Bannack, Montana - Street Scene. Bannack got its start when Colorado prospectors found gold along Grasshopper Creek in the summer of 1862. The site of the first major gold discovery in Montana, miners soon flooded the area and by fall, the mining camp boasted more than 400 people. Named after the local Bannock Indians, the town grew quickly to some 3000 residents by the spring of 1863. When Montana became an official territory in May, 1864, Bannack became its first capital. Though two years later, the capital would be moved to Virginia City. Photo byKathy Weiser-Alexander.