The community of Pozo, 17 miles southeast of Santa Margarita, was first settled in the early 1800's. Ynocente Garcia, administrator of Mission San Miguel, during the secularization period, and his sons established a rancho in the area that is now Pozo and named it Rancho San Jose. Later when the area petitioned for its own post office, another community further north had already claimed the name San Jose so the petitioners chose the name Pozo, which means well, in Spanish, from the appearance of the valley surrounded by hills, resembling a well. Pozo had its own Post Office from 1878 until 1942, when it was combined with the Santa Margarita Post Office.
When California became part of the United States in 1850, homesteading began in earnest and the community grew. The road through Pozo originally was the main route from the San Luis Obispo area to the Central Valley, Bakersfield and beyond. It was eventually named Highway 178. There was also a rougher wagon road directly to Arroyo Grande (present day Hi Mountain Road) so in its early days Pozo was a relatively busy place.
The area was good farming and ranching country and the community prospered through the 1920's and 1930's boasting many homes, a hotel, blacksmiths shops, a school, two stores and of course the still operating, world famous Pozo Saloon.
Thomas Arnold and Fred Delker subdivided property in the area and produced a sales brochure proclaiming Pozo to be "California’s newest wonder town, located in a beautiful mountain valley, where health and prosperity abound". He Offered 5 acre farms for $5.00 cash and $5.00 per month. Ten acre farms were $10.00 cash and $10.00 per month.
The Pozo area at one time was known for turkey farms, with several turkey ranchers producing thousands of turkeys a year. There is still a commercially produced variety of turkey called the "Pozo Gray". Turkeys were still being produced in Pozo up until the 1960's.
The hills east of Pozo also produce a gold rush in the early days. Claims were staked and worked in Pozo Creek and over the hill in the La Panza district. There are still hobby prospectors working the area today, though the placer deposits are reported to be fairly light with the gold found in small flakes rather than large nuggets. No one seems to be getting wealthy very quickly panning the gravel in the creeks.
Pozo had at least three schools through the years; the first school was behind the Saloon. The second school was called the "new school” whose remains are still prominent on the little hill on the right as you drive into Pozo. The last school was the ‘modern school’ and was a couple miles east of Pozo on the Goodwin Ranch. When the Pozo and Santa Margarita schools districts were consolidated with the Atascadero School District, the school district decided to bus the kids to Santa Margarita and Atascadero. The last year school was held in Pozo was 1967.
In the 1940's the highway that used to run through Pozo was improved and rerouted north about 10 miles and renamed Highway 58. Pozo became a quiet back roads place instead of a bustling stop on a major thoroughfare. The town of Pozo slowly shrank to what it is today: a few houses, the saloon and a U.S. Forestry guard station.
As Walter Murray, the editor of the San Luis Obispo Tribune wrote in June 1870, “We advise everybody who wants to see good scenery, fertile land, plenty of grass and to experience air which ought to prolong the lives of lung patients indefinitely, to visit San Jose Valley. It is one of the prettiest places we ever saw”.
Edited by Sharon Drake, additional information from Barbara Arnold and Cheri Roe 10-14-11
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