Labor was very scarce, expensive, and had to be economized.  The mill was built over a dry channel of the river which was calculated to be the tail-race.  After arranging his head-race, dam and tub-wheel, he let on the water to test the goodness of his machinery.  It worked very well until it was found that the tail-race did not carry off the water fast enough, so he put his men to work in a rude way to clear out the tail-race.  They scratched a kind of ditch down the middle of the dry channel, throwing the coarser stones to one side; then, letting on the water again, it would run with velocity down the channel, washing away the dirt, thus saving labor.  This course of action was repeated several times, acting exactly like the long Tom afterward resorted to by the miners.  As Marshall himself was working in this ditch, he observed particles of yellow metal which he gathered up in his hand, when it seemed to have suddenly flashed across his mind that it was gold.  After picking up about an ounce, he hurried down to the fort to report to Captain Sutter his discovery.  Captain Sutter himself related to me Marshall’s account, saying that, as he sat in his room at the fort one day in February or March, 1848, a knock was heard at his door, and he called out, “Come in.”  In walked Marshall, who was a half-crazy man at best, but then looked strangely wild.  “What is the matter, Marshall!” Marshall inquired if any one was within hearing, and began to peer about the room, and look under the bed, when Sutter, fearing that some calamity had befallen the party up at the saw-mill, and that Marshall was really crazy, began to make his way to the door, demanding of Marshall to explain what was the matter.  At last he revealed his discovery, and laid before Captain Sutter the pellicles of gold he had picked up in the ditch.  At first, Sutter attached little or no importance to the discovery, and told Marshall to go back to the mill, and say nothing of what he had seen to Mr. Wimmer, or any one else.  Yet, as it might add value to the location, he dispatched to our headquarters at Monterey, as I have already related, the two men with a written application for a preemption to the quarter-section of land at Coloma.  Marshall returned to the mill, but could not keep out of his wonderful ditch, and by some means the other men employed there learned his secret.  They then wanted to gather the gold, and Marshall threatened to shoot them if they attempted it; but these men had sense enough to know that if “placer"-gold existed at Coloma, it would also be found farther down-stream, and they gradually “prospected” until they reached Mormon Island, fifteen miles below, where they discovered one of the richest placers on earth.  These men revealed the fact to some other Mormons who were employed by Captain Sutter at a grist-mill he was building still lower down the American Fork, and six miles above his fort.  All of them struck for higher wages, to which Sutter yielded, until they asked ten dollars a day, which he refused, and the two mills on which he had spent so much money were never built, and fell into decay.