Across the Bear River in Nevada County was another camp, Little York, and just west, a trading post at Cold Springs (later known as Gold Run).

In the fall of 1866, however, the railroad had reached Cisco, 20 miles (32 km) further up the ridge, and Dutch Flat lost most of its importance as a stage stop.

One of the first large mining ditches to reach Dutch Flat had, in effect, demonstrated the existence of easy grades up to Emigrant Gap; from there, the line of the old Donner Trail across the Sierra Nevada was also such that a railroad could be built.

Judah argued vociferously for the Central Pacific's financial backers—including California's "Big Four": Leland Stanford, Collis P. Huntington, Mark Hopkins, and Charles Crocker—to employ the route for a trans-Sierra route that would link up to existing Union Pacific service in Utah or Nevada, instead of Huntington's less-ambitious plan to cater to the lucrative stage and wagon-hauled freight between Sacramento and the Comstock mining boom by building a well-surfaced toll road from Dutch Flat to Donner Lake, and then onward to the Carson Valley.

San Francisco investors, Sierra miners, and even the general public believed that the Central Pacific Railroad was focused only on getting their line built to Dutch Flat.

Other Californians believed the whole railroad construction project a scam and that no one, not even "Crazy Judah," had ever really figured out a practicable route through the Sierra range.

San Francisco newspapers boldly accused the Central Pacific of planning only to lay track up to Dutch Flat and no further.

Judah's successor as chief engineer, Samuel S. Montague, was immediately ordered to continue surveying the future route as far as the "Big Bend of the Truckee River" (where it turns north toward Pyramid Lake), more than 40 miles (64 km) east of the California border.

In 1872, however, the Cedar Creek Company of London purchased over 30 claims in the area and began working them in a more aggressive and industrial fashion, employing hydraulic mining to reach hitherto unreachable deposits of gold by literally blasting it out of alluvial deposits with high-pressure water cannons known as “monitors.” The many dozens of mining claims dividing the old channel gravels beside Dutch Flat and Gold Run made for a thriving economy.

Court challenges were filed, injunctions were disobeyed, inspectors were threatened with violence, but eventually hydraulic operations were brought to an end.

From 1861 to 1907, the Towle Brothers Lumber Company was among the largest in the state, owning over 20,000 acres (81 km2) of land, with a private narrow-gauge railroad 38 miles (61 km) long, and employing a workforce of around 200 men, including fifty Chinese workers.

[9] Dutch Flat's Chinatown began in the 1850s, and by the late 1860s, when the transcontinental railroad was under construction, it was one of the largest Chinese settlements outside of San Francisco.

In 1877 Old Chinatown burned down, and the settlement relocated south of town, near the Dutch Flat Depot on the Central Pacific Railroad.

[11] The town is designated "semi-ghost"[12] and while tourism makes up much of the local economy, many of its current residents are retirees, families and professionals who commute to nearby jobs.