The City of Elgin was first incorporated as a town in 1846, and then as a city in 1854 (Alft 10). James Talcott Gifford, founder of Elgin, wrote this to his wife when first arriving upon the land that would become Elgin in April of 1835:

We have located on the river, have a tolerable supply of timber, some good springs of water, and plenty of good prairie. . . We have selected land lying in considerable swells, such as would be called in this country broken, as I would like to see something like hills. I have on my claim the best place for waterpower which I have found on the river from its source some distance below this. . . The Fox is the finest stream I ever saw, it has uniformly in this State limestone bottom, its current uniform and gentle, its waters pure, as is abundantly supplied with fine Fish. (Alft 10)

By the end of 1843, Elgin’s population had grown to more that 400 people. The Gifford and Kimball families composed the majority of the population, making them the most prominent "founding families" of Elgin (Alft 8). At this time, Elgin supported a flouring mill, three saw mills, a shingle mill, the beginnings of a woolen mill, a small plow factory, and a foundry-all of which were powered by the dam on the Fox River (Alft 8).

The proximity of Elgin to Chicago made for an excellent place to sell goods, but traveling by wagon was difficult. The first railroad to reach Elgin was the Galena & Chicago Union in 1850, greatly reducing travel time between Elgin and Chicago (Alft 12). This railroad was eventually consolidated with the Chicago & North Western in 1864. This ended Elgin’s isolation as a city completely independent of Chicago, while tying the city to the national economy (Alft 13).

Two of the largest businesses in Elgin in the mid to late 1800’s were the Elgin National Watch Factory and the dairy industry. E.C. Alft, in his book, Elgin: An American History, wrote this about Elgin during this time, "A new America moved to the sound of machines-machines in Elgin that made watches, canned milk, and churned butter. Steam engines joined water as a source of power, and smoke stacks towered over a more crowded urban landscape. The name ‘Elgin’ gained a wide reputation with the sale of the city’s products throughout the country" (40). The factory for the watch company was erected in 1865, the total floor area comprising 23,000 square feet and capable of many extensions, making this factory the core of what would become the world’s largest watch manufacturing complex (Alft 42). The watch factory payroll became the mainstay of the local economy. The company provided jobs for residents, and executives also moved into the area, improving the surrounding neighborhoods (Alft 45). However, the Elgin National Watch Factory was not the only large source of employment for Elgin residents. The dairy industry, most notably the Gail Borden Elgin Milk Condensing Company, also contributed to the town’s prosperity (Alft 46). Production at the company began in May of 1865, but side ventures proved unprofitable and the firm was reorganized as the Illinois Condensed Milk Company in 1868 (Alft 47). The business grew steadily, becoming Elgin’s second-largest industrial employer. By 1889, employees numbered at nearly two hundred (Alft 48). Other large industries in Elgin at the time included the Elgin Packing Company, the Elgin Windmill and Pump Company, and the David C. Cook Publishing Company (Alft 50).

Between 1870 and 1890, Elgin’s population nearly tripled, rising from 5,431 to 17, 723 (Alft 59). Much of this increase in population can be attributed to the watch factory and other large industries located in the city at the time. Increases traffic into the downtown on the east side of the river required a second bridge at National Street to ease congestion off the Chicago Street bridge (Alft 61). Referring to the extraordinary growth in Elgin at the time, Alft wrote, "Within sixteen years Elgin has built two bridges [totaling three at Kimball Street, Chicago Street, and National Street] and a new city hall, organized a public library, purchased its first fire engine, and provided for electric street lights, public transportation, gas lamps, and telephone service. . . A second railroad had entered the city. . . It was an amazing performance, especially to many of the city’s residents who remembered when only a few log cabins dotted the countryside (63).

Circa 1960, Elgin experienced increased growth in area with several new subdivisions on the rural fringe of the city, which shifted the population from the older portion of the city near the river to the countryside (Alft 72). Between 1960 and 1980, Elgin’s area expanded from less than nine square miles to more then twenty, with new construction concentrated on the eastern and western fringes (Alft 72). Elgin’s downtown, home to several department stores and a new civic center, faced abandonment in the late 1960’s. At this time, several enclosed malls were being built in the vicinity of the city including Woodfield Mall in 1971, located twelve miles away in Schaumburg, and Spring Hill Mall in 1979, located in neighboring West Dundee-both of which provided tough competition (Alft 75). The department stores in downtown Elgin began leaving for Spring Hill Mall in 1979, and in 1984, the city’s city planner announced, "We are not looking at the downtown area as the retail core anymore" (Alft 75).