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Powderly is located on U.S. Highway 271 nine miles (14 km) north of Paris in north central Lamar County. It was settled around the time of the Civil War and was originally known as Lenoir. When the St. Louis-San Francisco Railway was built through the area in the 1880s, the community was renamed Powderly in honor of Terence V. Powderly, a labor leader and later a commissioner of immigration in the McKinley administration.
A post office was established in 1888, and by 1890 the town had a general store, two cotton gins, a gristmill, a sawmill, a blacksmith, and an estimated population of thirty. In 1914 the town's population was 100. During the 1920s, however, the community declined; in the early 1930s Powderly had a church, a school, six rated businesses, and a reported sixty-three residents. Since that time the population has increased, reaching 120 in 1950 and 150 in 1965. In 1990 Powderly had a church, a school, a number of houses, and an estimated population of 185. The population remained the same in 2000.