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Montgomery was incorporated as a borough by the Pennsylvania General Assembly on March 27, 1887 from part of Clinton Township. The history of the settlement of Montgomery begins in 1783 when John Lawson established a homestead there. Nicholas Shaffer built a gristmill in Montgomery in 1795. A sawmill and a wool carding mill were other early industries found on Black Hole Creek which flows through Montgomery. Montgomery lies along the West Branch of the Susquehanna River, 6 miles southwest of Muncy, and 8 miles southeast of Williamsport.