Jefferson's grid plan, with the usual provision of a courthouse square, was laid out in 1854. The site was a high tableland located between the North Raccoon River and Hardin Creek. Two mills, the Eurel Mill and the Jefferson Mill, were situated on the nearby river. The town was first reached by the Chicago and Northwestern Railroad, and later by the north-south Chicago, Milwaukee, and Saint Paul Railroad. In the 1920s Jefferson became an important stop-off point on the east-west US 30.
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