In the summer of 1848 a man named Rose established a trading post called Rose’s Corral about ten miles southwest of today’s Nevada City to serve the prospectors already scouring the area. In August of 1849 a man named Findley, from Oregon, started another store where the emigrant trail from Truckee to Sutter’s Fort crossed the Bear River, a tributary of the Sacramento between the American and the Yuba, Feather River system. Johnson’s Ranch, a Spanish land grant on the Bear River north of Sutter’s grant, was where several rescue attempts for the Donner Party, trapped in the high Sierra snow in the winter of 1846-47, were launched. At that time Findley’s store was the only place between the Sutter’s Fort and Salt Lake City where emigrants could obtain supplies. In September David Bovyer started another trading post at White Oak Springs between Nevada City and Marysville and a man named Townsend with the Rough and Ready Company from Wisconsin started mining eight miles west of Nevada City
It was about this time that at Pleasant Flat on Deer Creek, a tributary of the South Yuba, Dr. A. B. Caldwell started his store. Then in October he opened a second one, called Caldwell’s Upper Store, seven miles up Deer Creek. This was the beginning of Nevada City, first called Deer Creek Dry Diggings. Before the end of 1849 another store opened at Boston Ravine, and with a cabin at Gold Run, a couple of sawmills near Grass Valley, and the mule pens called French Corral these were the only settlements in the area until 1850 when activity increased dramatically.
Nevada City, built on both sides of Deer Creek and in a mountain basin surrounded by oaks and pines, hazel bushes and chaparral and infested with rattlesnakes, was rich with gold deposits but there were no reliable all year streams around to bring in water to process the ore. A ditch was dug from Mosquito Creek, about a mile and half away, and supplied ample water to the diggings at Coyote Hill. This ditch served as a model for other areas, like Placerville, where water was in short supply and soon the gold country was covered with them.
The town had a population of several hundred people at the completion of the ditch. A meeting was held and the name of Nevada adopted for the town. Later, when the state of Nevada entered the union, the name of the town was changed to Nevada City. By the winter of 1850 there were some 250 buildings there, but a fire in March of the next year destroyed half of them and an extremely dry winter seriously hampered mining. Many men left, but the town bounced back and even grew larger. The Nevada Journal, the first newspaper in the northern mines was started, a theater opened and, in 1851, the town was made county seat of Placer County.