With the leadership of E. P. Cowan, Dallas investors organized the Yellow Pine Tram and Lumber Company sometime around 1883. At Colmesneil they built a large circular saw milling plant capable of cutting 75,000 feet daily, and soon operated a planer there which dressed around 100,000 feet per day. The sawmill's location at Colmesneil placed it not only in excellent stumpage, but most strategically positioned it to have convenient access to both the Texas & New Orleans and the Trinity & Sabine railroads. The mill employed 300 men in 1889, and although the town was barely seven years old, a population of 2200 was easily supported by the lumber company. Financial woes, however, fell upon this apparently prosperous lumber community, forcing the company into receivership and eventual sale in April 1891. Royal A. Ferris, also of Dallas, emerged as the new owner, but a devastating fire on April 17, 1893 destroyed not only the entire mill plant, yard, and many company houses, but any hopes of rebuilding the mill.
Plus seven hotels, Colmesneil could also boast of twenty-three other businesses in 1889. In addition to Baptist and Methodist churches being active in Colmesneil's early history, it was reported in July 1889 that a Catholic church was being erected. At the same time it was reported that the Colmesneil High School had enrolled 137 pupils and owned an organ. It was also reported that the Colmesneil mill was the first industry in Texas to use a “steam lumber stacker” which replaced the labor of twelve men. In 1905 Colmesneil had no lumber mill, and it was then reported that the town had the only “fruit and truck (vegetable) growers' organization” between Beaumont and Nacogdoches.