James Shannon Layne and his wife Caty Hager Layne founded the Layne Settlement on the banks of the Big Sandy River in 1796. Layne built a mill for grinding grain and later operated a general store. According to Henry Scalf's book Kentucky's Last Frontier, the Laynes were known both for their auctions of slaves brought in from North Carolina and for being strongly pro-Union during the Civil War. The present town of Betsy Layne is named for Elizabeth Johns Layne, daughter of Thomas Johns, Jr., who was nicknamed "Betsy" and who was married to Tandy Middleton Layne, a son of founder James Shannon Layne. Tandy died of typhoid fever in 1841 and Betsy moved away a few years later but, nevertheless, the C&O Railway station and post office were named for her when they opened on the couple's former farm many years later in 1908. A separate community called Justell arose nearby but is now considered part of Betsy Layne as well.
