Pleasant Flat on Deer Creek, a tributary of the South Yuba, is where 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.

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