Original Mexican colonization laws allowed only people of Mexican or Spanish decent to settle on coastal land. However, Stephen F. Austin became the first American empressario given permission to colonize the Galveston Bay area. He sold a league of land bordering Galveston Bay and Dickinson Bayou to Amos Edwards in 1828. The Edwards family lived and ranched on the estate for nearly a decade. After the Texas Revolution, a portion of it was platted as the new town of Powhaten under the Republic of Texas by Dr. Branch Archer and Samuel May Williams. This town only lasted one year, as a hurricane in 1837 destroyed it. Soon thereafter, Edwards’ son Monroe sold land to another investor who created a new town called San Leon. Although there is not a lot of information about San Leon’s development or demise, it is known that the Edwards eventually lost ownership of the land which became open range for the Butler Ranch.​

During the late 1800s, Galveston businessmen created a plan they hoped would diminish Houston’s potential, and make their city the premier deep water port and industrial center. An integral part of the plan was to turn San Leon into North Galveston and build a bridge across Galveston Bay at Red Fish Bar so rail shipments could connect to Galveston without going through Houston. By 1892, North Galveston was laid out, numerous buildings were constructed, and the new North Galveston, Beaumont & Eastern Rail Road was built from the new town to Virginia Point connecting it to Galveston. Several factories began producing goods like baskets, barrels, lumber, bricks, and wall board. 

This new factory town was well received at the Chicago World’s Fair, and excursion trains brought passengers who stayed at the new 75-room Hotel Industrial while they toured the town. The only hurdle that remained was securing permission from Congress to build the rail bridge over Galveston Bay. During this same period Houston was lobbying Congress to allow them to dredge a ship channel up Buffalo Bayou. Just as it seemed Galveston would indeed win that battle in Congress, a devastating hurricane hit the Texas coast just west of Galveston on September 8, 1900. The storm not only destroyed lives and property throughout the county, but also the future shipping monopoly for which Galveston was aiming. North Galveston was destroyed, and many of the surviving residents left. As Galveston struggled to recover, Houston solidified its plan for dredging its ship channel.

A Houston businessman named Joe Eagle purchased the ghost town of North Galveston and changed its name back to San Leon. Eagle renovated the hotel, and initiated drawbridge and school construction. The area became known for fig and citrus orchards, until the Depression and freezing temperatures hurt production. San Leon’s economy began to shift in the 1920s from agricultural to commercial fishing.
San Leon Hotel, ca. 1911