<P> A short time later a third town, called Highland was founded on the west side of the South Platte River . Surrounded by steep bluffs and separated from the other two settlements by the river, it was slow to develop . </P> <P> In November 1858, General William Larimer, a land speculator from eastern Kansas, placed logs to stake a square - mile claim on the site of the St. Charles claim, across the creek from the existing mining settlement of Auraria . The majority of the settlers in St. Charles had returned to Kansas for the winter and left only a small number of people behind to guard their claim . Larimer and his followers gave the representatives whiskey, promises, and threats and the St. Charles claim was surrendered . </P> <P> The name of the site was changed to "Denver City" after Kansas Territorial Governor James W. Denver, in an attempt to ensure that the city would become the county seat of then Arapaho County, Kansas . Ironically, when Larimer named the city after Denver to curry favor with him, Denver had already resigned as governor and no longer had say in naming the capitol . </P> <P> Denver at first was a mining settlement, where gold prospectors panned gold from the sands of nearby Cherry Creek and the South Platte River . Larimer, along with associates in the Denver City Land Company, laid out the roads parallel to the creek and sold parcels in the town to merchants and miners, with the intention of creating a major city that would cater to new immigrants . In the early years, land parcels were often traded for grubstakes or gambled away by miners in Auraria . However, the prospectors discovered that the gold deposits in these streams were discouragingly poor and quickly exhausted . When rich gold deposits were discovered in the mountains west of Denver in early 1859 it appeared that Denver City might become a ghost town as prospectors left for more lucrative claims . However, once the gold rush began there was a great need for materials that couldn't be produced locally, which assured Denver's future as a supply hub for the new mines . </P>

Who was the city of denver named after