely to win legal cases.

Another reason for choosing California was due to the abundant labor force, which was not only readily available due to the state's relaxed immigration policies, but also non-unionized, allowing for filmmakers to keep production costs low, compared to many eastern states.

Silicon Valley

Finally, there is also the tech industry, known for many world-changing inventions, software, and internet companies, including Apple, Google, LinkedIn, Twitter, and Facebook, located in California's "Silicon Valley".

“Silicon Valley", which is technically in Santa Clara County, is historically known for its high concentration of tech companies, and is, to this day, one of the largest technology hubs in the world. Many accredit Stanford University, more notably Frederick Terman, the dean of the engineering school at Stanford, as a main contributor to the technology boom, with an environment that encouraged innovation and entrepreneurship.

Overall, California's economy has been a major contributor to the country's economy, both in terms of sheer market size as well as number of leading industries. While California may be better known and recognized for its significance like the film, tech, and agriculture industries, it has numerous other major industries that contribute to its continued success.