At one point, the area of Loretto, Minnesota was comprised of nothing more than woods, lakes, streams, and the occasional open space. The only inhabitants were the Dakota Indians, and they made use of the woods and water by providing themselves with plenty of game. However, all of this changed as a result of the Traverse de Sioux treaty. This treaty allowed the settlers to flood the area while the Indians moved out to the west. Most of the settlers moved to the location because they were drawn to the woods and plentiful farming opportunities.
Loretto was originally just a railroad site for the Marie Railroad. Most of the settlers were of German or Dutch heritage. The area was named from a Catholic mission, Lorette, which provided services for refugees of the Huron Indians near Quebec, Canada. The Lorette Catholic nuns would care for the Indians year after year. They provided care for so long, that their name became popular in the area. The initial inspiration for the name of the mission was from Loretto, a small town in Italy. Modern-day Loretto was originally a part of the city of Medina. However, many of the members formed a separate community from Medina, and the city of Loretto (derived from the name of the local Catholic mission) was incorporated in 1940. Since then it has served as a small and peaceful town.
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