Smith's Castle was built in 1678 as a replacement for an earlier structure which was destroyed by the Narragansett Tribe during King Phillip's War. The land on which the house was built was known as Cocumscussoc (or Cocumscossoc), and was the original site of Roger Williams' trading post. Williams was the founder of a Rhode Island and a prominent Baptist theologian. He built the trading post on the site in 1637 to trade with the Narragansetts after receiving the land from the tribe. Eventually, Williams sold the trading post to Richard Smith to finance his trip to Great Britain to secure a charter for Rhode Island. Smith bought the trading post and surrounding lands from Williams and constructed a large house which was fortified, giving the house its nickname as a castle. His son Richard Smith Jr. inherited the plantation in 1666 and invited militias from Massachusetts and Connecticut to use the property during King Phillip's War. In retaliation for the Great Swamp Fight, the house was burned, and the present structure was built in its place, originally as a saltbox house, and later modified into its current form. Approximately 40 soldiers were buried on the property during King Phillip's War. Additionally, the only incident of an individual being hanged, drawn and quartered for treason on American soil took place at Smith's Castle in 1676. Joshua Tefft, an English colonist accused of having fought on the side of the Narragansett during the Great Swamp Fight, was executed by this method.
Eventually the property was transferred to the Updike, Congdon and Fox families. It was the site of a large dairy farm into the twentieth century until it became a museum. In the early twentieth century, preservationists Norman Isham and John Hutchins Cady stabilized the house and performed several minor restorations.
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