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Carl Walters was born in Fort Madison, Iowa where, as a jack-of-all-trades in his early career, he had sculptural experience as a tinsmith and brass patternmaker. Walters' first art instruction was from the Minneapolis Art Institute, where he took figure-drawing classes from 1905 to 1907. In 1908 he moved to New York to study at the William Merritt Chase School with the famed leader of The Eight, Robert Henri. Walters married Helen Lawrence in 1912 and the couple moved to Portland, Oregon, where they stayed for six years. While in Portland Walters exhibited paintings of circus animals and seascapes. He sent two marine subjects to the 1917 Salon of Independent Artists in New York, perhaps in anticipation of his return to the city in 1918.

Walters' combination of artistic sensitivity, mixed with mechanical understanding from his first jobs, proved useful when he developed a passion for ceramics. Walters' interest in the medium was first sparked by a display of ancient turquoise-glazed faience beads at the Metropolitan Museum of Art. Driven by his desire to achieve the same turquoise color, Walters spent the years 1919 to 1921 experimenting to develop his own alkaline glaze, which became his trademark "Walters Blue." This translucent blue glaze closely rivaled that of ancient Persian ceramics. While self-taught as a ceramist, Walters was one of the first American sculptors to exhibit finished pieces in clay.

Through fellow artist Arnold Blanch, Walters learnt of the Maverick, an artist community of Woodstock, NY, which he joined in 1922. Hervey White, the leader of the artist community, built a kiln and studio for Walters. It was here that Walters first worked on his modernist figurative ceramics that established his reputation as a sculptor. Walters had his first show as a ceramist at the Whitney Studio Club in 1924. When the Whitney Studio Club became the Whitney Museum of American Art on West Eighth Street, Walters was commissioned to make its entrance doors. Each door had thirty molded glass panels in raised relief decorations of animals and circus scenes.

Walters' first one-man show of sculpture was held in 1927 at the Dudensing Gallery, New York. In 1928 Walters' sculptures were included in the International Exhibition of Ceramic Art, organized by the American Federation of the Arts. The exhibition toured eight city museums, including New York's Metropolitan Museum, the location of the artist's original inspiration. Walters was invited to exhibit regularly at the Whitney's annuals and biennials, from 1929 to 1945, as well as the Art Institute of Chicago from 1932 to 1945. In the 1933/1934 Century of Progress exhibition, Walters' entries, a bull and a warthog, received much acclaim for their "pleasing unity of basic form, surface modeling, and glaze texture," according to the magazine Design. Walters also exhibited at the annual National Ceramic Exhibitions in Syracuse in the 1930s. His colorful and humorous processions of animals and figures were purchased by clients such as the Rockefellers and Eleanor Roosevelt. Walters had annual exhibitions at the Downtown Gallery throughout the 1930s and 1940s. He received a Guggenheim Fellowship in 1935 and 1936, which he used to travel around the United States and the West Indies. During his lifetime Walters' work was collected by the Metropolitan Museum of Art, the Museum of Modern Art, the Newark Museum and the Whitney Museum of American Art.

In 1951 Walters accepted a teaching position at the Norton Gallery and School of Art in West Palm Beach, where he spent his winters. Walters continued producing ceramic sculptures until the end of his life in his beloved Woodstock, New York, where he had lived since 1922. In 1958 the Museum of Art of Ogunquit held a memorial exhibition for Walters, curated by William Innes Homer. The donor list to the exhibition demonstrates the breadth of the artist's patrons, with donors from Florida to Nebraska, as well as loans from many esteemed collections and museums.

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