American Beach was founded in 1935 by Lewis with the backing of the Afro-American Life Insurance Company (AALIC). AALIC was created in 1901 and used pension funds to purchase the land in the 1930s. The company's goal was to create a safe and profitable overnight vacation and retirement area for middle-class African Americans. Many wealthy African Americans throughout the country purchased homes and condominiums at American Beach, allowing the area to become the black enclave AALIC envisioned.
Segregation was the impetus behind the creation of American Beach, but the community survived well after segregation officially ended owing to the continued existence of racial discrimination and the desire of many African American families to patronize places where they were made to feel welcome. African Americans from all walks of life have vacationed and invested in the area, including black celebrities and leaders.
Hurricane Dora and desegregation led many families to move away from and not visit American beach (other beaches opened closer to where they lived). Thanks to the efforts of Lewis' great-granddaughter, MaVyrne Betsch, who moved to American Beach in 1977, the history and legacy of the community has been preserved. Betsch became known as the Beach Lady for her determination in preserving the community's past.