The original site, called "Possum Bluff," was purchased for $200 by Pierre Lavine from H.L. Morrison in 1886. The Sabine Tram Company bought the land in 1897 from G. Smyth, and a sawmill was built shortly afterward. The mill soon became the center of industry for the small community. The town was later renamed for U.S. Admiral George Dewey, who served with distinction during the Spanish-American War. Peavy-Moore Lumber Company purchased the mill in 1919, but a devastating fire destroyed it in 1943, leaving the town without an economic center. The Sabine and Neches Valley Railway ceased operations shortly afterward, and most citizens associated with the mill left the area.