Gold was first discovered in Colorado near present-day Denver, setting off the Pike's Peak gold rush of 1858. The Smuggler gold vein above Telluride, and placer gold in the San Miguel River, were discovered in 1875. John Fallon made the first claim in Marshal Basin above Telluride in 1875 and early settlement of Telluride followed. The town itself was founded in 1878. Telluride was originally named "Columbia", but due to confusion with Columbia, California, the name was changed by the post office in 1887. The town was named after valuable ore compounds of the chemical element tellurium, a metalloid element which forms natural tellurides, the most notable of which are telluride ores of gold and silver. Although gold telluride minerals were never actually found in the mountains near Telluride, the area's mines were rich in zinc, lead, copper, silver, and ores which contained gold in other forms.

Telluride began slowly because of its isolated location. In 1881, a toll road was opened by Otto Mears which allowed wagons to go where only pack mules could go before. This increased the number of people in Telluride, but it was still expensive to get gold-rich ore out of the valley. -Wikipedia