Zavalla was first known as Zavalla Prairie. Established in 1900, the town was named for the grant to Lorenzo de Zavala on whose land it stood. He had a sawmill which harvested the nearby tracts of longleaf pine timber. Others also owned sawmills in the area contributing to the predominance of the lumbering industry as the major industry of the area. The first post office was set up on 19 January 1901 with Jesse C. Fondren as the postmaster. The community also became a shipping center for the local farming with cotton was the main crop. Other industries which developed in the early 1900's were the Texas naval stores business, using local pine resins and turpentine and the production of Tung which is used in furniture polish and related products. The population remained around 100-200 during the early 1900's, gradually increasing to 450 by 1945. The peak population was reached in 1974-75 at 900. Zavalla was incorporated in 1975 due mostly to the nearby Sam Rayburn Reservoir. The first mayor was C. M. Cryer. The population declined to 726 by 1980. In the mid-1980s Zavalla had two schools, several churches (predominantly Baptist and Pentecostal), and a number of businesses. In 1990 the population was 701. Another town in Jasper county is named Zavala and is many times confused with Zavalla.
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