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I hope you mean Lake Ouachita, because that’s what I researched.
I didn’t find anything about dams being built in the area at ALL during the 1800s, although due to prolific flooding each spring (maybe this is where the story came from?), there were several surveys done for dam construction; the first dam for the lake was apparently built in the 1920s.
Hope this helps!
http://www.arkansastravel.com/communicate/media/display.asp?id=91
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hot spring,and day to,…
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Lake Ouachita was created by damning the Ouachita River in 1955. But I can’t find any info on whether or not towns were destroyed to create the lake.
http://en.wikipedia.org/wiki/Lake_Ouachita
http://gorp.away.com/gorp/location/ar/parks/ouach.htm
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