The natural two-and-a-half foot drop in the Cedar River between Park Avenue and Sixth Street gave Waterloo its original name: "Prairie Rapids." It was a good place to cross the river and an excellent site for mills.

George Hanna, Charles Mullan and James Virden arranged for James Eggers to build a dam and sawmill here in 1854. Eggers received land from the three in exchange for his work. He soon sold out, however, to new owners who built a millrace and flourmill on the site of the former YMCA Building, 154 West Fourth Street.

These new owners, led by George Couch, formed the Waterloo Mill Company in 1871. Their competition included the Cedar Milling Company formed in 1868. The two firms merged in 1873 as the Union Mill Company, operating mills on both sides of the river. Union Mill merged with Cedar Falls Flour and Feed Mills in 1901 to form the Waterloo and Cedar Falls Union Mill Company.

Water was used to power sawmills and flourmills in Waterloo, but it had other uses, too. A woolen mill operated here from 1866 to 1875. Part of the building was used from 1879 to 1883 for a hydroelectric generator that powered arc lights in a handful of Waterloo stores.

The growth of the milling industry in Minneapolis and other cities made Waterloo's small mills less competitive. The switch from waterpower to electricity, after a 1922 flood destroyed the Waterloo dam, was expensive, and an embezzlement in the Union Mill Company led to substantial losses. As a result, the company closed all of its Waterloo mills in 1924.

The Union Mill Company's water rights were sold to Iowa Public Service, which built a new dam to provide cooling water for its generating turbines. The remaining mills were demolished and the millrace was filled in. The mills are gone, but they did much to establish the industrial heritage and prosperity of Waterloo.