In 1846 the United States and Mexico went to war, and the United States claimed New Mexico. Gen. Stephen Watts Kearny and his men arrived in Albuquerque in early September. The Army established a supply depot in Albuquerque. It needed food and firewood. Antonio José Otero founded Peralta Mills, one of the first mills. So began Albuquerque’s first government contractors. The army hired civilian employees and rented quarters. Soldiers patronized local merchants and saloons. The result was to introduce a cash economy where there had been only barter.

The most prominent businessmen in town were José Leandro Perea, Mariano Yrisarri, and Cristóbal Armijo. One of the first Anglo merchants was Simon Rosenstein, who in 1852 hired a young German immigrant named Franz Huning as clerk. Five years later Huning opened his own store on the plaza and by 1860 was a successful businessman.

In 1863 Huning bought machinery for a new gristmill and a sawmill, certain that the town would boom. His La Molina de la Glorieta became the largest in the valley. In 1864 he began building a new store on the west side of the plaza. By the late 1860s at least nine other mercantile stores were operating, including one owned by Juan Cristóbal Armijo, which he built in 1857, and another owned by Salvador Armijo, who also owned warehouses with branches in other towns. Ambrosio Armijo was then a successful importer and freighter.

The Civil War had created a demand for New Mexico wool. When the war ended in 1865, demand for wool increased, boosting the fortunes of men like José Leandro Perea and Mariano Otero of Bernalillo.

After the war more Americans began to appear in Albuquerque, becoming merchants, tradesmen, restaurateurs, barkeeps and hoteliers. Some doctors and lawyers also hung out shingles. If they wanted to stay in business, they learned to speak Spanish. Some improved their connections by marrying into prominent local Hispanic families.

In 1867 the army closed the Albuquerque post, plunging the town into an economic downturn that lasted for years. Albuquerque had become a commercial center, but cash was once again scarce, so merchants accepted hides, wool and farm products in trade and then marketed them outside the area. In 1874 a disastrous flood sent the local economy into a deeper slump. Damage was so extensive that even the most prosperous merchants struggled to avoid bankruptcy.

The economy began to turn around, and newcomers were making their mark. In the 1870s John Murphy opened the first hotel, the Atlantic and Pacific Hotel, anticipating the arrival of the railroad of the same name. The hotel’s third owner was Tom Post, who also acquired the ferry business started by the army and built the first toll bridge at the site of the present Central Avenue Bridge.

Maj. Melchior Werner in 1876 opened The Centennial, a hotel, which also housed the post office and the telegraph office. The same year Elias S. Stover, former lieutenant governor of Kansas, arrived and established a store on the plaza. In 1878 brothers Frederick, Jefferson and Joshua Raynolds established the town’s first bank, Central Bank, on the plaza. Previously, merchants had accepted deposits, used the money in business and paid interest to depositors. (In 1881 First National Bank opened, and the two banks merged in 1884 as First National Bank.)

Merchants and town leaders had long hoped the railroad would serve Albuquerque, and by 1879, the Atchison Topeka & Santa Fe was approaching. Railroad representatives asked Bernalillo landowners Francisco Perea and his nephew José Leandro Perea if they would sell land for shops and repair facilities. The Pereas quoted an exorbitant price and refused to budge. It wasn’t greed – the Pereas were quite wealthy – but the senior Perea feared the railroad would ruin the wagon freighting industry.

The railroad men continued on to Albuquerque, where they received a warmer welcome. Franz Huning, Elias Stover and attorney William Hazeldine made a quiet deal with the railroad. They began buying land in the proposed right of way, which they deeded to a railroad subsidiary for $1 and a share of profits from sale of land the railroad didn’t need. The deal clinched the railroad for Albuquerque, and the three promoters also prospered. Apparently nobody was critical of the three because everyone expected to gain from the railroad’s arrival.

The tracks were actually laid two miles east of Albuquerque to accommodate north-south track alignment and to avoid washouts when the Rio Grande flooded. On April 10, 1880, the tracks reached Albuquerque.

The railroad spawned a second town, as stores and saloons sprouted along the tracks in tents and shacks. In time the new commercial district gained permanent structures of brick and brownstone, becoming known as New Town. The original community became Old Town. They were linked by the Street Railway Co., organized in 1880 by Huning and Hazeldine, with Oliver E. Cromwell. It had eight mule-drawn cars and three miles of track connecting the plaza with New Town and Barelas.

Soon after the railroad arrived, Huning began building the Highland Addition, east of the tracks between Copper and Iron. Now called Huning Highland, it was Albuquerque's first residential development. The younger Perea in 1881 building his own subdivision, now called the Downtown Neighborhood District. And Huning, Stover, Hazeldine and Perea, along with others joined to organize the Territorial Fair, which became the State Fair.

The railroad brought a lot of newcomers, but not all had good intentions. Sister Blandina Segale complained about the “want-to-get-rich-quick people,” who were trying to cheat the native-born people out of their land. Fraud was such a problem that the priest had to go door to door warning people not to make their mark on any piece of paper.

