Prior to colonization by white settlers, the area was inhabited at different times by Potawatomi and Iroquois native people. In 1833, the U.S. government granted Jay R. Monroe a land patent for 65 acres of land along the shore of Lake Michigan. In the 1850s the first permanent settlers arrived, and early in the decade the first steam sawmills were built on the Black River. About this time, the settlement gained its first merchant, physician, lawyer, and minister, and the first schoolhouse was built. The first bank was organized in 1867. South Haven was incorporated as a village in 1869, and as a city in 1902.