Mexico had reluctantly ceded California and much of its northern territory to the United States in the 1848 Treaty of Guadalupe Hidalgo,. When the Mexican diplomats signed the treaty, they pictured California as a region of sleepy mission towns with a tiny population of about 7,300-not a devastating loss to the Mexican empire. Their regret might have been much sharper had they known that gold had been discovered at Sutter's Mill in Coloma, California, nine days before they signed the peace treaty. Suddenly, the greatest gold rush in history was on, and "forty-niners" began flooding into California chasing after the fist-sized gold nuggets rumored to be strewn about the ground just waiting to be picked up. California's population and wealth skyrocketed.
Most newly acquired regions of the U.S. went through long periods as territories before they had the 60,000 inhabitants needed to achieve statehood, and prior to the Gold Rush, emigration to California had been so slow that it would have been decades before the population reached that number. But with gold fever reaching epidemic proportions around the world, more than 60,000 people from around the globe came to California in 1849 alone. Faced with such rapid growth, as well as a thorny congressional debate over the question of slavery in the new territories, Congress allowed California to jump straight to full statehood without ever passing through the formal territorial stage. After a rancorous debate between the slave-state and free-soil advocates, Congress finally accepted California as a free-labor state under the Compromise of 1850, beginning the state's long reign as the most powerful economic and political force in the far West.