Legitimate business people launched a variety of new enterprises in the railroad town. One of the first businesses was JC Baldridge Lumber Co., started in 1881 by Joseph Coulter Baldridge, a railroad brakeman. (The business was sold in 2005.) Mariano Armijo decided Albuquerque needed an elegant hotel. In 1882 he built the three-story Armijo House at Third and Railroad Avenue. Two years later local businessmen built the 80-room San Felipe Hotel at Fifth and Gold, which claimed to be the best in the territory. (Both hotels burned down in the late 1890s.)

Railroad contractor Angus Grant started the Albuquerque Electric Light Co. in 1883 and built the Grant Building, which housed the 1,000-seat Grant Opera House. (It burned in 1898.) Grant also owned the water utility – the Water Works Co., which had a city franchise to develop a municipal water system. In 1882 Miguel Otero started a telephone system, which had 34 subscribers a year later. (Albuquerque got long-distance service in 1905.) Huning and Hazeldine started the Albuquerque Gas Co. and built a plant that converted coal, shipped in by rail, to gas for street illumination.

The first African American businessman may have been Joseph Knisely who in1883 had a mill and also operated the Los Angeles House, a hotel, at Third and Silver. In 1908 General Bryant opened a restaurant on South Third Street and then a grocery store at First and Bridge. With his two brothers, Heard and Williard, he started The Bryant Co., a messenger service, and by 1910 they had a fleet of two automobiles, four bicycles and one horse-drawn wagon.

Soon after the railroad arrived, the first daily newspaper, the Golden Gate, appeared briefly. A few months later Albuquerque Publishing Co. acquired the Golden Gate’s press and began printing the Albuquerque Daily Journal. Huning was president and Hazeldine secretary of the publishing company. Four years later Stover was president. (The New Mexico State Tribune, later the Albuquerque Tribune, began publishing in 1923.) In 1889 Stover became the University of New Mexico’s first president.

As New Town grew, Railroad Avenue (Central) became the hub of retail and entertainment with clothing stores, restaurants, hotels, theaters, general stores, and plenty of saloons. The appropriately named Gold Avenue was home to most of the city’s banks, real estate firms and insurance agencies.

With accessible transportation, the town’s economy changed dramatically. Albuquerque became a shipping point for livestock and wool, and the lumber industry boomed. The sheep industry continued to be important – the Perea and Otero families alone had an estimated half-million head – and Albuquerque was still the center of the Southwestern wool trade. Wool warehouses proliferated along the tracks.

By 1885 New Town was mushrooming, and families were building homes there. In 1891 wholesale grocer M.P. Stamm filed a plat for the Terrace Addition to sell house lots south of Central to Hazeldine and east of the city limits to Buena Vista. Local people then considered Stamm’s subdivision quite remote. It took an hour by horse and buggy to get there.

The forerunner of the Chamber of Commerce started in 1892. The Albuquerque Commercial Club, which organized to attract residents and promote investment, built a handsome, brownstone building at Fourth and Gold. It featured plush meeting rooms, a ballroom, parlors and offices.

The biggest employers in the late 1800s were the Santa Fe Railway shops, the Albuquerque Wool Scouring Mills, the Albuquerque Foundry and Machine Works and the Southwestern Brewery and Ice Co.

In 1893 New Mexico suffered during the financial downturn that gripped the nation. The railroad went into receivership, although it would later recover. What buoyed the Albuquerque economy was agricultural production. Albuquerque’s truck farms were then supplying mines in northern New Mexico.

By the turn of the century Albuquerque had surpassed Santa Fe as the Territory’s commercial center. The Commercial Club raised money to buy a tract of land and gave it to the railroad for a tie-treating plant south of San Jose.

Construction began on the railroad depot and complex in 1901. And in 1902 the Alvarado Hotel had opened. Completed at a cost of $200,000, it was considered the finest railroad hotel of its time. Charles F. Whittlesey designed the California Mission-style building, which featured towers, balconies, and arcades supported by arches. It had 75 rooms, parlors, a barbershop, a club, a reading room and a Harvey dining room. It also offered electricity and steam heat, luxuries at the time. Between the hotel and depot was the Indian Building, where visitors could see Indian artisans at work and buy their wares. It was a successful early effort to promote Indian art and sparked a revival in native crafts.

In the early 1900s Albuquerque gained another industry as logging gained momentum in the Zuni Mountains, west of Grants. American Lumber Co. was soon second only to the railroad as Albuquerque’s largest employer. Its 110-acre complex was built between 1903 and 1905 near Twelfth Street. Producing milled lumber, doors and shingles, American Lumber by 1908 was the largest manufacturing company in the Southwest and one of the largest lumber businesses in the country.

Col. D.K.B. Sellers was one of the busiest developers of the period. He plotted and sold 700 lots in the Perea Addition in 1905. Then he subdivided the Grant Addition on North Fifth Street, selling the lots in 30 days. Next he built University Heights.

In 1905 the Albuquerque Gas, Electric Light and Power Co. completed its first generator near two sawmills that provided its fuel – wood chips. It would later become Prager Generating Station.

Railroad Avenue, the city’s primary commercial and transportation corridor, became Central Avenue in 1912.