Sheffield was purchased in 1724 from the Mohican Indians for 460 English pounds, three barrels of cider and 30 quarts of rum. From this tract of land, the settling committee created two townships, the Lower Township retaining the name of Sheffield and the Upper Township becoming Great Barrington in 1761. Settlers were attracted by the fertile Housatonic flood plain and the natural resources. The town developed rapidly, giving rise to gristmills, sawmills, plaster and paper mills, forges, tanneries, smithies, limekilns and shops for making clothing, furniture, wagons and harnesses. None of these industries survive today, except for the few large farms. Sheffield belongs to the Southern Berkshire Regional School District.

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