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Cave Hill was chartered in 1848 on what was William Johnston's Cave Hill Farm, then a rural property some distance east of Louisville. Johnston, who died in 1798, had built the first brick house in Louisville on the grounds circa 1788. City officials had purchased part of the land in the 1830s in anticipation of building a railroad through it, and a workhouse was built there. The railroad was built elsewhere, and the land was leased to local farmers.
In 1846, Mayor Frederick A. Kaye began investigating the possibility of developing a garden-style cemetery on the grounds, a popular concept at the time. Hartford, Connecticut civil engineer Edmund Francis Lee was hired, who planned a cemetery with winding paths, graves across the tops of hills, and lakes and ponds in the valleys. The Cave Hill Cemetery Co. was chartered in February 1848, and the cemetery was dedicated on July 25, 1848. Reverend E. P. Humphrey delivered the dedicatory address, and elaborated on the idea of the garden cemetery, noting, among other things, that ". . .Reason and taste suggest that [this cemetery] should be decorated appropriately by the beautiful productions of our great Creator. . ."

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