|Until the middle of the 17th century, Porsgrunn was the name of a small island on the east side of the Porsgrunn River. It was renamed Tollbodoya when the Customs House was moved there in 1661. Porsgrunn was then little more than a cluster of buildings, 26 on the east and 12 on the west side. The Customs House was a gathering place and centre of activity provided by timber exports, commodity imports, small-scale trading and an inn. By 1801 the population had grown from about 200 to 1600 and in 1807 King Christian VII granted Porsgrunn municipal privileges.
Shipping had great significance for the business sector and local community. By the end of the 1850s, 18 shipowners were registered and Porsgrunn had become a sailing port. Most of the shipowners had started out as seamen. They saved up, bought shares in sailing vessels or started a shipyard where they built vessels and took them over. Between 1850 and 1881, the fleet grew from 45 to 110 vessels. Shipping was a commercial driving force in the town. The demand for timber, masts and yards from the rural communities increased, as did the influx of workers to the town. Trade flourished and craftsmen were in demand. Shipbuilding was the town