During the late 1870s, as more settlers and cowmen moved into the Panhandle, cattle rustling became a constant menace despite the efforts of Capt. George W. Arrington and his company of Texas Rangers. In addition to outlaws, Texas fever, brought on by ticks carried by cattle driven from downstate to Kansas, decimated many Panhandle herds. To combat these problems, Charles Goodnight discussed the idea of organization with other large cattlemen, including Thomas S. Bugbee, Orville H. Nelson, and H. W. (Hank) Cresswell. Employing cowboys as messengers, they sent word of their proposed meeting to various area ranches as far south as the Matador. In March 1880 the ranchers convened at Mark Huselby's hotel in Mobeetie and elected Goodnight president. Within the following year the Panhandle Stock Association of Texas had been formally organized and its by-laws drawn up after a three-day session. As Goodnight remarked, its purpose was for the mutual benefit, cooperation, and protection of the ranchmen. A $250 reward was posted for the apprehension of anyone stealing cattle belonging to association members, and as it grew the organization hired inspectors, detectives, and attorneys to arrest and prosecute rustlers operating against area ranchers, both large and small. Whether he had one cow or thousands, any Panhandle settler was welcome to join the association on an equal footing. Membership guaranteed him the use of association lawyers for legal battles and its inspectors for keeping tabs on his cattle brand everywhere, even at distant markets and shipping places. In 1881 the association sent John W. Poe to join Pat (Patrick F.) Garrett in tracking down Billy the Kid (Henry McCarty), whose gang had been rustling Panhandle cattle from their base in New Mexico. Not even large cattleholders, whose drovers sometimes killed association beef to eat as they passed through on drives, were immune to prosecution. In 1882 John F. (Spade) Evans and other association leaders lobbied for formation of the Thirty-fifth Judicial District. Temple Houston, as its first attorney, gained the first conviction on behalf of the organization.
Besides protection from rustlers, the Panhandle Stock Association was responsible for building the great drift fence across the northern Panhandle in 1882, and it also imposed the "Winchester Quarantine" to control the movement of tick-infested herds from south Texas. Furthermore, it played a primary role in the organization of Donley County in 1882 after Goodnight suggested Clarendon as a more central location for meetings. When Benjamin H. White, the first county judge, mentioned the need for a school, the association, spearheaded by its secretary, T. R. Dickson, provided necessary funds for the establishment and maintenance of the Panhandle's first public school, primarily for the benefit of poor nesters' children.
During its six years of separate existence, Spade Evans, O. H. Nelson, and Robert Moody succeeded Goodnight as presidents of the association. These men, in addition to Nick T. Eaton, T. S. Bugbee and Hank Cresswell, also served intermittently on the executive committee. As more counties were organized, the activities of law-enforcement units like Pat Garrett's LS Home Rangers, plus the election of responsible public officials, served to lessen cattle theft considerably. Rustlers increasingly found their occupation hazardous, and were compelled to either flee the Panhandle or operate on a much smaller scale.
In 1886 Charles Goodnight left the association to join the Northwest Texas Cattle Raisers Association, founded at Graham in 1877. This association eventually became the Texas and Southwestern Cattle Raisers Association, whose field and market inspectors continue to render effective service in the war against cattle rustling. The loss of Goodnight, combined with drought, depression, and the close of the open range, led to the demise of the Panhandle Stock Association by 1889.