A party led by Dr. Thaddeus Hildreth discovered gold here in March 1850, and Hildreth Diggings was established. Soon another claim was located in Matelot Gulch, and by the end of April a tent camp of around 1000 had formed. Before long, it was determined that Hildreth Diggings, also called American Camp, needed a better name. On April 29, the camp was formally called "Columbia." Unfortunately, despite its fast growth, Columbia was halted by a lack of water and almost abandoned. Rains renewed interest, but a dry winter once again hindered development. The solution was to build a ditch from Five Mile Creek, which was completed May 2, 1852. Following the ditch's completion, Columbia began an immediate upswing and soon was producing an astounding $100,000 per week. By the end of 1852, over 100 businesses were in operation. The town was incorporated in May 1854.

On July 10, 1854, Columbia was struck by fire. H. "Babe" Crowell was accused of setting the fire, and had been heard only recently stating that Columbia hadn't suffered from fire like other Gold Rush towns. Much of the business district was destroyed, but reconstruction began immediately. Brick buildings with iron shutters were constructed where wooden buildings once stood, and water systems were developed to fight future fires.

By 1855, Columbia had become one the largest and most important cities in California. Mines continued to produce great amounts of gold, and the city had a thriving business district and a number of homes. Alas, another conflagration struck Columbia on August 25, 1857. A Chinese miner was cooking when the grease in his pan ignited, quickly setting fire to the canvas wall of his abode. The fire spread quickly and destroyed 13 blocks; some of the reported fireproof buildings were even lost to the flames. In the end, $1 million in property had been lost or damaged, and Chinese were subsequently banned from the city limits. Columbia once again rebuilt, with even stricter standards for fire protection.

By the 1870s, gold began to diminish in Columbia. After producing $87 million, Columbia faded. Brick buildings were dismantled, and the town nearly became a ghost. By the 1940s, interest in the Gold Rush and its history was renewed. In 1945, the State of California created Columbia State Historic Park, and began to restore the remaining buildings. A few replicas were built as well, following photographs and drawings from Columbia's early days. Today Columbia has a population of over 2000 spread over the surrounding hills, and the historic core of town serves as a living museum of how things were over 150 years ago.

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