The accelerating numbers of miners with their increasing competition for the best claims contributed not only to class tensions but also to conflicts among the miners. The spaces between the camps and individual miners decreased and finally disappeared. Already by fall 1848, the issue of property rights had become so crucial that the camps started to establish laws and rules under which the claims had to be staked out, worked, sold, and kept in absentia. The miners´ initial idea of individual free labor and equality, supported by the early cooperatives and furthered by the vacuum of power and law in California, contributed to the development of democratic self-rule.
Although President Polk tried to incorporate California into the Union as a territory from July 1848 on, the bill of the Senate, putting Oregon and California under a territorial administration with the decision over slavery left to the Supreme Court, was rejected by the House of Representatives. Thus, California was without government.
Meanwhile, Californians addressed this issue themselves and ratified a constitution in October 1849. In February 1850, they invented a Court system with a supreme court and state courts and abolished the second and third courts, which had been established by the military government, as well as the old judicial system of alcaldes and prefects. In April 1850 the common law of England became the judicial basis. Therefore, California did not have a new functioning governmental system until spring 1850, and years passed before the courts dealt with crimes committed in the mines.
To be sure, the Californian gold miners did not have any legal grounds to work or possess any land. Californian land was practically open, since the claims of the rancheros who had obtained property from the Mexican government were not valid until the land law of 1851. Consequently, the miners quickly developed their own understanding and laws for the acquisition and possession of land. Central to these laws were discovery and work on a claim. Miners could buy claims from other miners, but they lost their right to their land when they failed to work on it. To secure equality among the miners, the rules of the early mining camps determined that each miner could possess only a single claim of limited extent, e.g. a square with sides of no more than 150 feet in length. Next to the size and number of claims each miner was allowed to possess, the rules also determined how many days he could be absent without losing his claim. From 1849 on, the meetings where miners created these rules became more frequent and apparently more formalized. After 1850, emerging companies tried to circumvent these laws by purchasing claims through "front men" which enabled them to acquire large mining grounds, thus endangering the democratic structure of the mining community.
This democratic composition of the early mining communities and the miners´ conviction that the the formation of a state was based on a mutual contract provided the background for them to develop their own structures to handle disputes and crime. They strongly rejected efforts by the alcades or their colleagues, who had obtained their posts during the military government, to expand their authority to the mining camps. Since the alcades and military judges lacked the power to push through their authority, the miners´ rejection was successful. Nonetheless, the miners used the alcaldes as an example for establishing their own judge whom they called the Miners´ alcalde. In the years 1848 and 1849 these judges were democratically elected by the miners to decide disputes. In cases of crime, a court that was elected by the miners was responsible while the alcaldes only led the trial.
Due to a lack of institutions such as prisons, corporal punishment was common. Quick and brutal punishments included flogging, expulsion from the camp, and the death sentence. The last was often applied in cases of murder and robbery, but also for theft. Theft and robbery were certainly the most frequent problems in a community where people carried around gold, hiding it by burrying it in or near the campsite. This, of course, was also the case in mining towns and even San Francisco. When gold or money was stolen it cost the owner months of work, often forcing the miners to change their plans concerning their return home or kind of work. During the earliest years, the crime rate seemed relatively low, whether due to some sense of honesty and community, or to the presence of drastic punishments.
With the increasing influx of miners, the competition became more harsh and the diggings more exhausted. From 1850 onward, the mining courts in the camps as well as in the towns were not able to cope with the rising crime rate, often giving different kinds of punishments for the same offense. Moreover, these courts were increasingly used to expell foreigners from the diggings, and this abuse of power underscored the inadequacy of the judicial system. Vigilance committees were formed in this vacuum of government authority to fight crime in mining camps as well as in the town but were soon accused of cooperating with the criminals.
Clearly, a sense of property rights and democratic structures, even where they lasted, could do little to create an understanding between different ethnic groups. The miners from the U.S. always exhibited a hostility toward Native Americans, and from 1850 on, they openly and violently discriminated against Mexicans, Chileans, Peruans, the Chinese and French. Any cultural, ethnic and linguistic difference provoked hostility. Under the cover of justice, racism ran rampant.