In 1889 the Smith brothers, J. P., W. N. and Maurice, originally from Fordyce, Arkansas, bought the O. H. Willis Survey east of Big Mineral Creek in Grayson County.

When the section was divided among the brothers in 1904, J. P. Smith had 10 acres in the North East corner surveyed. The streets were designated and named. The Missouri, Kansas & Texas Railroad switch already at the site had been named Hagerman for an official of the railroad.

T. M. Smith, another brother, had joined the Smiths on the farm. He, with his wife, Ida and daughter, Norah, occupied the first residence on the townsite. W.N. Smith, his wife, Lucy, and son Elbert, moved into the second residence. They reared their family, including Elbert, Bruce, Mary, Robert and Edwin in the area. All made valuable contributions to the community.

Several families were established in the vicinity. In 1888, Judge Seth Daniel Steedman, former Judge of Grayson County, moved to a farm near Dever Switch about a mile west of the Hagerman Switch. The community was originally called "Steedman " in honor of Judge Steedman.  The Steedman postoffice was established in 1880 in the Steedman home with Mrs. Steedman as post-mistress. The postoffice was later moved to the Henderson store, also near Dever Switch. This postoffice was discontinued.  The U.S. postoffice was established at Hagerman with A.B. McClendon as the first postmaster. R. L. Sweeney was the last postmaster. He was transferred from the discontinued postoffice to Perrin Air Force Base postoffice where he is still serving.

The Hagerman Baptist Church, Hagerman Cemetery and the Hagerman National Wildlife Refuge are the only remaining users of the name Hagerman.

"In 1904 James Patillo (J.P.) Smith platted streets here in a ten acre wheat field and established the town of Hagerman, located between Denison and Whitesboro on the Missouri, Texas & Kansas railroad line and named for railroad attorney James P. Hagerman.   He was soon joined by the rest of the family, brothers Tom and Richard, and sisters, Sally Will and Susan Rebecca.  J.P. married Sallie Hunt; their direct descendants were Mary Webb Morrison, Hunt Smith, and Willie Sue Grace.  Right before Christmas in 1926 three stores were destroyed by fire on the east side of the street; the flames set off fireworks.  The three merchants left town to operate businesses in other places.  In January 1927 the bank closed its doors.  People began to move away causing the school to drop from 4 teachers to 3 teachers.  Thus began the decline of the quiet, little village.  The small light plant which provided electricity wore out and was not repaired or replaced.  People said "the dam will probably be built, so why invest money in a dying project?" So the residents dug out their old oil lamps and put them to use once again.  In 1928 the lumber yard moved to Whitesboro and in 1932 the gin moved to Collinsville.  A year later an unusual accident happened at the cotton gin  (Sherman Democrat, July 4, 1976)

The town consisted of 250 residents, a cotton gin, school, church, post office, railroad depot, and several businesses by 1910.  The village's first postmaster was A.B. McClendon.  "In 1927 R.L. Sweeney moved the post office to his store which was formerly the bank building; he served as postmaster until 1943 when the post office was disbanded."
("Hagerman, Now Only A Memory." Sherman Democrat, July 4, 1976)  

"On the second floor of the Bean Brothers store was the Woodman Hall where the community gathered for box suppers, beauty contests, dances and programs.  Johnnie Shires was the only Justice of the Peace the town ever had; he performed weddings on one side of the street while Brother Scott, a minister, performed the wedding ceremonies on the other side of the street."  ("Hagerman, Now Only A Memory." Sherman Democrat, July 4, 1976)  

The town prospered and grew to contain three churches and a three teacher school. However in the 1920s residents and businesses began to abandon the area when it became kn own that the creation of Lake Texoma would completely inundate the town. Lake Texoma was created in 1943."  In the 1930s and 1940s the population was reported as 150.  Thought most of the townsite was submerged under Lake Texoma in 1944, Hagerman is marked on the 1970 county highway map by a church, and several miles away, a cemetery.

"Hagerman merchants joined together to sponsor a trades day which included a rodeo with local boys, John Bean, Clifford McClendon and Ralph Dunning among those vying for the prizes.