In 1847 James B. Gay, a civil engineer from Indiana, came to the unsettled Kickapoo Valley, was struck by its untouched forests, and chose a site on the west bank of the river to build a sawmill because of the rock bottom and natural water power there. His mill became a lucrative business, sawing pine logs rafted down the Kickapoo from the La Farge–Ontario region and hardwood from nearby hills into rough lumber for houses and barns, later adding shingles and lath, with finished products piled along the riverbank. Between 1848 and 1860 many families settled in the small community, which by mutual consent took the name Gay's Mills in honor of its founders. In 1865 George M. Wilbur and John M. Gay built the first flour mill, a one-and-a-half-story structure about thirty by forty feet; two years later Wilbur sold his interest to Richard Only, a son-in-law of Mr. Gay, and the building was later remodeled and raised to three stories. Thomas W. Gay, Samuel H. Robb, and James A. Robb operated the mill until 1888, and because it was the only flour mill within twenty-five or thirty miles, farmers came from as far as Eastman, sometimes leaving thirty or forty teams waiting in line while wheat was ground into the winter's supply of flour. During the fall and winter the mill ran two twelve-hour shifts to meet demand, was known for excellence, and had a capacity of seventy-five barrels a day. The flour mill dominated the community's business life as the Gay and Robb families sold it to the King Haggerty Company, whose owners enlarged it again with an addition over the road; it remained in Atwood Haggerty's ownership until 1924, then passed to the Interstate Power Company and later to the Village of Gays Mills. The hydro-electric plant at Gays Mills was owned by Interstate Power Company and later Wisconsin Power and Light Co., with ownership transferred to the village in 1960.