From the Super Mario Wiki
Lonesome Mushroom is a small, nearly-deserted town in the Wild Wild West. Calamity Clam is the town's sheriff, as well as the owner of all of its buildings. During "The Great Gold Coin Rush", Mario, Luigi, Princess Toadstool, and Toad end up there after digging their way from a gold coin mine. Calamity Clam confirms that the coins that Toad brought are genuine, which leads to a spur of Toad miners digging through the streets of Lonesome Mushroom and the town developing exponentially. However, Claim Jump Koopa kidnaps the Toad miners, halting any progress on the town.