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The Gulf, Colorado, and Santa Fe Railway purchased 360 acres of land a few miles west of Palo Alto, a small farming community that had been around since 1872. Frank P. Killeen was the railroad's assistant general manager. The railroad built a town of 70 blocks on the land. The town had a railroad depot, a saloon, and several shops by the end of the year. Many residents from the smaller towns in the vicinity moved to Killeen. The town had 350 residents by 1884. It was served by five general shops, two gristmills, and two cotton gins. There were also two saloons. A lumberyard, a blacksmith shop, and a hotel.
Killeen grew as it was an important shipping port for cotton, wool, and grain in eastern Bell and eastern Coryell Counties. It had a population of 780 people by 1900.
Local politicians and businessmen convinced Texas legislators to build bridges over Cowhouse Creek, and other streams. This doubled Killeen's trade region. In 1914, a public water system was established. Its population grew to 1,300.
