Fort Blair, also referred to as Fort Baxter, was established in the spring of 1862 to protect Kansas residents against the frequent attacks from Confederate regular and guerilla forces during the Civil War. Located north of the springs, it was here that the battle referred to as the Baxter Springs Massacre occurred. Confederate guerillas, under the command of William Quantrill, struck the fort around noon on October 6, 1863, then moved on to massacre a contingent of troops being led toward Fort Smith by General James G. Blunt. Nearly 100 Union soldiers were killed in the guerilla attack and are buried in the Baxter Springs Cemetery, just west of the city.

In 1865, after the war was over, a town was laid out on 80 acres by Captain M. Mann and J. J. Barnes and soon thereafter Baxter Springs became an outlet for the Texas cattle trade. As Missouri became off-limits for Texas cattle due to quarantines, Baxter Springs welcomed them to Kansas. The community built stockyards with corrals capable of holding 20,000 cattle and provided range land with plenty of grass and water. Though the town took on all the appearances of prosperity, it also inherited a reputation for being one of the wildest cow towns in the West.

After the long cattle drives from Texas, cowboys found the town a welcoming sight after several months on the dusty trail, making the most of the numerous Baxter Springs saloons. Offering up flowing liquor, card games and available women, every third business in town was a gambling house or a saloon. Public hangings, gunfights and saloon brawls soon became common occurrences.

The city incorporated in 1868 with about 1,500 residents and the city government issued $150,000 in bonds to entice the Missouri River, Fort Scott and Gulf Railroad to extend its line into Southeastern Kansas. More bonds financed a new school, a courthouse and street improvements. On May 12, 1870 the Missouri, Kansas and Texas Railroad arrived, beating out the Missouri River, Fort Scott and Gulf Railroad for the privilege and just two years later the town boasted 6,000 residents. But soon, the railroad pushed south into Texas and the Baxter Springs cattle industry died. However, its illustrious past hung tight, when in 1872, the mayor of Baxter Springs, J.R. Boyd shot down C.M. Taylor, the city marshal, over a dispute regarding a warrant for an arrest.

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