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The townsite of Pemberton is located 335 kilometres south of Perth and 31 kilometres from Manjimup. It is located within the south west forest region, where in 1913 the state government established sawmills, the Number 2 and Number 3 State Sawmills. The area had become known as "Big Brook", but a more distinctive name was soon sought. The name Walcott was first suggested but was rejected by the Post Office, and Mr W.L.Brockman, a famer in the area, then suggested Pemberton, after Pemberton Walcott who was the first settler in the area in 1862.
The name Pemberton was used from 1916. The State Sawmills Department developed a small private town at the mills, but by 1921 there was community agitation for a government townsite to be declared. Although initially sternly resisted by the State Sawmills Department, particularly because it saw it as a way for alcohol to be introduced, community pressure eventually resulted in lots being surveyed in 1925 and the townsite of Pemberton being gazetted in October 1925.