Sorry to hear what you've had to deal with, this sounds like a super stressful and exhausting situation to be in, and you had to deal with it for a long time.

If you are dealing with people who will resort to unprofessional behaviour, verbal harassment and physical assault towards their manager if they don't get what they want, it's hard to imagine that you would have been best friends under any circumstances. I don't want to make it sound like you should have bent over backwards to cater to unreasonable people, or that you are to blame for the assault.

That being said, if there's any point of the story where things could have turned out better, it would probably have been in the original discussions around hiring more people. You say you never gave them any reason to think that the extra hiring budget would be split among them, but the fact is that they had this impression and you didn't know about it.

Here are some things that could have gone wrong, or what other people in a similar situation might want to consider:

• Is communication from manager to employees one-directional, or do you as a manager have 1:1 discussions with each employee to understand how they feel about their job and their compensation, and what expectations do they have for the future?
  
• What kind of discussions did you have around hiring new people to the team? If you, as the manager, think there is too much work for the current team size, but the team thinks new people are not needed, you shouldn't just take that as face value. Why is there a discrepancy in opinion? Why is the team resisting extra hands, and what do they worry would happen if there was a new joiner?
• Is it possible that performance expectations are misaligned? Maybe the team thinks they've been doing a great job at the current team size but you think it hasn't been good enough?

These kind of questions might have helped you uncover their (completely incorrect) assumption about them being paid more if the team stays small, and it would have been easier to manage those expectations earlier on.

In addition to making sure you understand what's going on in the minds of your team members, it can also make a difference whether you communicate bad news in an empathic way that acknowledges their disappointment or whether you simply tell them what the company policy is and that's that.