Fort Graham, a United States Army post, was established in March 1849 and was occupied on April 17 of that year by Maj. Ripley A. Arnold and companies F and I of the Second Dragoons under command of Bvt. Brig. Gen. William S. Harney, commander of the Frontier District of Texas. The site was near the eastern bank of the Brazos River at Little Bear Creek fourteen miles west of the site of present Hillsboro. According to material in the National Archives, the post was named for James D. Graham of the Corps of Topographical Engineers. Other sources, however, state that it was named for Lt. Col. William M. Graham of the Second Dragoons, who was killed in 1847 at the Mexican War battle of Molino del Rey.
The annexation of Texas and the other territorial gains made by the United States as a result of the Treaty of Guadalupe Hidalgo had given the United States Army the responsibility for frontier defense and communication in the Southwest. Fort Graham was intended to help anchor the northern frontier defense line between the Towash Indian village and Fort Washita. Arnold's orders directed him to provide escorts for supply trains and travelers, to patrol the countryside as far as the forks of the Trinity, to protect the citizens from hostile incursions by Indians, and to attempt to conciliate the local Indians. During the first months, the men began construction of a number of log and clapboard structures including a commissary, officers' quarters, and a stable. Meanwhile, civilian laborers built a hospital, a carpenter and wheelwright shop, a blacksmith shop, three corncribs, a wagon and mule yard, and a quartermaster's storehouse.
Building and patrol duties, however, were hindered by a lack of adequate manpower. Arnold was assigned a complement of eighty-nine officers and men, but according to post returns filed by Arnold in April, he had only fifty-five men, including five officers and seven noncommissioned officers. This number was further reduced in June, when Arnold turned the command at Fort Graham over to Lt. Fowler Hamilton and moved north with F Company to the West Fork of the Trinity River to establish Fort Worth. Soon after Arnold's departure, Graham's new commanding officer reported that he had only one officer and forty-six men available for duty. The situation did not improve until early fall, when Gen. George M. Brooke, the new commander of the Eighth Military Department, was able to send two companies of the Eighth United States Infantry under command of Bvt. Lt. Col. James V. Bomford to the northwestern posts. Bomford and Company H remained at Fort Graham, where the colonel assumed command, while the other company proceeded to the Trinity to reinforce Fort Worth.
In October 1849 Brooke ordered Lt. W. H. C. Whiting of the corps of engineers to make a general reconnaissance of the frontier posts. According to Whiting, Fort Graham was one of the most important posts on the upper frontier. The post was near a recognized council spot and close to the villages and camps of many Indian groups. Fort Graham was thus in an excellent position to serve as a frontier "listening post" in the Northwest. The fort also served as headquarters for Indian agents during their missions to the upper Brazos and provided escorts for the agents during councils and periodic visits to the Indian camps. Moreover, it was located near George Barnard's trading post, a target for criticism from Indian agents and departmental commanders, who accused the traders of selling liquor and firearms to the Indians. Thus Fort Graham's position, both geographically and militarily, was so important that Whiting recommended, and Brooke concurred, that about 200 men should be stationed there.
Unfortunately, Brooke did not have such forces. Bomford's arrival did bring the strength of the post up to five officers and seventy-five men, however, and during 1850 and 1851 the garrison was able to carry out patrol and escort duties and complete the building of two sets of quarters, a log house for the commanding officer, a second stable, a guardhouse, a bakehouse, and a powder magazine. During June 1851 troops from Graham under command of Maj. Henry H. Sibley provided escorts for acting adjutant general Samuel Cooper's inspection of the upper Brazos Indian villages. During the fall the post served as a base for Indian agent Jesse Stem's meetings with various tribal delegations in the region.
During 1852 Fort Graham continued to serve as a listening post along the northern frontier, but by 1853 the line of settlement had advanced far to the west, and Graham's location ceased to be strategic. In August 1853 Bvt. Maj. Gen. Persifor F. Smith ordered Fort Graham closed and the troops moved to other posts. Before the order could be carried out, the post surgeon, Josephus M. Steiner, shot and killed Major Arnold, who had returned to Graham to help close it. Despite this disruption the troops began leaving Fort Graham in October, and the post was closed by November 9, 1853.
Fort Graham was fairly typical of Texas frontier posts of the 1845–60 period. No hostilities occurred between the army and the Indians in or near it, and the post was far more important as a scouting and reporting station than as a defensive outpost. Its strategic location near the upper Brazos villages, however, and its role in the affairs of the Indian agents indicate that Graham may well have been one of the most important pre-Civil War ports in Northwest Texas.
By offering protection against Indian raids, Fort Graham helped open the Hill County area to settlement. It also provided a market for local goods and labor, stimulated economic growth, and helped attract settlers to the region. The post was not in existence long enough, however, to build up a large community in the immediate vicinity. Although a hamlet called Fort Graham developed near the post, attempts to develop a major townsite there after 1853 were unsuccessful. By 1890 the population of the settlement had dropped to 250, and it soon disappeared. In 1936 the Texas Centennial Commission arranged for the state to buy the site, erect a marker, and reconstruct the barracks at a nearby site, where the building was used by local civic groups. With the development of Lake Whitney in the 1970s, the site was flooded, and the fort was again rebuilt at what is now Old Fort Park.