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The city was founded in 1841 as the seat of the newly established Panola (later Harrison) County, after repeated failed attempts to establish a city on the Sabine River. The Republic of Texas decided to choose the site of land granted by Peter Whetestone and Isaac Van Zandt after Whetestone proved that the hilly location had a good water source.
By 1860 the city was the fourth largest city in Texas and the seat of the richest county. The county had more slaves than any other, making it a hot bed of anti-union sentiment. When Gov. Sam Houston refused to take an oath of allegiance to the confederacy, Marshall's Edward Clark was sworn in as governor. Marshall would also produce Texas' third confederate governor Pendleton Murrah. Marshall became a major Confederate city; becoming the capital of Missouri's exile confederate government, producing gun powder and other supplies for the C.S.A. Army, and hosting three conferences of Trans-Mississippi and Indian Territory leaders.
Marshall became the seat of civil authority and headquarters of the Trans-Mississippi Postal Department after the fall of Vicksburg. The city may have been the intended target of a failed Union advance that was rebuffed at Mansfield, Louisiana. Towards the end of the war Richmond had $9 million in Treasury notes and $3 million in postage stamps shipped to Marshall, possibly meaning this was the intended destination of a government preparing to flee from advancing armies.
Marshall was occupied by Union forces on June 17. During Reconstruction the city was home to an office of the Freedmen's Bureau and was the base for Union troops. In 1873 The Methodist Episcopal Church founded Wiley College to educate free men. African-Americans flocked to the city seeking opportunities and protection until 1878. When the "Citizens Party" led by Confederate General and war hero Walter P. Lane took control of the city and county governments and ran Unionists and many African-Americans out of town. Ultimately declaring Marshall and Harrison County "redeemed" from Union and African-American control. However the African-American community would continue to progress with the establishment of Bishop College in 1881 and the certification of Wiley by the Freedman's Aid Society in 1882.
Marshall's "Railroad Era" began in the early 1870s. Harrison County voters elected to offer $300,000 bond subsidy, and the City of Marshall would donate land north of the city center to the Texas & Pacific Railroad if the company would move to Marshall. The T&P's President, Jay Gould, accepted and located the T&P's workshops and general offices for Texas in Marshall. The city benefited immediately from a population explosion. By 1880 the city was one of the American South's largest cotton markets. The city's prosperity was made apparent when the first department store in Texas, J. Weisman and Co., opened in 1878.
According to the United States Census Bureau, the city has a total area of 76.8 km² (29.6 mi²). 76.6 km² (29.6 mi²) of it is land and 0.2 km² (0.1 mi²) of it is water. The total area is 0.27% water.
As of the census of 2000, there are 23,935 people, 8,730 households, and 6,032 families residing in the city. The population density is 312.5/km² (809.5/mi²). There are 9,923 housing units at an average density of 129.6/km² (335.6/mi²). The racial makeup of the city is 54.66% White, 38.59% African American, 0.39% Native American, 0.55% Asian, 0.04% Pacific Islander, 4.83% from other races, and 0.94% from two or more races. 8.64% of the population are Hispanic or Latino of any race.
There are 8,730 households out of which 32.2% have children under the age of 18 living with them, 46.4% are married couples living together, 19.0% have a female householder with no husband present, and 30.9% are non-families. 28.0% of all households are made up of individuals and 14.0% have someone living alone who is 65 years of age or older. The average household size is 2.55 and the average family size is 3.12.
In the city the population is spread out with 26.1% under the age of 18, 13.4% from 18 to 24, 24.6% from 25 to 44, 20.3% from 45 to 64, and 15.5% who are 65 years of age or older. The median age is 34 years. For every 100 females there are 87.9 males. For every 100 females age 18 and over, there are 82.2 males.
The median income for a household in the city is $30,335, and the median income for a family is $37,438. Males have a median income of $30,146 versus $21,027 for females. The per capita income for the city is $15,491. 22.8% of the population and 17.8% of families are below the poverty line. Out of the total people living in poverty, 32.5% are under the age of 18 and 15.1% are 65 or older.