Source: http://www.smithsonianmag.com/history/go...

According to the consumer data website Numbeo, San Franciscans today face grocery bills and rents about 21 percent higher than the national average. That is an unfortunate figure, but again, it seems negligible when compared with the prices facing shocked gold-seekers as they arrived in the early days of the rush, when almost everything – tools, equipment food, clothing – was in short supply.

Edward Gould Buffum, author of Six Months in the Gold Mines (1850), described having a breakfast of bread, cheese, butter, sardines and two bottles of beer with a friend and receiving a bill for $43 – the equivalent today of about $1,200.

There were reports of canteens charging a dollar for a slice of bread or two if it was buttered, the equivalent of $56. A dozen eggs might cost you $90 at today’s prices; a pick axe would be the equivalent of $1,500; a pound of coffee $1,200 and a pair of boots as much as $3,000 when today you could get a decent pair for around $120.

“Every newcomer in San Francisco is overtaken with a sense of complete bewilderment,” wrote Taylor. “The mind, however it may be prepared for an astonishing condition of affairs, cannot immediately push aside its old instincts of value and ideas of business, letting all past experiences go for naught and casting all its faculties… Never have I had so much difficulty in establishing, satisfactorily to my own senses, the reality of what I saw and heard.”

While some miners did strike it rich in the early days, those that made most money were the ones who “mined the miners.” Imagine the joy of the woman who made $18,000 by baking and selling pies in the gold fields. Or of the foresighted man who arrived in San Francisco in July 1849 with 1,500 old newspapers which he sold to miners, hungry for news from back east, for a dollar each.

Some of America’s best known businesspeople also began this way: Philip Armour was just 19 when he began selling meat to forty-niners in Placerville California (then called Hangtown); Levi Strauss, a Jewish emigrant from Germany, identified the need for tough clothing in the gold fields; Henry Wells and William Fargo made millions by setting up banking services in San Francisco; and John Studebaker’s automobile empire began with him making wheelbarrows for California miners.