Dayton was the site of Nevada's first documented gold discovery in 1849 at the mouth of Gold Cañon and became the state's earliest permanent Euro-American settlement after miners created a tent town there in 1851. Known first as Ponderer's Rest and then as Chinatown from 1857 to 1861 after 150 Chinese workers arrived to dig a water ditch from the Carson River to mining operations in Gold Cañon, it was the site of the first Chinese settlement in Nevada and of the state's first significant construction project. Dayton became a milling center for ore from Virginia City's silver and gold mines, was named in 1861 for surveyor John Day, and became the first county seat of Lyon County in the new Nevada Territory. In 1862 it ranked as the territory's third-largest community, and by 1865 it had hotels, saloons, grocery stores, a brewery, lumberyards, a military unit, farming and ranching operations, and a schoolhouse. Mining later declined, and by 1880 the population had fallen to 200. The area had been home to Native Americans for thousands of years before Euro-American emigration, and Dayton was also the site of Nevada's first cemetery, a Pony Express stop called Nevada in 1860-1861, and part of the route of the Lincoln Highway.