Willowdale was established around a sawmill that was built in 1812. The village thrived because sawmills, gristmills, and a factory producing sawmill machinery were powered by the Ammonoosuc River. After the Littleton Lumber Company opened in 1870, the village grew rapidly to include stores, a post office, a school, railroad siding, and a hall. The company employed as many as 60 workers and produced 3 to 6 million board feet yearly until fire destroyed it in 1898. The village never recovered and slowly dwindled away until it disappeared altogether, a fate suffered by other 19th century mill villages.
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