The area was first developed to help satisfy the demand for water to work the gold-bearing claims scattered in the foothills and valleys of Northern California’s Nevada County and Sierra County. The area contained an inexhaustible supply of water, which could be collected in reservoirs and conducted by aqueducts and flumes to lower elevation mining locales. In the summer of 1858, the South Yuba Canal Company erected a stone wall across a 900 feet (270 m) ravine through which flowed a tributary of the South Yuba River, forming the Meadow Lake reservoir. From it, parts of Nevada City and southwestern Nevada County obtained their principal supply of water during several months of the year. It measures 50 feet (15 m) in height, 15 feet (4.6 m) width at its apex, and is built of granite.
In 1860, Henry Hartley, a trapper, built a cabin in the area. In 1863, he noticed some gold flakes in granite ledges. With John Simons and Henry Feutel, he formed the “Excelsior Company” to work their claims about one mile south of the lake. The next year, the California Company staked out several additional claims.
The town’s heyday occurred from 1865 to 1868 with the economy built on the prospect of finding substantial gold ore. In 1865, rumors of abundant gold around the lake began to spread. One newspaper reported that its assay showed $55,000 in gold and silver to the ton of rock. Judge Tilford, the respected author of the section on Meadow Lake in Bean’s History, commented:
“The writer is happy to have it in his power to state that assays since made, as well as results of milling on a large scale, have confirmed the judgment of the original locators, and demonstrated that these claims are among the foremost of the district.”
Soon, thousands of miners and speculators rushed in staking out over a thousand claims and creating a boom in mining shares. Many were from the Virginia City area, where concerns had spread that the local mines were “played out.”
By late June, a 160-acre townsite was laid out by a surveyor hired by Virginia City promoters A. C. “Alex” Wightman and Charley Parker. Summit City, as it was named, was a planned community with streets intersecting at right angles and named in lettered order in one direction and numerical order in the other, and a plaza at its heart. By late summer, Summit City reportedly had 10 stores, five lumberyards, 10 hotels, five blacksmith shops, many, many bars, gambling houses, a brewery, a book and stationery store, a cigar store, a barbershop, a church, and a 10 piece brass band. An excursion vessel ferried revelers to four hurdy-gurdy houses (dance halls) at the lake’s upper end. Not satisfied with a private school, the citizens petitioned the Board of Supervisors to create a school district. Soon, the Board created the Altamont school district. Summit City had more businesses than any other town in Nevada County except Nevada City and Grass Valley. About 150 houses had been erected. A stage ran daily to Virginia City and a tri-weekly Pony Express ran from Nevada City. Tollroads spidered out from the town in various directions, including to the Henness Pass road, and to the Central Pacific Railroad in Cisco. Prominent residents included Mark Twain’s brother, lawyer Orion Clemens. The town had a court, presided over by Judge Jones, a jail, a marshal and several other lawyers.
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