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  • Writer's pictureMichael Gallant

Gold Rush, Donald J. Trump, and the Rise of Service Businesses

Updated: Mar 24, 2021

This week's Business, People, Education will share the story of the Klondike gold rush; Freidrich Trump (DJT's grandfather); and some lessons for modern-day crypto investors. I also inserted links throughout and at the end of the story.


There's Gold In Those Waters...

In the summer of 1896, a group of prospectors discovered traces of gold near the Klondike River, on the border of Alaska and Northern Canada. They 'staked' the properties and rushed to the local police station to register their claims (a process that, oddly enough, hasn’t changed much since the 19th century). Word soon got out, and in no time the Klondike sprawled with local gold diggers who staked the land and started looking for gold.

Over the next summer, a ship arrived from the Klondike to Seattle. On board that ship were some prospectors, together with over $1 million worth of gold (in today’s money, just over $1 billion). As you might imagine, this drew some attention. Over the next two years, about 100,000 people, from every part of the country (and outside it), traveled to the area to get their hands on some of that Klondike gold.

The demand was so high, in fact, that William D. Wood, the mayor of Seattle, actually resigned his office (together with 12 policemen,) to build a shipping company that would transport the prospectors from Seattle to Skagway, Alaska (where the prospectors would start their voyage to Bennet Lake area through the Chilkoot Pass).

Miners climb Chilkoot Pass. Photo credit: Library and Archives Canada

Mind you - the route to the Klondike was nothing short of adventurous. Menacing mountain tops, frozen lakes, boundless tundras, wild animals, and temperatures that can go as low as negative 80° in the winter (Fahrenheit, though it almost doesn’t matter at that temperature). In short, nature at its wildest.

Nevertheless, adventurers kept coming. This gave rise to local boomtowns - ad hoc settlements that were built to cater to the needs of the endless stream of prospectors. In those towns, one could everything from mining gear, clothes, food, clean water, all the way to luxurious hotels, high-end bars, top restaurants, fancy opera houses, and even schools and libraries.

Entrepreneurs from across the nation built businesses that sold equipment, clothing, food, newspapers, and communication to the prospectors hoping to strike gold. One of these entrepreneurs was a German immigrant, a barber-restaurateur by the name of Friedrich Trumpf, or as he later became known,

Fredrick Trump

Fredrick grew up in Bavaria, Germany. At the young age of 16, he immigrated to the US, first landing in New York, and eventually ending up in Seattle, where he opened a food business. After several ventures in the Seattle area, he saw an opportunity in the thousands of people rushing North and found his way to the Yukon.

Fred understood that while not everybody will find gold, everybody will need to eat. Together with a partner, he opened the Arctic Restaurant and Hotel in the boomtown of Dawson, YT, where he offered food and accommodation, among other things. The restaurant quickly made a name for itself, becoming known as one of the largest, fanciest restaurants in the area, offering delicacies that ranged from fresh fruit to wild animal meat.

A couple of years later, when the Chilkoot Route was made obsolete by the Yukon Route, and the city of Dawson was almost completely abandoned, Frederick and his partner moved their business to the town (now city) of Whitehorse. The new business also did very well, and within a couple of years, Trump sold the restaurant for a profit, returned to Germany, got married, and eventually moved back to NY, this time with more money in his pockets. And the rest, as they say, is history. Frederick's son, Fred Trump Sr., became a prominent real estate developer in New York. Fred Sr.'s son, Donald J. Trump, became the 45th president of the United States of America.


Mine the gold or mine the miners?

Out of the 100,000 gold-seeking adventurers that attempted to get to the Klondike, only 30-40,000 actually made it. Out of those, only 20,000 actually became prospectors (that is, physically mined the land in search of gold). Of them, it is estimated that only 4,000 struck gold. Of those, only a few hundred became rich. Almost all of them lost their money in later prospecting ventures.

Some examples include “Sweetwater” Bill Gates (not related), George Carmack (one of the original discoverers of the Klondike gold, who lost everything only to later become rich again via his real estate investments), and Belinda Mulrooney, “the richest woman in the Yukon”, (who also started from a services business, supplying prospectors with textiles, and eventually left the Yukon to start the failing Dome City Bank).

Should you set your sights on being Klondike Mike, betting on the underlying asset and hoping to get rich by finding gold, or should you act like Fred or Belinda, and capitalize on the influx of prospectors by owning a piece of a business that serves them? If the latter, what service business should that be?

First Mover Advantage?

The first prospectors in the Klondike had the upper hand. They enjoyed the best territories, the lowest acquisition costs, the most intimate knowledge of the market, and the utmost familiarity with the incumbent players. Most of the players who got rich - got there first.

Bitcoin, Etherium, ETH-based coins, stabilized currencies, DeFi coins, NFTs, exchanges, cold wallets, and other blockchain-based financial instruments are dominating financial news. Some even say crypto mining is consuming over 0.5% of the electricity in the world.

With the rise in the value of so many digital assets (currencies leading the trend), the market has been flooded with millions looking to get rich, fast. Some understand the ideological, commercial, and technological aspects behind various crypto-related topics. Others just see an opportunity.

So, what’s your place in this? Are you going to be a miner who arrives two years late only to find that all the good properties are already staked, or will you be the early prospector, trying to get to the gold first? Or perhaps, you will try to build (or buy a share in) a restaurant (or a security firm, or an exchange, or a wallet)?


History shows that even if you are an immigrant to the US, and you find yourself in an extremely harsh environment, in three generations your offspring can become president. So don't give up just yet.

One more thing:

A fantastic book I’m reading right now that features a different gold rush - Killers of the Flower Moon: The Osage Murders and the Birth of the FBI

Be good!


Visiting Bennett Lake in November 2018. Photo credit: Scott J. Berdahl


In each newsletter, I tell a story. This story is about a business venture, trend, or concept; a person (alive or dead) behind it; and my key lesson(s) or questions from studying those two. Now and then I might throw in a “bonus” like a product, a book, or a course that relates to the story or the takeaways.

If any of this reads to you as remotely interesting, I cordially invite you to subscribe to my newsletter. I also moderate a community on Reddit.


This article is NOT intended to be a recommendation, discouragement, or advice to buy, sell, hold, lend, or perform any financial transaction, in cryptocurrencies or other assets.



  • Book recommendation - To Build a Fire by Jack London

  • Visit the Yukon? Direct flights from Frankfurt to Whitehorse (???)

  • I wouldn't normally recommend it, but the Wikipedia page about the Klondike Gold Rush is actually pretty amazing.

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