Port Jefferson was located where the Sidney Feeder canal connected with the Great Miami River. The purpose of the feeder was to provide a steady flow of water to the Miami Canal at the Lockington locks. A large dam in the river east of Port Jefferson diverted the waters into the feeder.

Because Port Jefferson was the closest point on the canal system for the vast territory east of Sidney and Port Jefferson, it became an important center for commercial activity almost overnight. All grain, lumber, and other products north and east of town, destined for the canal, passed through it. The canal feeder at Port Jefferson was completed to Sidney by 1841, some 4 years before the Miami & Erie Canal was opened between Cincinnati and Toledo.

Samuel Rice heard about the bright economic prospects of the village in the early 1840s. After first touring a small underdeveloped town called Chicago in northern Illinois, he traveled here, evaluated the prospects of Port Jefferson, and chose to invest here. He purchased a substantial amount of property around the village, and waited...

During its heyday between 1845 and the 1860s, Port Jefferson almost rivaled Sidney in size and influence. Close to 150 Port Jefferson men worked in the wooden products (barrels and staves) business. Four blacksmiths, including Epler and Johnson, were kept busy by the canal boat work. Gottlieb Allinger built a large mill on the canal in 1871, now the site of Hussey's Restaurant. Three dry goods stores, three groceries, and a shoe shop blossomed.