Once dubbed a "pipe dream" by skeptics, the GRDA’s (Grand River Dam Authority) building of Pensacola Dam on Northeastern Oklahoma’s Grand River, and thus creating Grand Lake O’ the Cherokees, brought a new kind of boom to a once sleepy five-county rural area.

People rushed in from everywhere. Virtually overnight, the surrounding land became more valuable than it had ever been before, and the adjacent towns began a spirited rivalry for the thousands and thousands of tourists soon to be visiting the area each year.

One of those people was a native of Blue Hill, Nebraska named C. D. Armstrong, who came to Oklahoma from Texas. In November of 1939, he founded the town of Disney, Oklahoma. He owned the land and actively promoted the townsite. He also did much of the original planning work for the town and was involved until his death in 1961 at the age of seventy-one.

Not only was Grand Lake the biggest attraction for fishermen in the five-state area, but it would soon become a haven for recreational boaters, sail boaters, skiers, and vacationers wanting to get away from the surrounding larger cities such as Tulsa, Joplin, Wichita, Springfield, Fayetteville, and others.

At one point, back when train service still went to Pensacola, the Tulsa Chamber of Commerce was scheduling train trips to the area to tour Pensacola Dam and visit Grand Lake. Disneyites arranged for private automobiles and busses to transport these visitors from the train depot in Pensacola to Disney on the East side of the dam. They even arranged for a fleet of private boats to treat the visitors with a short ride on the lake and provided free refreshments and entertainment for them. The entertainment was under the direction of the unique Disney Women’s Life Saving Unit, the only all female lifeguard unit in the United States at the time.

In June of 1940, the town of Disney received a new title as "Capitol and Hub of the New Empire" created by Grand Lake. It was also sometimes referred to as the "Venice of America" since it is actually an island surrounded by the lake, the river channel and the spillway courses. More modern extensions of these monikers now refer to Disney as "The Island City".