What was probably the most disastrous fire in Nebraska during territorial days occurred on the afternoon of Saturday, May 12, 1860, in Nebraska City. At about two o'clock in the afternoon the alarm was given that Coleman's butcher shop was on fire. It had been a dry spring, and the wind from the south was blowing a gale. Sparks were carried rapidly by the wind, setting the commercial buildings and houses on fire.
At that time Nebraska City had no fire fighting equipment, and there was even a shortage of water. All the buildings on both sides of Main Street for a block and a half were destroyed as well as those north and south along Sixth Street. It was only when the fire reached more scattered buildings that it was stopped. Citizens worked to remove all important papers and records and as much furniture as possible from structures in the fire's path. It was only with great difficulty that the homes of J. F. Kinney and Robert Hawke, among the finest houses in Nebraska City, were saved.
About thirty-eight buildings were destroyed, some containing several offices. These included two general merchandise stores, two drugstores, the bank, three banking and exchange offices, one large hotel, the post office, the U.S. Land Office, all Otoe County offices, a large hall used as a courtroom and for public meetings, a stove and tinware store, eight attorneys' offices, one dentist's office and dwelling, two warehouses, one butcher shop, three saloons, one tenpin alley, one blacksmith's shop, one wagonmaker's shop, one livery stable, one barber shop, two boot and shoe shops, one bakery, one carpenter's shop, and a number of other buildings. Some suspected that the blaze was started by an arsonist, but it was later discovered that a container of smoldering sawdust in Coleman's butcher shop had been the source.
Much of the destroyed property had not been insured. About sixty-two thousand dollars of insurance money was collected to begin rebuilding the town. Nebraska City's first hook-and-ladder company of volunteer fire fighters was organized in 1861, and the decade of the 1860s saw the organization of others. The A. T. Andreas history of Nebraska, published in 1882, credited the fire with inaugurating an era of "renewed energy and activity" in Nebraska City.