The town began with the discovery of the Happy Go Lucky gold reef in 1863 by William McGregor. He informed his friend William Cummin, who investigated the area and reported that there was no sign of gold. Cummin went immediately to Seaton to register a prospecting claim on the site, knowing that gold was indeed present. McGregor was offered 1/8 of the takings as a compromise.
By 1864 a booming village had developed, including 3 hotels, bakers, butchers, and restaurants. The town was surveyed in 1865 and named Pearson, although it was popularly known as The Happy. At its peak, it had a population of around 300, including a small community of Chinese prospectors.