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Prescott was originally home to the Yavapai people, who were separated from Patayan groups in 1300 AD. Spaniard Antonio de Espejo, who was searching for gold, made the first known contact with Yavapai. There was no permanent European presence in the area until the 1860s. In 1862 and 1863, the Walker Party explored the territory. Walker and his men found gold at Hassayampa creek, just south of Prescott in 1863. Additional gold was found at nearby Lynx Creek and Weaver Creek. The Arizona Organic Act, which established the Arizona Territory, was passed with the support of Ohio railroad magnates in February 1863. The land was now available for settlement. Fort Whipple was also established in the same year, near Chino Valley. It was also designated the territorial capital.
The fort was moved 20 miles south to more mountainous terrain the following year. After his first visit to the territory, Arizona Territorial Governor John Noble Goodwin chose Prescott as the location. Goodwin succeeded Governor John A. Gurley who was appointed by Abraham Lincoln but died before he took office. Both of them are honored by the Prescott streets. Goodwin chose a location south of Granite Creek's temporary capital, near several mining camps. At a May 30, 1864, public meeting, the new town was named after William H. Prescott, a historian. Robert W. Groom was the first to survey the new community. An initial auction resulted in the sale of 73 lots on June 4, 1864. The new community had sold 232 lots by July 4, 1864. Prescott was established in 1881.