The discovery of gold at Sutter’s Mill in 1849 and the subsequent strikes all along the Mother Lode area resulted in a flood of people rushing to California over the next three years. The many groups of hopeful 49ers encountered a climate and geography very different from home. The Mediterranean climate with its attendant periods of wet and dry, drought and flood, created an acute awareness in the determined miners of the need for a consistent water supply. The discovery that hydraulic mining would produce a more efficient breaking of the gold-bearing quartz ledges around the town of Columbia drove the establishment of the Tuolumne County Water Company in June of 1851.

It was to be an employee-owned and controlled company. The founders quickly traveled to surrounding communities advertising their organization and attracting investors. At the end of June, with 160 shares of stock sold, the water route surveyed and workers celebrating, the Tuolumne County Water Company went into business. Their initial plans to tap into Five Mile Creek and then the south fork of the Stanislaus River met with limited success, as the creeks ran dry and rivers ran low, typical of summer weather patterns. It took almost a year for water to finally arrive, although not in amounts great enough to sustain significant mining operations. During this initial period of struggle, the Company borrowed heavily for capital investments in sawmills, water ditches and flumes, roads, and equipment. The Tuolumne County Water Company formally incorporated in September 1852 with an issue of stock valued at $275 a share. With new capital, the Water Company quickly began work on locating plentiful supplies of water and developing water delivery infrastructure, while building their business. It did not take long for the inflated prices the Company charged to assist them in overcoming heavy debt to spark protests from the local mining interests.

The availability of water, as well as the prices paid for it, strongly impacted the economic health of the community. Water became nearly as precious as the gold it helped to mine, and a struggle between Company owners and miners for control of water sources ensued. Greed on both sides of the conflict resulted in power-grabbing to control the water and the subsequent economic health of associated towns. By 1855, miners, dissatisfied with the high prices and non-responsiveness of the Tuolumne County Water Company, formed a company of their own, the Columbia and Stanislaus River Water Company. Although starting with high hopes and sound principles, the new company soon ran into financial trouble and dissolved. Sold to pay debts and then absorbed by the stronger Tuolumne, disgruntled miners began sensing a water monopoly.

The purchase of the Columbia and Stanislaus Water Company began an era of swift expansion of the Tuolumne company, and some miners, enraged by the monopolistic practices of the Tuolumne, formed a group of “ditch breakers” to protest the company’s policies. The group destroyed ditches and flumes and levied threats of physical harm against company officers and employees. The company prevailed however, and within a few years had built a network of ditches, flumes, and reservoirs throughout Tuolumne County.

By the late 1880s, as gold production declined and population moved to seek success elsewhere, the Tuolumne County Water Company began to experience an extended period of decline. Many ditches were in a sad state of repair and dams and reservoirs showed a marked lack of maintenance. A brief boom period returned with the arrival of the railroad. A growing lumber industry and subsequent demand for hydroelectric power to run sawmills resulted in the company entering the field of water-supplied power, but even this did not last for long. By 1903 the company was up for sale and shortly thereafter ceased operations, leaving an impressive array of ditches, flumes, dams, lakes, and reservoirs all over the county.