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This town came to life in the 1870s when several area mines were developed, and the Salmon River Mining and Smelting Company established a smelter. However, the smelter was short-lived, existing only from 1902 to 1904.

The town was named after Clayton Smith, who was quite popular with the miners for opening a house of ill-repute. Today, the area still maintains several active mines. The most notable, the Clayton Silver Mine, dates back to 1929 and employs approximately thirty-five people.

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