The spring session of the 1703 General Assembly granted to the town of Woodbury the right to enlarge its bounds. Negotiations with the Indian inhabitants were successfully concluded and in 1710 a deed of sale, signed by Nunawague and five other chiefs, conveyed to Woodbury nearly eighteen thousand acres, known thereafter as the North Purchase. This included the present town of Bethlehem and parts of the later Judea, now Washington. Surveyed in 1723 and, after proprietors were granted their rights, divided into lots, it was opened for sale. Pioneers arrived in 1734, settling on the heights northeast of the present center.
In 1738 young Joseph Bellamy was called to preach during "winter privileges". Separate "society privileges" were granted in October, 1739. Bellamy was requested to continue as pastor, and so remained until his death in 1790, as the settlers established their own Bethlem Church and school.
Doctor Bellamy became a most distinguished author, preacher and teacher, conducting the first theological school in America. Young men lived in the Bellamy home while he grounded them in his brand of scriptural interpretation and preaching methods. Among future leaders who studied there were Aaron Burr, Jonathan Edwards II, and James Morris. Bethlem men served in the French and Indian and all subsequent wars. Numerous are the captains and lieutenants buried in the Old Cemetery.
Bethlem was incorporated as a separate town in 1787. Mainly a farming community until the 1900s, it had sufficient water power for 18th Century industries - fulling mills, cotton mill, woolen mill, wagon factory, straw hat and bonnet factory and miscellaneous manufactories of leather goods.