Coal was discovered in the Crowsnest area of Southeastern British Columbia more than 100 years ago by prospectors looking for gold. In 1897, William Fernie reported a major discovery which led to the formation of the Crows Nest Pass Coal Company. The mining community which emerged in 1897 was named Fernie, in honour of the miner whose efforts helped to establish the new industry.

An extremely interesting legend concerning Fernie follows:

William Fernie, founder of the city, met a tribe of Indians during one of his prospecting trips. He noticed one of the Indian chieftain's daughters was wearing a necklace of shining black stones. Knowing that these stones were coal, William Fernie asked as to their source. The Indian Chief agreed to show Fernie where these had been found, upon condition that the prospector would marry the Indian maid. After learning the location of the coal deposits, William Fernie refused to marry the Princess. The Indian Chief was angered by this and he laid a curse upon the valley stating that it would meet with Fire, Flood and Famine.

As a reminder of the curse, the Ghost of Mount Hosmer can be seen each sunny summer evening on a rock face high above the city. The "ghost" is a spectacular shadow in the form of a rider on horseback.

The first fire which occurred in 1904 destroyed a large portion of the wooden business section of the city. The largest disaster, however, came on August 1, 1908, when a forest fire practically destroyed the City of Fernie. Soon, Fernie was rebuilt. In 1916 disaster struck when the Elk River overflowed its banks and flooded sections of West Fernie. The near famine conditions of the Great depression made Fernie people believe the curse would never end.

On August 15, 1964, members of the Kootenai Tribes, headed by Chief Ambrose Gravelle, known as Chief Red Eagle, assembled in Fernie for the ceremonial lifting of the Fernie Curse. Mayor James White made amends with the Chief by smoking the "Pipe of Peace" with Chief Red Eagle.