The 1880’s and 90’s: water, religion and new commerce
Civil War veteran Gerhard Schutte and his friend D. D. Wadsworth were looking for possible investment opportunities. Hearing of Frazier's Station and the well water that showed a water analysis indicating a similarity to that of the famous Well Number Nine in the Karlsbad Bohemia Spas, they decided to investigate. After gathering favorable information in 1886, Schutte, Wadsworth and two other investors, Samuel Church Smith and Henry Nelson, formed a real estate investment group that they called Carlsbad Land and Water Company. Carlsbad, the anglicized version of Karlsbad, was chosen to emphasize the connection with the famed Spa. The Company purchased 270 acres from Frazier and 130 adjoining acres of coastal land at $40 an acre. These 400 acres were entirely outside of the Kelly Rancho Agua Hedionda land grant and the Marron property of Rinconada de Buena Vista. The Carlsbad Land and Water Company set about forming a town. John Frazier was retained as general superintendent of the wells, since the availability of water was an important selling point for any western lands. Additional wells were sunk and water was piped throughout the newly formed town. The town was called Carlsbad in the promotional advertisements rather than Rancho Agua Hedionda or Frazier's Station, creating an identity apart from a Rancho or railway stop. The Carlsbad Land and Water Company paid for advertisements throughout the United States and Europe. The Carlsbad Land and Water Company laid out the town in grids with numbered streets running west to east from the rail lines. What we currently refer to as State Street was then called First, followed by Second through Fifth. The streets were demarcated with trees, most often eucalyptus. The company invested a substantial amount of money into the new venture. Several homes built by company founders remain today. The homes that were built were very different from the adobe structures common to the area, emphasizing a Midwest rather than a Spanish or Mexican flavor, making it seem a bit more comfortable and homelike to new investors. The Schutte Home built on Carlsbad Boulevard now known as Neiman's Restaurant, was built in a Victorian theme, and the Smith home, now located on Beech Avenue in Magee Park, was a typical Midwest house that included a snow porch.
In 1887, one year after the formation of the Carlsbad Land and Water Company, the population of Carlsbad was 300. Promotional literature such as the "Golden Era" published an article that year that stated, "Carlsbad is destined to occupy a foremost place among the great sanitariums of the world." The Company invested $50,000, a huge sum of money at that time, to build the Carlsbad Hotel, which was destroyed by fire shortly after it opened in 1896. Actually, by the time of the fire, land sales in Carlsbad had practically ceased and several company founders such as Samuel Church Smith had moved to more profitable locations such as San Diego.
The 1890's decade was one of terrible drought. The population in Carlsbad dropped to 155, almost half the number from just three years before. A general slowdown in Carlsbad's growth occurred as the combined forces of drought and national economic Depression affected the city. Carlsbad now entered into a 24-year period of slow to no growth. Things became so precarious that the school where enrollment had been growing by leaps and bounds just a few years before, was in actual danger of closing for lack of pupils. At times there were less than five students attending. Most of the city was abandoned and had only six registered voters. The outlying ranches with the Bordon, Kelly and Marron families kept the area populated. The Schutte Family remained in town as one of the original Land Company families. Gerhard Schutte stayed in Carlsbad until 1906, when he moved to National City with his wife Bertha. Several of his children married into other Carlsbad families, such as the Reeses, Kruetzcamps and Carpenters. Frazier had moved to Los Angeles and died in 1890. Basically the city was deserted.
One of the few positive additions to the town during the 1890s was the establishment of St. Michael's Episcopal Church by Father Jacobs. As a result of the advertisement campaign in England that promoted the new American West, many English citizens formed expatriate communities in San Luis Rey, Carlsbad and Encinitas. Episcopal missionary priests established small missions in their communities and also served in a small church located on Carlsbad Boulevard and Lincoln. The Ramsays, Shipleys and the Shaws, were all founding members of St. Michael's Church. They provided money, labor and land in order to build the parish. In 1959 the Old St. Michaels Church moved to Carlsbad Boulevard and Christiansen Way.
While the Carlsbad Land and Water Company was forming in the current northwest quadrant of the city, a similar enterprise was occurring in the coastal area just south of the Rancho Agua Hedionda borders. In 1886, Thomas E. Metcalf, one of the La Costa town and Land Company founders, along with his brother Alfred and Jacob Gruendike, purchased land from Oliver H. Bordon, father of W. W. Bordon who published and edited the Plain Truth Newspaper. O. H. Borden, who settled in the Batiquitos area in 1874, sold all 550 acres of land in "his upper and lower places" as reported in the Plain Truth, to the La Costa Land Company for $18 to $20 an acre. Additionally, The La Costa Land and Town Company purchased 160 acres at $25 an acre from J. C. Peterson. The total 710 acres for the proposed town included land from the present day La Costa Resort to the Pacific Ocean and on both sides of the Batiquitos Lagoon. But this endeavor along the coast was doomed to failure. The land lacked an adequate water supply. The coastal area around Batiquitos Lagoon, while never part of any Rancho Land Grant or developed town, was destined to remain a rather sparsely populated area until development of the La Costa Resort in the 1960s
Robert Kelly died in 1890 willing his property, the Rancho Agua Hedionda land grant directly east of the fledgling town of Carlsbad, to his brother Matthew’s nine children. Between the years 1892 and 1896 the entire land grant was held in common, except for a section in the northwest section sold in 1893 to a Mr. Thorpe. The sale was necessary, bringing needed cash into the family and ensuring their survival during the drought years. Shortly after the property was sold, Mr. Thorpe resold the land to the Thum Brothers, who held the patent on the Tanglefoot Fly Paper. The land became known as Thum Lands.
After the Rancho property was surveyed and divided into equitable parcels based on availability of grazing and water, each section was assigned an alphabetical letter. The letter was then placed on a slip of paper and as each heir drew his or her slip, the ownership of that parcel was transferred. Minnie Kelly Borden gave up her rights to draw from the slips of paper, in order to choose a preferred section of land, and two parcels were held in common. While the drought continued, a few of the Kelly heirs began homesteading land that adjoined their parcels to support their grazing livestock.
During the decade of drought that followed Robert Kelly's death, ranching and dry farming of beans, corn and hay became the only agricultural options. A few other enterprises undertaken were prospecting for oil and copper mining. While ranching was difficult during the dry years, the ranch families were in a better position regarding water than those that lived in town, since many of them lived near creeks or had already dug wells. For those who remained in town, digging a well meant the well level would be precariously close to the water level of their outhouses.