The town of Anderson was created in 1872 by the Central Pacific Railroad as it built northward from Sacramento to Oregon. It was named for pioneer settler Elias Anderson, who granted the railroad company free right-of-way through his American Ranch. The railroad depot, with town lots around it, was located in the half-mile between the ranches of Elias Anderson and Elmus Nicholas.
The entire area was part of pioneer Pierson B. Reading's Mexican land grant of 1844, the 26,632 acre Rancho Buena Ventura. Reading's grant extended along the west bank of the Sacramento River from Cottonwood Creek on the south to Salt Creek beyond what is now the city of Redding.
Thomas Freeman was the first settler to buy here in 1854. His adobe was a convenient stopping place for miners, freighters, and pack trains on their way to the gold diggings.
Elias Anderson bought Freeman's 160-acre American Ranch in December 1856, and enlarged the ranch to 370 acres. He then built and ran the original American Ranch Hotel. In 1878, he bought a lot in town for $100 and moved his wood-frame hotel to the corner of Center and Ferry streets, across from the railroad depot.
Elmus Nicholas, whose ranch bordered the railroad and marked the north boundary of the town, sold 3/4 acre to Jerry Wright and James and John Bedford, nephew and uncle. They set up a mercantile store and blacksmith shop on North Street at the end of east Center Street. The original building is still in use today on Ferry Street.