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The history of Carlsbad unfolds as part of a grandiose promotion of the lower Pecos Valley.

During the 1890s, development was fueled by the arrival of colonies of immigrants from England, Switzerland, France and Italy. The original settlement bore the name of Charles B. Eddy, co-owner of the Eddy-Bissell Livestock Company. The cattleman recognized the value of diverting water from the Pecos River to the grazing lands on his Halagueno Ranch, which included present-day Carlsbad.

In 1888, Eddy arranged for the careful layout of streets in the new town and planted young cottonwood trees to line them. By 1892, the newspaper reported that the town company had planted 12,000 trees.

Lots were sold for $50 to $400 each. Because the town’s benefactor was determined to create a model temperance community, restrictions against the manufacture or sale of alcoholic beverages were inserted into the deeds of each lot. A small satellite community of saloons and prostitutes flourished for a while in what was known as “Phenix,” south of the tee-totaling Eddy Township.

Former Lincoln County Sheriff Pat Garrett (famous for gunning down Billy the Kid in 1881) first envisioned an ambitious development project to harness the valley’s water resources with a series of dams and canals for irrigation. He brought promoter Charles W. Greene to the Halagueno Ranch to meet Eddy, who soon recognized that more capital was needed for such a venture. Later, Robert W. Tansill introduced Eddy to millionaire James J. Hagerman, who became a principal investor in the Pecos Irrigation and Improvement Company. Unfortunately, Garrett was edged out of the new partnership.

Eddy, known as the “Pearl of the Pecos,” began as a company town for the massive irrigation and real estate development business. Hagerman and his partners soon formed their own corporation and took over the enterprise. Key to the growth of the area were special excursion trains that brought visitors from the east at reduced fares. Even before the railroad was completed from Pecos in 1891, travel parties were met at the railroad station in Toyah, Texas and driven by buggy 90 miles over a rough, dusty road to this small but growing settlement on the banks of the Pecos River.

By March 1893, the newspaper reported that there were eleven visiting millionaires in Eddy. All were attracted here by the prospect of highly profitable investments.

Soon after the town of Eddy was incorporated in 1893, a disastrous flood swept away the Avalon and Tansill dams, the original wooden irrigation flume, and the Greene Street bridge. The irrigation system was promptly rebuilt, but the town’s boom period had ended. By 1899, residents voted to change the town’s name from Eddy to Carlsbad, after the Karlsbad Spa in Czechoslovakia. The inspiration for the renaming was a large spring near the flume which reportedly had mineral qualities similar to the famous European health resort.

The town constructed a first-class hotel to provide lodging for the wealthy visitors arriving by train. The Hagerman Hotel, a two-story, 60-room lodging house, was located on the southwest corner of Canyon and Mermod streets, facing the courthouse square.

Most of the early construction in Carlsbad was completed with locally manufactured bricks. The bricks were quite soft and of poor quality. The former First National Bank building at the corner of Canal and Fox streets is one of the few remaining buildings constructed with the local brick.

In 1918 Carlsbad officially became a city when New Mexico Governor W. E. Lindsay granted the town permission to incorporate, since the population had surpassed 2,000. Today, Carlsbad owes its world fame to Carlsbad Caverns National Park, which lies 20 miles to the southwest.