Beginning in 1907 in northwestern Tom Green County, Carlsbad is a census-designated community. The name Carlsbad originated from a spa in Bohemia. The town was promoting itself as a health resort due to medicinal waters. The main economic activity in Carlsbad was farming. There were an estimated 60,000 acres of ranch plots. Around 1910, a drought that lasted for three years decimated the community. The population declined during the Great Depression. After World War II, the Carlsbad freight station served a local pipeline and cattle shippers. The McKnight State Sanatorium was opened in 1950 to take advantage of the dry climate.
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