The first permanent settlement began in May 1787, when Colonel Jacob Davis and General Parley Davis arrived from Charlton, Massachusetts. General Davis surveyed the land, while Colonel Davis cleared forest and erected a large log house on the west side of the North Branch of the Winooski River. His family moved in the following winter.
Colonel Davis selected the name “Montpelier” after the French city of Montpellier. There was a general enthusiasm for things French as a result of the country’s aid to the American colonies during the Revolutionary War. The settlement grew quickly, and by 1791 the population reached 117.
In 1825, the Marquis de Lafayette visited Montpelier on a triumphal tour of America, 50 years after the Revolutionary War.
The town developed into a center for manufacturing, especially after the Central Vermont Railway opened in Montpelier on June 20, 1849—the same year East Montpelier was set off as a separate town. Falls on the Winooski River provided water power for mills. There was an iron foundry.
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