Donald was formed from Donation Land Claims sold by R.L. Donald, an officer of the construction company building the Oregon Electric Railway, to the Donald Town Lot and Land Company in 1908.  The original community was centered around agricultural land growing hops, and in 1889 became home to the Hop Growers Fire Insurance Co. The town grew, primarily on the hop crop, until the building of the Oregon Electric Railroad which located a substation and depot in Donald as part of the electric railway between Portland and Salem
The Donald post office was established April 13, 1910, and the town was home to the Donald Brick and Tile Works from 1911 to 1923. However, completion of the paved Highway 99E negatively effected railway ridership, and the last electric railway ran through Donald in 1933. The Donald Farmers Co-op began the latest phase of agriculture.  It was acquired by Wilco in 1967 and the Wilco facility in Donald has five grass seed cleaning lines processing 20 million pounds of seed per year.  It is the largest grass seed cleaning facility in the state.

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