Long before Mobeetie, Texas ever became an "almost ghost town”, the vast plains were home to the Apache Indians. In the 1700s the Kiowa and Comanches took over the area, running the Apache out. However, the Kiowa and Comanche were defeated in the Red River War of 1874 and the white settlers quickly began to settle the area.

In the spring of 1874, buffalo hunters moved down from Kansas and a camp was formed near Sweetwater Creek called Hidetown about two miles southeast of the site of where Old Mobeetie stands today.

In 1875, the United States government established Fort Cantonment about 2 miles northeast of Hidetown to keep the Indians on reservations in Indian Territory and establish law and order in the region. On June 5, 1875 Major H.C. Bankhead and the 4^th Cavalry arrived with several companies of infantry to establish the new fort. The first buildings at the fort were made of sharpened cottonwood posts placed into the ground at close intervals, joined by poles fastened across the top. Larger logs were used as ceiling beams which were stacked with layers of brush and weeds above the beams. The structure was then covered with adobe, packed into the spaces between the posts. Board buildings would quickly replace most of the picket buildings, but some were still in use until as late as 1890.

Nearby Hidetown quickly began to develop with the settlement of the Fort and gained the name Sweetwater City. Dominated by three Dodge City, Kansas men by the names of Charles Rath, Bob Wright, and Lee Reynolds, the settlers supplied buffalo hides to the three men, who in turn, made provisions available to the settlement. With the fort established, the Dodge City men built a trading post and Sweetwater quickly grew to a population of about 150 people. The three Dodge City men claimed to have bought over 150,000 buffalo hides while they were in Sweetwater.

Catering primarily to the soldiers at the fort, Sweetwater had a Chinese laundry, a restaurant, a dance hall and several saloons by the summer of 1875. Like many Old West settlements, the town was primarily called home to bullwhackers, outlaws, buffalo hunters and gamblers.

The restaurant was run by Tom O’Loughlin, and his wife, Ellen, who was said to have been the only virtuous woman in the settlement. The only other women in the small town were the dance hall and saloon girls. Numbering about 15, the girls worked the many Sweetwater Saloons, which held such names as the Pink Pussy Cat Paradise, the Buffalo Chip Mint and the White Elephant. One saloon, called the Ring Town Saloon, located about 2 ½ miles northwest of Sweetwater was designated for black men only – primarily those Buffalo Soldiers employed at the fort.