Arriving in Texas in the mid 1840s, German farmers became the first settlers of what is now known as Gruene, Texas. Ernst Gruene, a German immigrant, and his bride Antoinette, had reached the newly established city of New Braunfels in 1845, but acreage was scarce. Thus, Ernst and his two sons purchased land just down river, and Ernst built the first home in Gruene in early fachwerk style. His second son, Henry D. Gruene, built his home (now Gruene Mansion Inn) and planted his surrounding land with cotton. Having become the number one cash crop, the cotton business soon brought 20 to 30 families to Henry D.'s lands. 

Situated on the banks of the Guadalupe River in New Braunfels between Austin and San Antonio, the Gruene cotton gin processed crops raised by area farmers until the wooden structure burned to the ground in 1922. All that remains of the water-powered mill today is the three story brick boiler room – now the Gristmill River Restaurant & Bar.