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In the early 1840s, James W. Marshall, living in Missouri, contracted malaria. In OTL, he moved west on the advice of his doctor. However, in ATL, he refused, and ended up dying. Thus their was no one to discover gold in California, and the Gold Rush never occurred.
After the United States gained California, there was nothing it could do with it. There were no large cities, and no natural assets to speak of. Because of this, the California Territory faded into obscurity, and by the turn of the century, it was an agricultural outpost of the United States.
In 1913, Mexican revolutionary Pancho Villa captured the defenseless New Mexico Territory and the weak southern half of the California Territory, for use as a base. His domain's northernmost counties were San Luis Obispo, Kern and San Bernardino. When tidings of this event reached Washington, President Wilson reacted immediately, sending troops to end the rebellion. Mexico's U.S.-supported government under Francisco I. Madero was fast to support the Americans.
The War of the Southwest
At first, Villa's troops did well in the war, soon dubbed the War of the Southwest by writers. A major offensive was launched into Baja California and Sonora, and it looked like the American troops were helpless to stop it. However, in January 1914, Brigadier General John J. Pershing, just back from the Philippines, was put in command of the Army 8th Brigade. Pershing's troops were able to ground the advance to a halt, and in late October, parties from both sides met in Naples. On November 13, the terms of the Treaty of Naples were agreed upon. The revolutionaries kept all the territories they had gained, and were officially recognized as an independent country. The move was widely regarded as a diplomatic victory for the newly created República Desierto.