The great financial panic of 1873, presaged by that monetary cyclone, "Black Friday in Wall Street", had no immediate effect upon business in California. The years 1873 and 1874 were among the most prosperous in our history. Through good and evil report California had clung to her gold and silver money. The specific contract act of the Legislature of 1862, making debts payable in gold coin, virtually demonetized the government legal tender and the national bank notes in our State... It certainly did for a time retard immigration to California from the East. The eastern immigrant landing on our shores with $1000 in greenbacks found himself compelled, before he could make an investment, to convert his paper into gold. Theoretically, he might be convinced that the six or seven hundred dollars in gold twenties which he received in exchange were equivalent to his thousand in government legal tenders, but practically he felt that somehow he had been worsted in the exchange... The capitalists of the East preferred to retain their wealth where resumption of specie payment was gradual instead of instantaneous, as in California. The bulk of immigration to Southern California in the early '70s was from the central and northern parts of our own State.1 (emphasis mine)
Although the quote above represents speculation on Guinn's part (and contradicts other sources claiming heavy east-to-west coast immigration due to unemployment), it is interesting to consider how something so fundamental could have an effect upon the migration patterns of our ancestors. The Specific Contract Bill, passed in 1863, did actually allow most commerce in California to take place in gold coin, instead of the federal greenback. One imagines that this could have had very real implications for anyone from "back East" who sought to start up or engage in business in California2.
1. Guinn, JM. "Los Angeles in the Sixties and Seventies", Southern California Quarterly Volume III, 1893. p. 68.
2. For more detail on the "Specific Contract Bill" see A Financial History of California by William Fankhauser (1913), p. 221.