Blast from the past

For those interested in the historical antecedents of todays technological capital of the world, a fascinating look into the connection between the Gold Rush and today's Silicon Valley viz a viz an 1872 law: 

Let’s then formulate the question more specifically for the present day – which of the differences of Silicon Valley is currently the most obvious? The answer to this question of course is known to everyone – the characteristic difference of Silicon Valley is that here you have world’s fastest paced unstoppable introduction of scientific and technological innovations.

Hence, it raises the following question: What was California’s totally unique characteristic “component” of the local socio-economic climate, which became the “catalyst” for the process of development of technical ideas that arose here (or were imported here) at the first attempts at their formulation by inventors to market the product?

With this catalyst of scientific and technological process acting locally in just one American state, a very special law was enacted in California in 1872.

The law in question declared null and void any contract between a business owner and employee if said contract in any way restricted the employee’s freedom to change employers, even if that meant joining the former employer’s competition.

In other words, any previously signed agreements—for example, an employee contract signed upon hiring—that could in any way limit the employee’s right to freely choose his or her place of work were deemed unenforceable in this 1872 law. More specifically, those clauses that were in conflict with this law were deemed unenforceable.

This law was initially ratified in 1872 as part of California’s Civil Code. It is now listed under California Code - Section 16600, also known as CAL. BPC. CODE § 16600, and reads:

Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.

As a result of this cascade of direct and indirect consequences from the application of this law in Silicon Valley, today a number of generally operating U.S. legal standards, including some of the most important, are practically blocked (“de facto” canceled).

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1872 Law’s Weight in Gold

The amount of gold extracted per year during the Gold Rush amounted to 80 million of that period’s dollars, worth about $2 billion in today’s money.

It might be possible to compare this figure with the “gold mines” discovered by the companies operating in Silicon Valley, which were able to expand on the first generation of startups only by provision of this 1872 law.

For example, the New York Times described gold-rushing pioneer Apple Computer’s financial impact as “the iPhone Gold Rush”. Apple's sales in 2010 were valued at around 60 billion USD.

One might also take into account the “gold” extracted by Intel, which—like many other Silicon Valley startups—would not have got its start had not the 19th century California Gold Rush given rise to the aforementioned 1872 law. Intel’s patented “silicon gold mine” produced about 40 billion dollars of sales this year.

This modern-day gold extraction, legally speaking a direct result of a law dating back to the California Gold Rush 100 years previous, has brought financial gain on the order of hundreds of billions of dollars, earned by tens of thousands of high tech companies in Silicon Valley, all mining the seemingly bottomless gold reserves of information technology.

Well worth a full read.