Mercedes is in the Rio Grande valley on U.S. Highway 83 twenty-five miles east of McAllen in southeastern Hidalgo County. The site was first settled by ranchers in the late 1770s and was part of the Llano Grande Spanish land grant issued on May 29, 1790, to Juan José Ynojosa de Ballí. During the 1850s it was the location of the Anacuitas ranch, owned by Ramón and Manuel Cavazos. Apparently by the beginning of the 1900s it was replaced by the Fuste ranch, which was owned by the Cavazos family, alleged heirs of Ynojosa de Ballí. Lon C. Hill, Jr., a local land promoter and developer, owned 45,000 acres extending sixteen miles from the Rio Grande and including the site of what is now Mercedes. Hill, in preparation for developing the area, cleared land and constructed the Estarito Canal. On May 29, 1904, he formed the Capisallo Town and Improvement Company to develop the town of Capisallo a mile east of what is now Mercedes. Hill promptly renamed his new community Lonsboro and sold his company to the American Rio Grande Land and Irrigation Company, which renamed the new town Díaz. The town's name was changed three more times, until the name Mercedes was finally adopted. The origins of the name have been disputed. While some sources assert that the town was named in honor of the wife of Mexican president Porfirio Díaz, there is no evidence that Díaz was ever married to a woman named Mercedes. When, on July 8, 1904, Mercedes became the first town on the Sam Fordyce Branch of the St. Louis, Brownsville and Mexico Railway, it was nicknamed the Sweetheart of the Branch.
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