The first Anglo Saxon miners in 1848 were all amateurs, and anyone who had been in the diggings for two days was considered a veteran. The concept of free labor and the strong will to succeed contributed to the relatively high profits from the small mines within the first months.
With their high and naive expectations about making a quick fortune, even miners who were initially members of a large joint-stock company came quickly to the conclusion that reliance on their individual labor would be a key to riches. Alone, or more often in small groups, they embraced the idea of becoming independent owner-operators. Such self-reliance was new to most of them, and represented expanded individual risk, but it also drew out hidden reserves of energy. For many, the rejection of wage labor and embrace of a "free labor" ideology helped them overcome the physical hardships of mining which proved far reater than they had been led to anticipate by the exaggerated press reports. Thus, their success depended less on skilled mining techniques than on a hardy constitution and will.
Even when it became clear that gold did not lie on the streets and that miners were usually not the ones who became rich in California, miners refused to give up free labor. Formation of a labor class working for mere wages would have been a confession that the American dream of fast riches was made of dust. Only when the miners´ earnings became insufficient to support their living did they consider either joining the ranks of wage laborers or going back home. As long as they could support themselves they usually struggled to remain self-reliant miners, hoping to strike it rich. After all, they had made naive promises to their relatives and friends about returning as millionaires in "flying colors." Even a realistic letter from California could do little to reduce the high expectations of their families and peers at home. Awareness of these continued high hopes contributed to the psychological pressures on the miners and served to reinforce their stamina.
Nevertheless, the early technical difficulties with mining in the dry diggings that were remote from rivers, or generally characterized by a scarcity of water, led to the formation of cooperatives and larger companies of gold diggers. In these companies, the miners shared the production costs and profits proportionally in an effort to overcome the technological problems and the lack of capital for investment in machines. Despite these rudimentary forms of industrial workers´ organization it quickly became clear that only private capitalist enterprises with high investments in costly machinery were able to exploit the increasingly exhausted mines after 1852.
As early as 1849, many of the independent miners already felt dissatisfied with their returns. This, of course, stemmed from the great difference between their high expectations and harsh reality. Nonetheless, working at the subsistence level became the disappointing norm for an increasing percentage of miners. Although numerous miners continued to insist on free and individual labor, the increasing competition and exhausted soils that demanded technically advanced equipment from 1853 onward, forced many of them to became wage laborers if they wanted to keep their "profession."
Wage labor in the quartz mines was also hard work, but the laborers were much better paid than their independent collegues. Their better pay was based on the scarcity of available labor and the technical superiority of the mines of the big companies. These operations yielded much higher profits than the small, individually worked mines, and the pay was relatively regular and reliable.
Miners who still insisted on their free work often acknowledged proudly or reluctantly that individual mining on small claims was less a profession than a gamble. Sooner or later, they were forced to recognize that they had no protection from the effects of bad weather and the unfavorably dry climate. Always looking for new claims, these independent miners played a major role in pushing the industrial frontier to new, unknown geographical areas; they became the forerunners of the large-scale industrial exploitation of the gold deposits that would follow. Not surprisingly, they often invaded Native American territory in their reckless search for new mines.