Paper City, Middletown. "One of the leading industries in Middletown is that of paper making," wrote George Crout, Middletown historian, in 1948. "Twelve companies are engaged in making some kind of paper products, ranging from fine tissue to heavy box board. In addition there are machine shops, foundries and casting establishments which are used to make and repair paper machinery. The paper industry is Middletown's oldest large industrial enterprise, tracing its beginning back to the old Erwin Paper Co. which was established in 1852. Paper today  ranks next to iron and steel in the Middletown industrial picture." Crout said "throughout the Miami Valley, and at Middletown in particular, there has been a localization of the paper industry. This is due to certain geographical factors. One of these is the natural resource of clear water uncolored by minerals. When the glacier retreated from this area, it left behind a vast cover of fine debris, which served as a natural filter for water. Unfiltered water with mineral deposits would cause coloration of the paper.
Crout said Middletown "had the advantage of an early start. In 1852 the first mill had been constructed along the hydraulic canal, and in a few years, many new paper mills were in operation along the shores of the hydraulic, which furnished water power for the running of these early mills. The hydraulic, it should be noted, is still used as a source of power although, today  it is greatly supplemented by other types. The hydraulic served as a canal, and the products of the mill could be shipped down the hydraulic to the Miami-Erie Canal and thus to market. Readily available water transportation made the industry develop without dependency on the higher freight rates of the railroad. The industry, through water transportation had access to Cincinnati, the 'Queen City of the West,' and could be shipped down the Ohio to New Orleans. Since at that time there were few mills in the West, the companies had a market waiting for them," Crout explained.