Lying in the wide Cimarron River Valley and surrounded by buttes, mesas, and old volcanic cones, this area was long utilized as hunting grounds for the Comanche, Ute, and Jicarilla Apache Indian tribes.
The first white settlement in the area was Madison, settled in 1862 and named for its founder, Madison Emery who built a cabin at the site. As more families arrived, homes, stores, and other businesses sprang up and Emery also erected a rough hotel. In its early days, Madison was the nearest settlement to the “Robbers’ Roost” just north of Kenton, Oklahoma, which was home to a band of outlaws led by Captain William Coe in the late 1860’s. When the outlaws sensed a raid on their “Roost”, they would often hide out in Madison. Coe was eventually caught in Madison by the US Cavalry with the help of Emery Madison’s wife and step-son. He was taken to Pueblo, Colorado to await trial, but was lynched by a group of vigilantes before he had a chance. After Coe was captured and killed, the rest of the gang must have scattered because they were never heard from again.
In 1877 a post office was established at Madison. The coming of the Colorado and Southern Railroad in 1887 killed the settlement because the line bypassed the town. Madison’s post office closed in 1888. Today there is little physical evidence that it ever existed except foundations of an old grist mill.
The Colorado and Southern Railroad cut across the northeast corner of New Mexico in the late 1880s and many of Madison’s former citizens moved to the new town that sprang up about eight miles to the northeast. The railroad was the only one in the northeast part of the state until 1901. The community was first called Ragtown, because the shelters and business establishments were all tents. When the bride-elect of President Grover Cleveland, Francis Folsom, stepped off the train to explore the little town during a whistle stop, the townspeople were smitten by her charms and the town was named for her. Folsom gained its post office in 1888 after Madison’s closed.
One of the first citizens in Folsom was W. A. Thompson who was the proprietor of the Gem Saloon and deputy sheriff. Arriving from Missouri, where he had been charged with murder, he quickly racked up a lurid record in Folsom. He was said to have shot and killed a friend because he visited another saloon. On another occasion, enraged at a boy for taunting him, Thompson chased the boy with a six-shooter and when he failed to catch him, turned his guns on a fellow officer and a customer emerging from a store, killing one of them. Though Thompson was captured and tried in Clayton, New Mexico he was acquitted and went to Oklahoma, where he was said to have killed another man.
Late in the 1880s, two Dallas investors put together nearly $50,000 to build a mineral springs resort just east of town. Their plans included a hotel on the edge of a canyon and the building of a dam to create a small lake for fishing and boating. When Hotel Capulin was almost complete, the investors got into a dispute and dropped the project completely. Afterward, the investors never returned and the magnificent hotel was abandoned. Locals then used the building for parties, vagrants moved in, and bits and pieces were taken for the structure for other building purposes. The flood of 1908 finally washed away what was left.
The town prospered in its early years with the largest stockyards west of Fort Worth, Texas and a number of land speculators working in the area. Numerous homesteaders moved in and established farms and ranches. The area cowboys and farmers relied on the town for supplies and a taste of civilization. The town boomed with as many as 1,000 people in the area and the town responded with hotels, restaurants, supply stores, two mercantile stores, doctors, newspapers, and three saloons. Three school houses were built after the first two burned.
On September 3, 1897, the Ketchum Gang held up the train near Folsom. Sam Ketchum and several other men held up the train at the same site on July 11, 1899. A posse caught up with them in Turkey Canyon and a fight ensued in which Sheriff Edward Farr of Walsenburg, Colorado was killed. Sam Ketchum and Elza Lay were wounded as were five of the eight members of the posse. Henry M. Love, another posse member died of his wounds four days later. Sam was taken to the penitentiary at Santa Fe where he died of his wound. Elza Lay, who had made his escape, was later sent to the New Mexico Territorial prison
On August 16, 1899, Tom “Black Jack” Ketchum tried to hold up the train at the same place by himself and was seriously wounded by the conductor, Frank E. Harrington. Ketchum was picked up beside the tracks the next day. His arm was amputated on September 9 while he was awaiting trial. He was hanged on April 26, 1901, at Clayton, New Mexico.
By the early 1900s, the area was still doing well but the town’s population had fallen as many of the homesteaders found that the area proved unsuitable for farming
In 1908 the town had a new telephone switchboard which was operated by Sarah J. Rooke in her home on the edge of town. Sarah was an older unmarried woman. On August 27, 1908 Sarah answered her buzzer to hear a voice shouting that a flash flood was racing down the river and would strike the town within minutes. Sarah rang one phone after another warning people to get out of town before the water hit. She was still sitting at her switchboard when her own house was swept from its foundations and her body was later found eight miles below the town. Most of the town’s buildings were carried away and 18 people, including Sarah Rooke, drowned. She was buried at the Folsom Cemetery south of town. A granite monument with a plaque was erected by her fellow workers. This was not the first flood in the town, as a report in the Folsom Metropolitan reported on another damaging incident in August of 1890.