The Mill River, which flows through the Whitney Armory site is on its way to Long Island Sound, has played a crucial role in its history. Eli Whitney, Sr. came to the site in 1798 specifically in order to use the water's power for running machinery; sixty-two years later his son turned the river into the first public water supply for the city of New Haven. For some decades thereafter, the river continued to provide power not only for the Armory's machinery, but also for pumping its own water into the network of pipes reaching New Haven's buildings and hydrants. Eventually it gave way, as a power source, to steam engines and electric motors, but it continues to this day to supply water for the city.
The low dam and waterwheels that Eli Whitney, Sr. installed made possible the Whitney Armory with its adjacent small settlement, Whitneyville. Like many another New England water-privilege site, but unlike the larger planned waterpower complexes such as Lowell or Holyoke in Massachusetts, the community remained of modest size. Constrained in large part by the natural limits on its water power, Whitneyville did not grow into an industrial city, but led him first in the 1840s to replace the waterwheels with hydraulic turbines, the latest advance in waterpower technology, and then to make the dam five times higher in 1860. The other purpose of this move - to form Lake Whitney as the as the first reservoir for the New Haven Water Company - was what paid for the construction of the dam we see at the site today. The creation of Lake Whitney in turn prevented further industrial development at waterpower sites upstream - by flooding them - thus leaving the Armory as southern Hamden's only industrial site until a later era.