The falls are formed by a small stream, formerly known as Gylloproyd Dike, dropping over a natural fault line where sandstone meets softer shale. The stream then passes through a conduit under the former Meltham Branch Line before joining Hall Dike near to Bent Ley Mills. Traditionally, the stream formed part of the boundary line between the districts of Meltham and South Crosland.
Historically, the falls were more commonly called "Dolly Folly" and the spelling "Dolley Folly" can also be found in contemporary sources.
Several explanations have been put forward to the curious name, including that a woman named Dolly built a cottage somewhere above the falls or that it "took its name from the suicide of Dorothy Seymour who killed herself jumping over the forty-two-foot high waterfall after being jilted by her lover." The most likely source for the name is given in Richard Orton's The Story of Meltham (published 1977):
This name first appears in the Baptism Register for 1819. The entry states:- "Alice, daughter of Samuel and Sarah Wood, clothier of Dollyfolly, baptised." The two questions arise in connection with this — who was Dolly and what was his folly? Perhaps Dolly was the nickname either of Samuel Wood or of some other clothier who lived in the house before him. The nature of his folly is in dispute. A recent correspondence in the Huddersfield Examiner suggested that Dolly committed a folly in building a house in such an out of the way spot. This correspondence was prompted by a photograph printed a few nights previously of Folly Dolly Falls in spate. Anyone familiar with Folly Dolly Falls will know that it is in spate only after heavy rain when there is plenty of "top water". Most of the time there is only a trickle coming down the Falls. I would suggest that the folly was connected with this fact. It was not at that time a folly to build cottages in out of the way spots. There were many cottages built in spots much more out of the way. We can still see the ruins of them dotted about on the edges of the moors. Wherever there was water a weaver's cottage would be built. In any case this particular spot is less out of the way than most. Two paths cross there, one from Meltham to High Brow past the brickworks, and the other from Helme to Bent Ley. Before the turnpike road was built up the valley these paths would have been much used. Dolly Folly would be quite a busy cross roads. We must seek some other reason for the folly. Clothiers at that time were thinking in terms of mechanisation. It had been discovered that looms could be driven by water power, more cloth produced and more prosperity attained. One can imagine Dolly saying to his wife, "Everybody's doing it. We must have a water wheel." So he dug a dam, and a channel from the dam to the stream, constructed a wheel, connected his loom to it and sat down waiting for the wheel to turn. Nothing happened! There was indeed plenty of water after heavy rain, but very little of it got into his dam. The majority went straight past and over the Falls. It is possible that the dam never filled up at all. Dolly certainly committed a folly in imagining that that stream could ever provide enough power to drive machinery.
I owe this suggestion to the late Mr. Matthew Kaye who himself heard it from Mr. Francis Creaser. Francis Creaser was born in the 1860's at a time when there would still be people living who could remember Dolly and his Folly. There is no doubt that somebody dug a dam and a channel. They are still there to be seen (silted up now of course). Then apparently he found out too late that he had wasted his time and energy. Would not this make him a laughing-stock of the neighbourhood? Would not his Folly be talked about in the taverns? One needs something like this to account for the sudden appearance of a new place-name, and this seems to the writer the most likely explanation. The evidence is quite strong, a trustworthy tradition traceable through known individuals of proved reliability, going back to within living memory of the event itself and concrete evidence in the form of a mill dam in a place where there is not enough water to fill one.
We owe the preservation of this story to an event which took place in 1940. Matthew Kaye was called to put out a grass fire at High Brow. They took their hoses but found there was not enough water power to operate them, and so had to fight the fire by hand, a job which took all night. Next day, working at Royd Edge Dye Works on some sewers in the presence of Francis Creaser, whom he had called in to advise (being the man who had put the sewers in in 1885), he remarked on his night's work, and Mr. Creaser replied, "You made the same mistake as old Dolly!" and of course explained his remark.
This explanation is seemingly supported by an advertisement for an auction which appeared in the Leeds Mercury (14/Jul/1838):
Lot 5. All that MILL, heretofore used as a Water Mill, with the Dam, Goit, Wheel Race, and other Appurtenances and Privileges belonging thereto, situate at Dolley Folly, near Meltham.
After swerving to the right and left the stream takes a breath ere it plunges in myriad crystals over the precipice into the gulf below. From the bottom the scene is one to be remembered with gladness. As the sun glistens through the gurglings and the babblings, and peeps through the foliage of the holly, the oak, the sycamore, the birch, and the luxuriant growths on the banks, draping the stratified rocks, a picture is completed worth going far to see. Here, too, is solitude of the sweetest and the truest. Nature sings and speaks to you and you want no one else. It is, moreover, free to all and is a beauty spot that must be seen to be fully appreciated. I have seen nothing to surpass it in this neighbourhood.