The Wisconsin Colony played a major role in the settlement of Peabody. In the spring of 1870, a group of men in Wisconsin, organized for the purpose of settling in Kansas. Membership in the association cost $25 per member. Leaders of the alliance were Colonel J. E. Cone, president, William C. Nye, secretary, and C. D. Bradley, general agent. These men, along with M. Birdsall, were the commissioners of the organization. The group planned to settle a tract six miles wide and nine miles in length along both sides of Doyle Creek, which was part of the proposed route for the Santa Fe Railroad. After arriving on the scene, the group enlarged its claim to a tract 12 by 8 miles in size.

A surveyor was hired to plat the acreage and show settlers which lands were available in the region named Coneburg, in honor of the company president. The townsite extended from where the present U. S. Highway 50 is on the north end of present-day Peabody to Division Street (so named when the street became the dividing line between the two early communities of Coneburg and Peabody). Civilian homesteaders of this acreage paid $2.50 an acre under the Preemption Law, soldiers who had not fought for the South in the Civil War could acquire acreage for $1.25 with soldier warrants. The railroad land grant, which went on the market 1 January 1871, sold from $3 to $10 an acre (Gazette, 29 June 1961).