By 1864 it became evident to Higgins and Worden that the need existed for a lumber and flourmill to supply building materials and food for the increasing number of settlers arriving in the Missoula Valley. Looking for a water source to power the gristmill, the entrepreneurs first considered nearby Grant Creek, but soon realized that its summer flow would be inadequate. The next obvious power source was Rattlesnake Creek, some four miles to the east. Because the land immediately adjacent to that creek was already owned, Higgins and Worden, with a third partner by the name of David Pattee, constructed a grist mill and lumber mill near where the Mullan Road intersected with present day Higgins Avenue. To bring the necessary waterpower, the businessmen dug a race from Rattlesnake Creek, effectively channeling the water to the gristmill. Physical evidence of that first mill race can be found in the basement of the National Register listed Missoula Mercantile Warehouse, where brick arches that allowed the water to flow under that site still exist.
The construction of the mills began in 1865 and continued into 1866. Worden and Higgins also built a frame structure for their business about a block west of the mill site. Soon other businesses appeared along Front Street, which roughly followed the east-west route of the Mullan Military Road. During 1866 and the years immediately following, Missoula, which was called Missoula Mills for a time, grew in a haphazard manner with settlers choosing sites primarily for the convenience of water rights. For the most part, however, buildings generally followed the contours of the Clark Fork River, whose banks were just a few yards south of Front Street. As Missoula grew, Hell Gate Village diminished. Governmental and trade activities moved to Missoula and by 1866, Hell Gate had lost its county seat status to Missoula.
Gold discoveries occurring both east and west during the latter years of the 1860s brought fortune seekers and others through Missoula by way of the Mullan Military Road, which was the only major transportation link between the Missouri River at Fort Benton and the Columbia River. In 1869 a gold strike west of Missoula at Cedar Creek, near present day Superior, brought thousands to the area. When claims soon played out many of the Cedar Creek miners came to Missoula. However, most moved on following the rushes to newly discovered gold strikes. As a result, Missoula never boomed the way true gold rush towns like Helena did. The population of Missoula in 1869 was around 100.
By 1872 there were 66 occupied buildings in Missoula with half of them having been constructed during the previous three years. By that time, Higgins & Worden had moved their business, which was now known as Worden and Company, a block north and a block east of Front Street to the northwest corner of Main Street and Higgins Avenue. The following year Higgins organized the Montana National Bank and located it in the new brick Worden & Company Store.
Higgins and Worden faced growing competition from the firm of Bonner and Welch, established by Richard Eddy, Edward Bonner and David Welch. By 1876 the company had welcomed Andrew Hammond, an enterprising young salesman from New Brunswick, Canada, into management and the store became known as Eddy, Hammond and Company. In 1877 that company began constructing a new building at the northeast corner of Front Street and Higgins Avenue. That building would evolve through the years and the company would become the most powerful business entity in western Montana under the name of the Missoula Mercantile Company. The store, greatly expanded through the years, still stands today and is listed in the National Register.
The expansion of Hammond’s business coincided with the hasty establishment of Fort Missoula, which was built in reaction to the threat of hostilities between Native Americans and white settlers. That fort came about primarily because of a general atmosphere of fear generated by the Battle of the Little Bighorn, which had taken place the previous summer, and the Nez Perce War of 1877, which brought Chief Joseph and his followers to within a few miles of Missoula. As word of Chief Joseph’s approach spread panic, some Missoulians hid in the half finished Missoula Mercantile building while others volunteered to join the forty-five soldiers who were sent out to confront the feared Nez Perce leader. When Chief Joseph simply avoided the soldiers who were encamped at a location southwest of present day Lolo, that site became known as Fort Fizzle. Still, Missoula had its new fort and the soldiers stationed there would help the local economy by among other things, frequenting the row of “honkytonks” that began to appear along West Front Street.