Historical Background

Pioneer Days

Most of the early settlers described this area as "the Great American Desert" because the waving prairie grasses in the fall of the year took on the appearance of sand. In the spring of the year from the seat of a covered wagon, a young lady said that, "it was as breathtaking as the sea of waving grasses sprinkled with nearly every color of blooming flowers, and bestowing beauty beyond description on the eye of the beholder."

Sometimes during their travels, the pioneers would not be aware that they were at a dugout until the smoke suddenly appeared before them from the dugout chimney. Almost every pioneer wanted to locate near a stream of water because of the water and timber supply.


Wild game was plentiful. Some early surveyors called this area Antelope Flats, because antelope were numerous. In overabundance were:

  • Buffalo
  • Catamount
  • Coyotes
  • Deer
  • Prairie Chickens
  • Wild Geese
  • Wild Turkeys

Prairie Fires

Prairie fires were most dreaded by the early settlers, for once started, a fire was almost impossible to extinguish and it consumed everything in its path. If strong winds accompanied the fire, a person could not outrun the fire. Frequently the flames leaped forty to fifty feet ahead. In the fall of the year the population arranged fire guards. Trenches were dug, fire rings were made with dirt, and sometimes sod fences were built to stop a fire. A prairie fire ravaged this area on October 6, 1871.

Indigenous Inhabitants 

The Native Americans in the Panama area were mostly Pawnee, Otoe, Sioux and Omaha. Salt Creek was the dividing line with the Otoe tribe on the east, Pawnee on the west, and Sioux Indians on the north and south. The Omaha tribe traveled throughout the territory.

Homestead Act of 1862 & Land Ownership

As soon as the Homestead Act of 1862 was published, the population began their movement for Government Land. Land belonged to heads of families who had settled on 80 or 160 acres. Then the land could be theirs by filing a claim and laying four logs in a square as a home foundation. When the land came up for sale on the market, the prospective buyers had the option of purchasing the land for $1.25 an acre.

Lancaster County was surveyed in 1857. The county was divided into sections, and precincts were established for the purpose of holding elections in 1870. In 1888, Thomas J. Dickson was elected County Commissioner with 3,564 votes. His opponent, O.S. Hazelton received 732 votes. In 1889, T.J. Dickson again won the election for County Commissioner with 5,147 votes. His opponent, D.A. Stocking, received 2,821 votes.

The town of Panama is located on section 3, Panama Precinct. The highest elevation on the Panama Precinct was 1,400 feet and the total acreage in 1903 was 19,704.47 acres.

Other Hardships

The pioneers suffered many hardships besides natural disasters.

Many times their only warmth was from a small fire kept alive with gathered prairie grass. Grasshoppers demolished their crops in 1875. The drought years occurred in 1875 and 1876. An epidemic of hog cholera invaded the area in 1878, and the great blizzard happened in 1888.

Numerous rattlesnakes were in the grasses, hay, and their homes. Mothers checked the children's beds to make certain that no rattlers were in them. Many of these beds, which were placed on dirt floors, were made of whatever material was available. Oftentimes hunger resulted from individual beliefs against violence, such as slaughtering of animals.

Panama Cemetery Association

The Panama Cemetery Association was formed in January of 1879, long before the town of Panama was established. A title was given with the purchase of a cemetery lot and meetings were held regularly. The Cemetery Association raised enough money to purchase a tent for its meetings and to sink a well on the property.


Panama began as a bustling town one mile south of the present location on what is now known as Highway 43 and Olive Creek Road. Panama moved to the present location when the railroad was established. The prosperity that a railroad brought to a town made the relocation feasible. After relocating, Panama was described as a station on the Crete Branch of the Missouri-Pacific Railway, situated on section 3, 25 miles southeast of Lincoln, Nebraska.

Bill Rapp, a resident of Crete and an avid railroad history expert, states that Jay Gould was president of the Missouri-Pacific Railway and that Mr. Gould made a special trip to Crete in his private car via the Burlington Railroad to look over the country. It was his theory that branch lines in agricultural areas were important sources of revenue. It has been established that the Missouri-Pacific railroad line from Auburn to Crete was constructed in a very short period of time and was laid out so as to avoid as many grades as possible.

Naming of the Village

There are several speculations about how Panama was named. The most popular theory is that it was named after the Isthmus of Panama. The first people in the community, who lived on Olive Creek Road, met in about 1870 and agreed on the name of "Panama" because the country was engaged in the Panama Canal undertaking. The word "Panama" is Spanish. Some experts said it comes from the word "fish" and some say it was derived from the word "butterfly'.

Early Legislation

The original survey states, as copied from the records in the Register of Deeds in Lancaster County: "I hereby certify that I have accurately surveyed and staked off into lots, streets and alleys the town of Panama, Lancaster County, Nebraska as shown in the above plat. All regular lots are 50 feet by 142 feet and dimensions of irregular lots are indicated in feet and decimals by red figures on the plat. Oak stakes are set at all block corners and pine stakes at lot corners on the block lines" signed J.A. Jaeger, surveyor.

