Gold was discovered on the Cosumnes River in 1849 by two men from Michigan near the historic Nisenan settlement of Palamul. In the 1850s, Michigan Bar became the largest town in Cosumnes Township, with as many as 1500 people. By 1800 the town had declined but still retained its post office, Wells Fargo office, and important pottery works, and little remained by the 20th century after much of the town was destroyed by hydraulic mining and dredging; the Michigan Bar School remained in use until the 1940s. The Michigan Bar Mining District covered a broad area roughly between Michigan Bar and Sloughhouse, where placer gold deposits were mined extensively between 1849 and 1900 primarily by hydraulic and ground sluicing, with dredging extending mining into the 1950s and total production estimated at over 1,500,000 ounces. Mining began with easily reached river deposits, then shifted to nearby gulches whose dirt had to be hauled to the rivers for processing, and ditch construction later allowed work far from water sources, including the first ditch in the area completed in 1851 and the Prairie Ditch completed in 1858, which signaled the beginning of hydraulic mining there. Miners and their families came from the United States and Canada, Central and South America, Europe, Asia, and the Pacific Islands. Native Americans continued to live nearby for some years after the discovery of gold led to the loss of their homelands, and some likely worked for miners and ranchers in the district. Several African American mining families also lived in Michigan Bar for many years. Hydraulic mining used pressurized water against hillsides, aided by additional water brought from miles away through ditch systems, making it easier to break down soils and process them for gold, but it also created tons of debris that entered the river system, deposited silt, and flooded croplands until California hydraulic mining was curtailed in 1884 after a major lawsuit filed by Sacramento and San Joaquin valley farmers.