The city of Houston was founded by the brothers Augustus Chapman Allen (1806-1864) and John Kirby Allen (1810-1838). The “Town of Houston” was advertised in the August 30, 1836 Telegraph and Texas Register (Columbia, TX) and was named after Sam Houston (1793-1863), who would be elected the first president of the Republic of Texas on September 5, 1836.

The same Telegraph and Texas Register newspaper, however, reported on an earlier town called “Houston” on October 26, 1835 and again on December 2, 1835. This “Houston” was located on the east side of the Trinity river, forty miles north of the San Antonio road. This town of “Houston” would later become Fort Houston and is close to what would become the city of Palestine.
 
 
Wikipedia: Sam Houston
Samuel Houston, known as Sam Houston (March 2, 1793 – July 26, 1863), was a 19th-century American statesman, politician, and soldier. He was born in Timber Ridge in the Shenandoah Valley of Virginia, of Scots-Irish descent. Houston became a key figure in the history of Texas and was elected as the first and third President of the Republic of Texas, U.S. Senator for Texas after it joined the United States, and finally as governor of the state. He refused to swear loyalty to the Confederacy when Texas seceded from the Union, and resigned as governor. To avoid bloodshed, he refused an offer of a Union army to put down the Confederate rebellion. Instead, he retired to Huntsville, Texas, where he died before the end of the Civil War.
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Houston left for Texas in December 1832 and was immediately swept up in the politics of what was still a territory of the Mexican state of Coahuila-Texas. Historians have speculated that Houston went to Texas at the request of President Jackson to seek U.S. annexation.

Attending the Convention of 1833 as representative for Nacogdoches, Houston emerged as a supporter of William Harris Wharton and his brother, who promoted independence from Mexico, the more radical position of the American settlers and Tejanos in Texas. He also attended the Consultation of 1835. The Texas Army commissioned him as Major General in November 1835. He negotiated a peace settlement with the Cherokee of East Texas in February 1836 to allay their fears about independence. At the convention to declare Texan Independence in March 1836, he was made Commander-in-Chief.
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Settlement of Houston
The settlement of Houston was founded in August 1836 by brothers J.K. Allen and A.C. Allen. It was named in Houston’s honor and served as capital. Gail Borden helped lay out Houston’s streets.
 
Wikipedia: Houston
Houston is the fourth-largest city in the United States of America, and the largest city in the state of Texas. According to the 2010 U.S. Census, the city had a population of 2.1 million people within an area of 579 square miles (1,500 km2). Houston is the seat of Harris County and the economic center of Houston–Sugar Land–Baytown, which is the sixth-largest metropolitan area in the U.S. of nearly 6 million people.
 
Houston was founded in 1836 on land near the banks of Buffalo Bayou. It was incorporated as a city on June 5, 1837, and named after then-President of the Republic of Texas—former General Sam Houston—who had commanded at the Battle of San Jacinto, which took place 25 miles (40 km) east of where the city was established. The burgeoning port and railroad industry, combined with oil discovery in 1901, has induced continual surges in the city’s population. In the mid-twentieth century, Houston became the home of the Texas Medical Center—the world’s largest concentration of healthcare and research institutions—and NASA’s Johnson Space Center, where the Mission Control Center is located.
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History
In August 1836, two real estate entrepreneurs—Augustus Chapman Allen and John Kirby Allen—from New York, purchased 6,642 acres (26.88 km2) of land along Buffalo Bayou with the intent of founding a city. The Allen brothers decided to name the city after Sam Houston, the popular general at the Battle of San Jacinto, who was elected President of Texas in September 1836.
 
Hanbook of Texas Online
FORT HOUSTON. Fort Houston was a stockade and blockhouse of the Republic of Texas at a site that is now on Farm Road 1990 two miles west of Palestine. It was built on the public square of Houston, Anderson County, by Capt. Michael Costley’s Company of Texas Rangers and completed before May 19, 1836. It covered an acre of the townsite. Tradition says the blockhouse was built by the rangers and the stockade by the settlers. Although it was an important point of frontier defense from 1836 to 1839, it was never attacked by an Indian force; there were Indian raids on the settlements nearby, however. After the fort was abandoned in 1841 or 1842, Houston became known as Fort Houston, but the settlement declined when Palestine became the county seat. In 1857 John H. Reagan bought 600 acres, which included the old site of the fort and town, and his home became known as Fort Houston. The Texas Centennial Commission erected a marker near the townsite in 1936. State historical markers were later placed near the site and at the nearby Fort Houston Cemetery.
 
