In 1829, Joseph Forsyth recognized the economic value of North Florida's vast pine forests and the deepwater meeting of Pond Creek and the Blackwater River, and by the early 1830s he and Ezekiel Simpson were producing 250,000 feet of lumber yearly at Arcadia Mill, moving it by flatboat to the Blackwater River for shipment to buyers. In 1835, the Florida territorial legislature chartered the Pond Creek and Blackwater River Canal Company, Florida's third railroad, which used mule-drawn carts on iron-covered wood rails to carry lumber from Arcadia to the Bagdad Mill. A steam-powered sawmill installed at Bagdad in the early 1840s increased production, and Bagdad's lumber trade eventually extended beyond the Gulf of Mexico and Caribbean to Atlantic ports in North and South America and to Western European, Mediterranean, and Scandinavian countries. When the mill closed in 1939, trade journals remembered it as part of one of the most successful lumber organizations in the Western Hemisphere. The same deepwater channel and abundant forests also made the area well suited to wooden shipbuilding: during the Revolutionary War, the Welsh brothers Jonas and Evan Jones repaired British warships nearby; Captain John Gardner established a shipyard near Bagdad in 1833; and in 1858 William Ollinger and Martin Bruce built a repair facility and marine railway at Shipyard Point that operated for 60 years. In 1861, Confederate President Jefferson Davis contracted with Ollinger and Bruce to build a 110-foot gunboat for Florida's coast and river defense, but on March 11, 1862, as Confederate forces hurried to deny resources to invading Union troops, they burned industrial facilities in Santa Rosa County, destroying the shipyard, the completed gunboat, and Bagdad's lumber mills. The shipwrights saved their pine-built 500-ton floating dry dock by sinking it in the river; after the war it was raised, used for decades, submerged again, then raised once more, found in remarkably good condition, towed to Pensacola, and used successfully for many years.