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The city is named after the brook Steinbach, which flows through it. The name comes from German "Stein" (stone) and "Bach" (brook). In 1874, a group of Mennonites from Russia settled in an area just north of present-day Steinbach. They were led by Franz Bartsch and had come to Canada via Manitoba Colony. In 1877, more families came to this settlement because of the lack of good soil at their original location on Lake Winnipeg; they stayed for one year before moving again due to flooding problems at that site as well. This time they moved south into what was then known as the Rural Municipality of Hanover but now is part of La Broquerie; there they established a permanent community called Neu-Schönwiese ("New Shallow Water").