FWIW, the earliest printed appearance of the phrase "the streets of Laredo" in this song is in John Lomax's "Cowboy Songs" (1910).

Why Laredo? It isn't exactly in cattle country, and Maynard's 1876 original had "Tom Sherman's barroom." Submitted for your consideration:

Corpus Christi [Tex.] Weekly Caller (Apr. 11, 1886):

"The late bloody riot in the streets of Laredo is much regretted by every good citizen of Texas. It is a disgrace, and the Lone Star State is bound to feel the effects of it. Such a scene as that on Wednesday evening, citizens firing at each other from the housetops with cannon, rifles, and pistols, does not belong in this enlightened age. It should have been prevented."

This kind if violence was unusual, even in the "Wild West." According to the Brooklyn [N.Y] Daily Eagle of Apr. 8, "the immediate cause is attributed by many to a circular which appeared yesterday morning, announcing that the Democratic party would hold [mock] funeral services...over the party known here as 'Huarches.' ...The casualties so far as is known are five killed and three wounded. All the killed were Mexicans except one, a young American named Brecker."

The rioters were finally dispersed by U.S. troops.