Built in 1888-89 by Silas Garber, the founder of Red Cloud, the building was a bank until the city of Red Cloud acquired the property in 1907 and used it as city offices. In 1959, the Willa Cather Pioneer Memorial Foundation purchased the building and restored it as the Cather Museum. In 1978, the property was transferred to the Nebraska State Historical Society.

The Farmer's and Merchant's Bank was organized by Silas Garber, who was its first president. Willa Cather was long a personal friend of the Garber's and eventually used them as prototypes for Captain and Mrs. Forrester in A Lost Lady. The bank is used in two of Cather's other writings, the short story, "Two Friends," and the novel, Lucy Gayheart.