Confederate Gulch, Diamond City, and the Montana Bar.

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At the center of the marked area is the site of Diamond City located in Confederate Gulch, which extends upstream and downstream, beyond the marked area, and drains westward through the Big Belt Mountains to the upper Missouri River. In 1864 confederate soldiers made a minor gold discovery in the lower portion of the gulch. The soldiers had been captured from General Sterling Price's Confederate forces in Missouri and were offered parole on condition they leave the combat area; they went to the Montana mining camps. The initial strike was small, but hard work produced enough gold so that other southern sympathizers showed up in late 1864, and the area became known as Confederate Gulch. During the winter of 1864 four log cabins were built equidistant around a large rock obstruction, and the paths from cabin to cabin made a perfect diamond in the snow, as seen from the slopes above, and the place was called Diamond City. The City was a joke, comparing the poor settlement of the southern sympathizers to the booming mining camps of Helena and Virginia City. Things got no better until late 1865 when a group of newcomers, referred to as the Germans, arrived. In response to their earnest and repeated requests for directions to good claims, they were told to "go up yonder". They set off up the gulch and discovered the Montana Bar. The Bar was a few acres in extent located on a shelf. It was one of the truly spectacular placer gold discoveries in terms of yield per acre. The Montana Bar became legendary, reportedly producing $1,000 of gold from one pan of dirt, and $115,000 of gold production in a week. The discovery of the Montana Bar generated other discoveries, upstream (or up gulch) from Diamond City, including Boulder Bar, Diamond Bar, Gold Hill, Cement Gulch, Montana Gulch, and Greenhorn Gulch. The other discoveries were not so easily worked, but some were almost as rich as the Montana Bar. For a period of years Confederate Gulch boomed, outstripping all other Montana Camps in gold production, chiefly because the gold was course and easy to get at, water was close and abundant and gradients favorable to sluice currents and dump disposal. The pay zone in Confederate Gulch proper was mined for about five miles, and produced $20,000 to $100,000 per claim. Diamond City grew to a claimed size of ten thousand (which probably included all the population up and down the gulches and side gulches and in the small communities of El Dorado, Boulder, Jim Town and Cement Gulch City). For a time Diamond City became the county seat of Meagher County. From 1864 to 1870, Confederate Gulch produced an estimated $17,000,000 in gold. Eventually the pay zones were all worked over, some with hydraulics. This process resulted in leaving spoil banks, mostly overgrown with brush, and in obliterating the remains of the original Diamond City, and other small communities in the gulches. Today a passable road goes up the gulch from Townsend and over the divide to the Smith River Valley. In the summer individual gold prospectors can still be seen, trying their luck up and down the gulch.