Terrell is on U.S. Highway 80 and State highways 34 and 205, thirty miles east of Dallas in northern Kaufman County. One of the first settlers in the area was George Paschall, who arrived in 1848. When the Texas and Pacific Railway crossed North Texas in 1873, two enterprising Kaufman County citizens, C. C. Nash and John G. Moore, purchased 320 acres in the J. W. Cude survey and laid out streets and lots for business and home sites. Jasper Johnson became the first postmaster when the post office opened in 1873. The town was named in honor of Robert A. Terrell, a pioneer settler whose farm lay on its western edge. The community grew rapidly and was incorporated in 1875. By the mid-1880s it had a population of 3,000, served by two banks, two hotels, three flour mills, three cotton gins, three weekly newspapers, and nine churches. The North Texas Insane Asylum (now Terrell State Hospitalqv) was opened in Terrell in 1885 to help relieve overcrowding at the state institution in Austin. By 1890 local businesses included a creamery, a canning factory, and an iron foundry; the town was also the shipping point for cattle, cotton, and timber raised in the area. In 1892 Edward Howland Robinson Green chose Terrell as the headquarters for the Texas Midland Railroad. During World War II, British pilots trained at what is now the municipal airport.

TERRELL STATE HOSPITAL. Terrell State Hospital was opened as a regional psychiatric hospital in July 1885. During the late nineteenth century, due to overcrowding in the state's only psychiatric treatment facility, located at Austin, eligible patients throughout Texas were often confined to county jails and poorhouses, both places incapable of treating the mentally ill. In 1881 state representative John S. Wood introduced a bill calling for the establishment of a branch of the Austin institution in North Texas. On February 16, 1883, the Eighteenth Texas Legislature passed Wood's bill, which specified that the new institution be located somewhere north of the tracks of the Texas and Pacific Railway. Terrell sent a committee to Austin to meet with the state officials involved in the selection process. The state location committee, acting upon information provided by the Terrell group, examined several locations in and around Terrell before selecting a 672.65-acre site a mile northeast of the town. Governor John Ireland commissioned the purchase of the tract, and the legislature appropriated $200,000 for the land and the construction of initial facilities. An additional 561 acres was leased to serve as pasture and cropland for the production of food for patients. The North Texas Lunatic Asylum, the purpose of which was the treatment and care of the "chronic incurable insane," opened on July 14, 1885, under a local board of managers. The hospital began operations with a five-man staff under Dr. David Richard Wallace, who had previously provided psychiatric treatment to Empress Carlota of Mexico. Only one-half of each wing of the facility's main building was complete upon opening. During its first year the institution admitted 330 patients from forty-six counties, and the following year it served 387 patients. This increase continued and necessitated an almost continual program of building and enlargement during the twentieth century.


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