Economy of California - History

History

California, as a microcosm of the nation, experienced waves of internal and international migration. The state was also a leader in the high school movement and mass college education. California has a diverse economic base including agriculture, natural resources, World War II industries such as aerospace and aviation, shipping, and knowledge work such as the film in the Hollywood region and computer industries in Silicon Valley.

Once the state became a territory of the United States after being part of Mexico, the early settlers on the frontier of this land encountered uncertainty over property rights, namely gold and water. The search for gold in California led to the California gold rush which started in 1848 and ended in 1855. Prior to, and following statehood, commerce and economic activity mainly centered around the Spanish settlements and California Missions established by Father Junípero Serra.

California's location along the Pacific coast gave way to the construction of major seaports and airports across the state. The state's shipping industry then evolved to help support the growing international trade with Asia and Oceania. During World War II, California's location also meant it had to be the first line of defense against a possible Japanese invasion on the Contiguous United States, and therefore numerous military bases and various wartime industries were quickly established in the state.

Early farming in the state was primarily concentrated near the coast, and the Sacramento–San Joaquin River Delta in the Central Valley, where the water table was high year round and water transport more readily available. Starting in the late 19th century, Chinese workers were used to construct hundreds of miles of levees throughout the delta's waterways in an effort to reclaim and preserve farmland and control flooding. Subsequent irrigation projects then brought many more parts of the Central Valley into productive agriculture use. One of them was the Central Valley Project, formed in 1935 to redistribute and store water for agricultural and municipal purposes with dams and canals. The even larger California State Water Project was formed in the 1950s to help construct the California Aqueduct and its ancillary dams.

With Thomas Edison's invention of the Kinetoscope in 1894, California would be a leader in sound film development in the following decades. Cheap land, good year-round climate and large natural spaces prompted the growing film industry to begin migrating to Southern California in the early part of the 20th century. The film patents wars of the early 20th century actually led to the spread of film companies across the US, however, many worked with equipment for which they did not own the rights, and thus filming in New York was dangerous; it was close to Edison's Company headquarters, and to agents the company set out to seize cameras. By 1912, most major film companies had set up production facilities in Southern California near or in Los Angeles because of the location's proximity to Mexico, as well as the region's favorable year-round weather.

Meanwhile, Stanford University, its affiliates, and graduates played a major role in the development of California's electronics and high-tech industry. From the 1890s, Stanford University's leaders saw its mission as service to the West and shaped the school accordingly. At the same time, the perceived exploitation of the West at the hands of eastern interests fueled booster-like attempts to build self-sufficient indigenous local industry. Thus, regionalism helped align Stanford's interests with those of the area's high-tech firms for the first fifty years of Silicon Valley's development. During the 1940s and 1950s, Frederick Terman, as Stanford's dean of engineering and provost, encouraged faculty and graduates to start their own companies. He is credited with nurturing Hewlett-Packard, Varian Associates, and other high-tech firms, until what would become Silicon Valley grew up around the Stanford campus.