Thomas McKay, stepson of Dr. John McLoughlin, and son of Alexander McKay and Margaruite Wadin, was probably the first settler of the area now known as Scotts Mills. In 1847 Thomas McKay built a saw mill on Butte Creek after which he built a grist mill, the latter being contracted by Lauren Lewis Thomas and Rice Dunbar.
Michael Nowlin obtained the mill site from the McKay estate and later sold it to his brother-in-law, Joshua Bowman, after which the mill property was sold to Robert Hall Scott in 1866. He improved the property and the enterprise was jointly conducted with his brother, Thomas Scott. Both of the Scotts were born in Banff’s Mills, Roxburyshire, Scotland and left a heritage in Oregon by giving the name Scotts Mills to the little village on Butte Creek. According to Lewis A. McArthur, author of Oregon Geographic Names, the settlement was named in 1866.
The Scotts Mills-Marquam Cedar Pole Line System was organized as a telephone company in 1907 and provided a quick means of communication between the two towns.
The Scotts Mills Post Office, located in the “Bridge House” was established November 1, 1887; mail service before that date having been provided by the Butte Creek Post Office which had been established January 24, 1851.
The Oregon Land Development Company was incorporated in February, 1888, and purchased 2,107 acres of land in 1893 from Thomas Scott. Shortly thereafter, the company induced members of the Friends Church from several states to settle the town. The townsite of Scotts Mills was recorded May 16, 1893, provisions being made for electricity, tramways, water pipes, and many modern conveniences. In 1902 the Oregon Land Development Company declared bankruptcy which resulted in the loss of property to many buyers.
The town grew slowly and in 1916, with a population of 165 people, obtained a charter. Charles Scott, son of Robert Hall Scott, was the first mayor.
A second church, the Christian Church, was built in 1897 and is the present home of the Scotts Mills Area Historical Society. The Friends Church, built in 1894, is a landmark and is still used for services.
In 1905 the business district of Scotts Mills consisted of two large grocery and dry goods stores, a Post Office, blacksmith shop, tin shop and photograph gallery, flour and saw mill, prune drying shed, and a coffin factory. A hotel, “Shepherd House”, built in 1894 by Shepherd Ong, later owned by Mr. and Mrs. John Kellis, provided room and board for weary travelers. In later years, the town supported a butcher shop, livery stable, barber shop, and a pool room.
The Maple Wood Cemetery, located across Butte Creek in Clackamas County, was donated by the Scott family and is the burial site of pioneers and newcomers of the Scotts Mills area.