"Know all men by these present that I, L.H. Wilcox, (a single man) of Lancaster County, Nebraska have caused to be subdivided and staked off into lots, blocks, streets, and alleys as shown by the annexed plat, the property herein described and the above and foregoing subdivision of the east half of the southeast quarter of the southwest quarter of Section three (3) and the southeast quarter of the northeast quarter of the southwest quarter of Section three (3). Also the west half of the east half of the west half of southeast quarter of Section three (3). Also the west half of the southwest quarter of the northwest quarter of the southeast quarter of Section three (3) all in Township seven (7), North of Range eight (8) East of the 6 PM in Lancaster County, Nebraska excepting the right of way and depot grounds of the Missouri-Pacific Railway Company upon and through above described property as appears on this plat is with the free consent and in accordance with the desire of the undersigned owner and proprietor. In witness where I have set my hand this 30th day of April A.D. 1888. In presence of A.R. Talbot, signed L.H. Wilcox Number 428. State of Nebraska, Lancaster County.

"On this 30th day of April A.D." 1888 before me, A.R. Talbot a Notary Public duly commissioned and qualified for and residing in said county personally came L.H. Wilcox (single) to me known to be the identical person described in and who executed the forgoing convenience and plots as grantor and acknowledged the said instrument and plot to be his voluntary act and deed year last above written." signed A.R. Talbot. The State of Nebraska, Lancaster County

"Entered on the numerical index and filed for record in the Register of Deeds office of said county this 3 day of May 1888 at 4 o'clock and 15 minutes P.M. and recorded in book of." signed Jno. D. Knight, Register of Deeds, Jsf. Fawell, Dep.


The land that was deeded to the town was the property of Moses J. Mitton, John Forrest, and Gilbert F. Steeves. Mr. Steeves owned most of the property on the west side of town. J. A. Jaegier was an engineer in the service of the Missouri Pacific Railway Company and surveyed the town site. L. H. Wilcox, was a vice-president of the railroad. John D. Knight was Register of Deeds, and John H. Fawell was a deputy when the town of Panama was being formed.

Panama was destined to become a prosperous town with the Missouri Pacific Railway trains making round trips each week. The conductor of the train, on the weekly trip, was known as Dad Comstock. Ruben Conn, upon hearing the news that the railroad was building near the prairie site of Panama, hitched up his horses to his wagon and hurried in to stake out a site to build a hardware store.


Other early businessmen were:

  • Blacksmith - J. N. Berry
  • Carpenters - John Howe, G. F. Steeves, and Van Giddings
  • Depot Agent - A. T. Thompson
  • Druggist - Mr. Feather J. C. Harper
  • Furniture and Undertaker - L.C. Laffer
  • General Store - George Hendee, Henry Van Diest, E. A. Burrough, and  Mr. Wannamaker
  • Grain Dealer - J. A. Wood
  • Hardware - Ruben Conn
  • Hotel Manager - O. S. Hazel-ton
  • Livestock Tenders - Thomas Hedges and T. J. Dickson
  • Lumber - M. J. Mitton and Joshua Pierson
  • Masons - J. C. Stillians and John Brandburg 
  • Ministers - Reverends Ray Compton and Reverend Wittaker
  • Physician - Dr. Louis Was
  • Postmaster, Printer, and Minister - Horner Moore
  • School Teacher - Miss Bertha Bottom
  • Section Foreman for the railroad - J. A. Gerard

Construction of New Buildings

In addition to these businesses, other established buildings included school district 138, a one-room school house, and three churches, namely Church of Christ, United Brethren Church and Panama Presbyterian Church. The depot, with the telegraph, was the link to the outside world and also a place to take commodities and to receive merchandise shipped from different cities in this country and from abroad.

Panama also had a bank, a lumber yard, two general stores (at one time supporting three general stores), an elevator, and a livery stable. The Bank of Panama now had a surplus of $13,000, did a general banking business and had the utmost confidence of the people.

Thomas Hedges and son ran a general store. They had a well kept stock and were doing a good business. Mr. Hedges was a heavy stock market dealer. M. J. Mitton managed the lumber business and Dickson Brothers operated a general store. The railroad shipped in rock, coal, furniture, supplies, tools, and satisfied the towns needs with the weekly train run. Panama had begun to make its own place on the map of the United States of America.

By-Laws & Ordinances

The first formal written By-Laws and Ordinances were accepted by vote of the Village of Panama Trustees on July 29, 1904. A previous set of by laws is said to have been in effect from the time the land was deeded to the town in 1888.

In the by-laws and ordinances it states: "We the undersigned, Trustees of the Village of Panama, Nebraska do hereby certify that the following By-Laws and Ordinances are a true copy of all the By-Laws and Ordinances compiled to date. Dated this 29th day of March, 1904.

N. Nieveen, Clerk, Thomas Hedges, Chairman, A.F. Hitch-cock, M.J. Mitton, T.C. Morgan, R.G. Dickson. The by-laws consisted of 11 articles and 18 ordinances."

By-Law on Alcohol Consumption

An unwritten by-law that by hear say has been passed down through the years, was made by Caroline (known as Carrie) Steeves. It was said that Carrie put into effect a by-law that would not allow any establishment to serve or sell alcoholic beverages. Should the town trustees allow such a place of business to operate the land would automatically revert back to the descendants of the Steeves family. This by-law was to be in effect for 100 years. To this day, Panama remains a dry town (despite a few bootleggers).

Current By-Laws & Ordinances

The by-laws and ordinances that govern Panama today were adopted in 1977.

Historical Photos

View historical photos of Panama via the Photo Gallery.