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The area was first settled by Europeans in 1831 when Samuel Damon arrived from the United States.
Damon married Lorena Darst and built a home on the south side of the mound.
The settlement grew until it counted 100 inhabitants in 1890 when it was called Damon Mound.
At that time cattle ranching was an important business.
In 1895, the post office reopened after having been closed for three years.
The town was renamed Damon around that time.
A Baptist church opened in 1896.
In 1918 a railroad line was built from Rosenberg to Damon in order to haul away the limestone and sulphur that were quarried from the mound.
In 1925 the town had 300 residents and a Catholic church was founded.
The population dipped to 260 in 1931 at which time the town had its own school district.
In 1944 the railroad line was discontinued beyond Guy to the north.
Nevertheless, Damon's population reached nearly 400 from the 1940s to the 1980s.
In 1989 there were 375 residents, a feed store, cotton gin, quarry and other businesses.
The 2000 census reported 535 persons and Baptist, Catholic, Church of Christ and Lutheran places of worship.

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