Jefferson, the county seat of Marion County, is at the junction of U.S. Highway 59 and State Highway 49, on Big Cypress Creek and Caddo Lake in the south central portion of the county. It was named for Thomas Jefferson when it was founded in the early 1840s by Allen Urquhart and Daniel Alley. In the late 1830s Urquhart, who immigrated to Texas from North Carolina, received a headright on a bend in the creek; he laid out a townsite there around 1842. At about the same time Alley obtained a 586-acre parcel adjacent to Urquhart's survey and laid out additional streets that became known as Alley's Addition. In contrast to most other town planners of the time, who arranged their plans around a central square, Urquhart laid out the town along Big Cypress Creek, with its streets running at right angles to the bayou. Alley's streets, on the other hand, followed the points of the compass. The intersection of the two plans gave the town its distinctive V-shaped layout. As the westernmost outpost for navigation on the Red River, Jefferson quickly developed into an important riverport. The first steamboat, the Llama, reached Jefferson in late 1843 or early 1844. A post office was established in 1846, and the town was incorporated in March 20, 1848, though because of various delays a city charter was not adopted until 1850. In the same year the town adopted the aldermanic form of city government. In 1846 Jefferson became the county seat of Cass County, upon that county's separation from Bowie County, and served as such until Linden became county seat in 1852. A Methodist church was organized in 1844, followed by the Presbyterian church between 1846 and 1850 and the Baptist church in 1855. The first newspaper, the Jefferson Democrat, was printed in 1847, and the following year the Jimplecute, the town's longest-running and most influential paper, made its appearance.
During the late 1840s efforts were made to clear Big Cypress Creek for navigation. Within a few years steamboats were regularly making the trip from Shreveport and New Orleans, transporting cotton and other produce downstream and returning with supplies and manufactured goods, including materials and furnishings for many of the early homes. By the late 1840s Jefferson had emerged as the leading commercial and distribution center of Northeast Texas and the state's leading inland port.
Among the persistent legends that have grown up around the town was the belief that Jeffersonians had shunned the railroads. While much of the city's wealth during the antebellum and early postbellum years derived from the river trade, city leaders recognized early the importance of rail transportation and made efforts to build a railroad linking the town with Shreveport and Marshall. Construction of a line began in 1860, but only forty-five miles of road was completed by the outbreak of the Civil War. In 1860 Jefferson became county seat of the newly established Marion County. After Abraham Lincoln was elected, Marion County voted unanimously for secession. Jefferson men volunteered for military service in large numbers, and during the Civil War a meat cannery was established there, as were factories for boots and shoes.
After the war the town's economy recovered quickly. A fire destroyed practically the entire business section in 1866, but it was rebuilt within a few years. In 1867 Jefferson became the first town in Texas to use natural gas for artificial lighting purposes, and ice was first manufactured on a commercial scale there in 1868. By 1870 Jefferson, with a population of 4,180, was the sixth largest city in Texas. Between 1867 and 1870 trade grew from $3 million to $8 million, and in the late 1860s more than 75,000 bales of cotton were being shipped annually. By 1870 only Galveston surpassed Jefferson in volume of commerce. The town reached its peak in 1872, when a supplementary census reported 7,297 inhabitants.
But in 1873 two events occurred that eventually spelled the end of Jefferson's importance. The first was destruction of the Red River Raft, a natural dam on the river above Shreveport. In November of 1873 nitroglycerin charges were used to remove the last portion of the raft, which had previously made the upper section of the river unnavigable. The demolition of the raft reopened the main course of the river, but significantly lowered the water level of the surrounding lakes and streams, making the trip to Jefferson difficult, particularly in times of drought. Even more important to Jefferson's decline was the completion of the Texas and Pacific Railway from Texarkana to Marshall, which bypassed Jefferson. Although another line of the Texas and Pacific reached Jefferson the following year, the development of rail commerce and the rise of Marshall, Dallas, and other important rail cities brought an end to Jefferson's golden age as a commercial and shipping center. Though efforts were made in later years to raise the water level on the Big Cypress, the railroads soon displaced the riverboats, and with them Jefferson.
Another of the misconceptions that surround the history of the town is that railroad magnate Jay Gould, angered by the lukewarm response of Jefferson civic leaders to the railroad, deliberately bypassed the town and wrote in the register of the Excelsior Hotel that it would mean "the end of Jefferson." In fact, reports that Gould placed a curse on the town are completely unfounded. He did not acquire the Texas and Pacific until the early 1880s and only visited the town much later. The rise of the railroads and the decline of the river traffic nevertheless had dire results for Jefferson, and after 1876 the town began to decline. By 1885 the population had fallen to some 3,500.
During the late 1870s the town's attention was briefly diverted from its economic woes by the sensational murder trial of Diamond Bessie Moore. Moore, a native of New York state who had worked for a time as a prostitute in New Orleans and Hot Springs, arrived in Jefferson in January 1877 with her consort, Abraham Rothschild. A few days later she was found murdered in the woods nearby. Rothschild was charged with the crime. The court battles that followed became one of the most celebrated trials of the period. Rothschild was eventually found not guilty, and the case was never solved; the incident has continued to provoke fascination.
Jefferson's economy rebounded briefly in the late 1930s after the discovery of oil in the county. In 1940 it reported some 3,800 residents and 150 businesses. Subsequently the town slowly declined. By 1970 the population had fallen to 3,203, and the number of businesses had declined to seventy-five. In 2000 the population was 2,024. In the 1990s Jefferson was known for its places of historic interest, including numerous mid-nineteenth-century homes, churches, and other structures. In 1971 a roughly forty-seven-block area containing fifty-six historic structures was listed in the National Register of Historic Places. In addition, some ten other buildings have been accorded National Register status, including the antebellum Excelsior Hotel and Planters Bank and Warehouse. Every year Jefferson sponsors a three-day spring historic pilgrimage to view these sites. Since 1955 the festivities have also included a reenactment of the Diamond Bessie Murder Trial.