Abstract

This paper examines the 1900 California oil boom to reframe the debate on pro ductive versus unproductive wealth. Contrary to the "resource curse" narrative, we demonstrate that the discovery triggered a unique structural transformation, foster ing a horizontally diversified, industrial economy. We highlight financial deepening as a central channel: oil rents, entering banks as deposits, increased credit supply and lowered interest rates. The cheaper capital simultaneously financed the rise of manufacturing and the mechanization of agriculture. California’s unique success, transforming resource wealth into broad-based development, illustrates that oil can be a blessing. It thus serves as a policy-relevant historical blueprint for leveraging resource wealth to build a resilient, diversified economy.