In 1902, pioneer rancher Helen J. Stewart hired surveyor J. T. McWilliams to map out her 1,800 acres of ranch land in the Las Vegas Valley so that it could be sold to United States Senator William Clark of Montana, who was building a railroad through the area from Salt Lake City to Los Angeles. While surveying the Stewart Ranch, McWilliams noticed that part of a separate eighty-acre tract, owned by the U.S. government just northwest of the Stewart ranch site, would border the intended route of Clark's San Pedro, Los Angeles & Salt Lake Railroad.

McWilliams filed a claim for the tract and acquired it by 1904 with plans to get rich by developing it as a townsite. He knew that the railroad was preparing to create and sell property for a rival townsite southeast of his land, and he saw an opportunity to make money quickly. He subdivided his land, known later as the McWilliams Townsite, into lots. McWilliams himself named it the "Original Townsite of Las Vegas."

McWilliams advertised his lots for sale at up to $200 each in Los Angeles newspapers for the rest of 1904. This was months before Clark's railroad sold its subdivided land in 1905 at the future Las Vegas Townsite, located beside a planned railroad depot.

Sales of McWilliams Townsite lots were brisk with business owners, residents, investors, as well as cowboys, miners, and thieves, among the customers. McWilliams boasted about offering graded roads and spring water for residents. With construction materials scarce, buildings were made with timber and tent canvases to cover walls and roofs, earning the place the name of "Ragtown."

Soon the town had a hotel—Ladd's Hotel, the town's first, with only four double beds. The young community boasted three newspapers, four restaurants, a store, a bakery, a meat market, a theater, horse stables, and a dozen saloons and gambling houses. On May 14, 1905, Charles "Pop" Squires opened a much better local establishment, the Hotel Las Vegas. The hotel had a kitchen, dining room, and thirty canvas-partitioned rooms, each with a bed, chair, chamber pot, pitcher, and washbowl. Another hotel, the Imperial, also opened.  

For a time, business and social activity flourished. But life was difficult in the tent buildings, where residents had little defense against high winds, desert heat, and the smell of manure from adjacent horse stables. McWilliams kept trying to sell his lots, insisting that buyers could double their investments in only sixty days. 

On May 15, 1905, just before the auction of lots at the rival Clark townsite, McWilliams tried unsuccessfully to discourage buyers—including those who bought property in his townsite—from attending Clark's sale. Clark, on the other hand, guaranteed access to the new railroad yard and station to anyone purchasing his lots. Businesses locating in the Clark townsite would benefit not only from train travelers on rest stops at Clark's Las Vegas depot, but also from rail workers with money to spend. The lure of being right next to a railroad station was a major inducement for business people to buy lots from Clark and locate there instead of the McWilliams site.

About 3,000 people attended the Clark auction, and many merchants who had bought lots from McWilliams moved their businesses from his town to Clark's. The main local newspaper, the Las Vegas Age, transported its presses to Clark's site. The local freight business, which used wagons to haul products, switched from serving the McWilliams site to Clark's on the east side of the railroad tracks.

While in decline from the exodus of businesses and residents, the McWilliams Townsite suffered a more serious fate only months after the Clark auction. On September 5, 1905, a fire swept through the tented town, destroying most of it, leaving the Clark site the undisputed center of business and residential activity for the area known as Las Vegas.

The town officially became a city when it incorporated in 1911. Part of the McWilliams Townsite eventually became the local segregated community, West Las Vegas or the Westside.