The modern town grew around the Drewsen og Sønner paper mill, established in 1844. Silkeborg Papirfabrik (Silkeborg Paper mill) was located near the Gudenå River where Silkeborg castle once stood, in order to exploit the river as a source of energy for the mill, as a resource for paper production and as a means of transport. Michael Drewsen, regarded as the founder of the city, was responsible for the daily management of the mill. A statue of Michael Drewsen now stands in front of the old city hall in the town square.