StoppingPoints.com: Texas State Historical Marker
Garrison Greenwood
Lampasas, TX, USA
Latitude & Longitude: 31° 4’ 22.44817999992”, -98° 11’ 56.7490900002” 
(December 19, 1799-October 18, 1859) A Ranger in Republic of Texas, Greenwood left Illinois to avoid Indian Wars. Arrived in Texas (then part of Mexico) in 1833 with wagon train of Baptist Daniel Parker. In 1835 he helped found Fort Houston (in present Anderson County); set up a Ranger post on Trinity River to fight Indians. In 1836 he led local settlers fleeing to Louisiana in front of Santa Anna’s army in Runaway Scrape. Spent rest of life as Texas farmer. Had 14 children.
   
The Portal to Texas History
26 October 1835, Telegraph and Texas Register (San Felipe de Austin, TX), pg. 19, col. 3:
To secure the inhabitants residing on the frontiers, from the invasions of the hostile Indians, the General Council has made arrangements for raising three companies of rangers; one, consisting of twenty-five men, to be organized by D. B. Frier, to scour the country between the Colorado and Brazos; one consisting of the same number, to be organized by S. M. Parker, to range between the Brazos and Trinity; these two are to establish their head quarters at Waco village. The other is to consist of 10 men, organized by Garrison Green, and to establish their head quarters at the town of Houston, for the purpose of scouring the country east of the Trinity.
 
The above named persons have been invested by the council with power to contract with aemploy (sic) the number of men above indicated, at the rate of one dollar and twenty-five cents per day, and to draw for money to defray the expenses, on the president of the council, or whatever other competent authority may be established by the Consultation.
 
The Portal to Texas History
2 December 1835, Telegraph and Texas Register (San Felipe de Austin, TX), pg. 59, col. 1:
We are requested to state that a town, called Houston has lately been laid out on the east side of the Trinity river, forty miles’ north of the San Antonio road. It contains between three and four hundred building lots, and a large quantity of out-land. The situation is said to be handsome, salubrious, and well watered; surrounded by fertile, well timbered land, and is about six miles from a good steamboat landing, on the Trinity. The town is intended to be on the roads leading from Nacogdoches and Pecos Point, to the falls of the Brazos. Within a few miles of it there are two large and good salines.
   
The Portal to Texas History
30 August 1836, Telegraph and Texas Register (Columbia, TX), pg. 2, col. 2:
We call the attention of our readers to the advertisement of the town of Houston, by Messrs. A. C. & J. K. Allen, who are well known in this country for their persevering enterprise as business men. From all we can learn, the location they have selected possesses as many advantages as any other interior town in Texas, and on account of the easy access to Galveston and the facility in procuring timber, as well as its central position, this town, no doubt, will be a rival for the present seat of Government of Texas.
Pg. 3, col. 3:
THE TOWN OF HOUSTON.
SITUATED at the head of navigation, on the West bank of Buffalo Bayou, is now for the first time brought to public notice because, until now, the proprietors were not ready to offer it to the public, with the advantages of capital and improvements.

The town of Houston is located at a point on the river which must ever command the trade of the largest and richest portion of Texas. By reference to the map, itwill beseen that the trade of San Jacinto, SpringCreek, NewKentucky and the Brazos, above and below Fort Bend, must necessarily come to this place, and will at this time warrant the employment of at least ONE MILLION DOLLARS of capital, and when the rich lands of this country shall be settled, a trade will flow to it, making it, beyond all doubt, the great interior commercial emporium of Texas.
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The proprietors offer the lots for sale on moderate terms to those who desire to improve them, and invite the public to examine for themselves.
A. C. ALLEN, for
A.C. & J. K. ALLEN.
August 20,1836.—6m
The Commerical Bulletin, of New Orleans, Mobile Advertiser, the Globe, at Washington, Morning Courier and New York Enquirer, New York Herald, and Louisville Public Advertiser are requested to make three insertions of this advertisement, and forward their bills to this office for payment.
 
Google Books
Historic Road Trips from Dallas/Fort Worth
By Wendi Pierce and Rick Steed
Charleston, SC: History Press
2010
Pg. 50:
Just two miles west of Palestine, a ranger company built a blockhouse, partnered by the settlers who built a stockade, on an acre of the town site of Houston in May 1836. It’s hard to believe that the sprawling city of Houston that we know today had Anderson County here in the east Texas (Pg. 51—ed.) pines as its original prospective location. After the town was abandoned, and Anderson’s county seat moved to Palestine, the structure took on the name Fort Houston.