The textile industry has been associated with Knaresborough for centuries – records of 1211 mention mills. While the woollen market expanded in the sixteenth century to satisfy an increasing population and the quality of its cloth improved, interruptions to export caused a depression in the latter half of the century and competition among producers must have been intense. Knaresborough was at a disadvantage because of its poor access to the major marketing centres – in the case of textiles these were Leeds and York. By specialising in a higher quality linen Knaresborough was able to take advantage of the increase in living standards and fund its higher transport expenses. An industry which began in cottages and small workshops gradually transferred to mills.
In 1791 a cotton mill was built on the site of a paper mill on the banks of the River Nidd at Knaresborough, and this was in turn converted to flax spinning in 1811. This was the famous Castle Mill, taken over in 1847 by Walton and Company for both yarn spinning and power-loom weaving. At the beginning of the nineteenth century Knaresborough became famous for its linen. In 1838 Walton and Co., had been appointed linen manufacturers to the Royal Household and in 1851 were awarded the Prince Albert Medal for the completely seamless shirt woven by George Hemshell on a hand loom. Castle Mill has now been converted to private residences.
Industrial development was still hampered by the lack of an efficient transport system to bring raw materials and supplies to the town, and to take manufactured goods out to the major trading centres, particularly to the linen market at York. A canal system was proposed around 1818 but deemed to be too expensive due to the large number of locks which would be required. A railway system was costed and proposed in 1820 but did not gain sufficient support and the situation was left unresolved until the middle of the century.