Early French visitors apparently named the area l’anse a la graisse (something like “greasy bend”), reputedly because of the preponderance of bear and bison meat they ate while here. That name didn’t stick, though.
Colonel George Morgan founded New Madrid in 1789 at the middle of a dramatic loop made by the Mississippi called the New Madrid Bend (or the Kentucky Bend, if you’re on the other bank). The village was founded when the territory was under Spanish rule. US General James Wilkinson, a rival of Morgan who was secretly collaborating with Spain, eventually sabotaged Morgan’s efforts, and the few dozen people who tried to create a new village moved on.
The governor of Spanish Louisiana, Estavan Miró, then directed soldiers to the area to build a fort and began encouraging new settlers. Slowly, folks started moving in again; New Madrid counted six hundred residents within a few years. It was a unique place, a French cultural outpost in Spanish territory populated by a significant number of Americans and American Indians.
The site turned out to be less hospitable than early residents expected, though. Disease was common (malaria, probably), and the Mississippi kept eating away at the bank where the town was first built. In just fifteen years, the river carved away the site of three forts and three city streets.
From late 1811 to early 1812, New Madrid was at the center of hundreds of earthquakes that shook and reshaped the region. The three biggest quakes took place on December 16, January 23, and February 7, scaring the hell out of the people who lived there. The shockwaves raced throughout the central and eastern US, with rumblings felt as far away as Washington DC and Natchez, Mississippi.
The first quake destroyed much of the town, forcing survivors to live in tents and other hastily constructed structures. Subsequent quakes convinced many people to leave altogether. It took a long time for the village to bounce back. In 1820, John James Audubon passed through; he wrote:
This almost deserted Village is one of the poorest that is seen on this River bearing a name.
During the Civil War, the critical Battle of Island Ten took place in the Mississippi near today’s New Madrid. (The river eventually swallowed up the island.) New Madrid had just a few hundred residents as the Civil War ended but has grown steadily every decade since. It has been a largely agricultural community since the Civil War, with cotton plantations carved out of the floodplain forests. Many of those fields are now planted with soybeans and corn.