Founded in 1881 by German, Prussian, and Swiss immigrants and named for the German town of Baden-Baden, New Baden centered first on the Colony House, which provided lodging for families while homes were under construction. Located on the route of the International & Great Northern Railroad, the town soon had stores, churches, a school, and a railroad station. Most residents were farmers, and the economy was based on agriculture. Although the population declined in the 1940s, New Baden remains a viable rural community.