One of the most important mining locations to arise after Coloma and Mormon Island was about eight miles southeast of the sawmill. Discovered by William Daylor, whose land grant along Deer Creek Slough and the Consumnes River was south of John Sutter’s property, prospected there early in 1848 and found many deposits of gold, most in ravines along a small creek that was substantially dry during the summer. The area quickly drew miners and first was known as the Old Dry Diggin’s before the name of Hangtown somehow stuck. We know it today as Placerville, perhaps still the most vibrant of the early gold rush communities.
Located in the center of one of the richest regions in the country the town grew quickly from tents and shacks to cabins and houses. It became a center for miners to send or receive their mail, get news and supplies, meet friends or perhaps visit one of the many bar rooms and gambling houses in town. There are tales of miners who dug up the dirt floor of their cabins down six feet or more then processed the ore in a rocker. One man was said to have found $20,000 in gold this way. Extensive canals were built bringing a consistent flow of water to mining operations and the town, with it’s stores, hotels, express offices, saloons, freight lines and mule trains, settled in as a permanent location now directly linked to the east by means of the Johnson cutoff.
Many smaller towns sprang up around Placerville; Diamond Springs, El Dorado, Logtown, Smith’s Flat, Cold Springs, Gold Hill and Weber Creek, where Charles Weber started a store on the stream named for him before he went on to build the city of Stockton. The source of much of the areas wealth came from what the early miners thought of as a number of ancient riverbeds. One, known as the Blue Channel because of the color of the gravel, ran from northwest to southeast and was several hundred feet wide. Running westward over the Blue Channel were the several beds of later streams called the Gray Channels, which were 20 to 50 feet deep and mostly washed away into the ravines and streams of the area and so provided the source for the ample placer gold around Placerville. Later, in 1859, when silver was discovered in the Carson Valley of Nevada, Placerville was already situated on the most direct route to the new mines across the Sierra Nevada and so continued to be an important mining center.
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