Here's a little more info on the incident, well, if these webpages are to
be trusted that is, heh:

http://www.truthorfiction.com/rumors/beaverdam.htm
http://www.snopes.com/humor/letters/dammed.htm

The Snopes.com link in particular has some followup information. It
appears this started out as what should have been a simple dispute between
neighbors, except one neighbor complained to the government.