It was a friend of Jean's from Manitoba who told them the story of a woman up there, years ago, who was at home and I believe heard a far away crash of some kind, went outside and saw some flashing red light in the distance (possibly a police car or ambulance). So she set out into the snowy woods in the direction of the light to see what happened. The light eventually faded and darkness fell. She had become lost in the woods, under heavy snowfall. Eventually she gave up trying to find her way out and took some rest inside a hollow tree. It snowed and snowed and became colder and after a while she could no longer move. She was stuck there for three days, when someone found her and brought her to their home to revive her. She was never able to speak, possibly brain-damaged from the cold. Apparently there was no one willing to take responsibility for her, so she was put in an institution. I guess back then not being able to speak was considered a real mental problem. She may have had other 'dumb'nesses about her, but the 'dumb' in the lyric primarily is about not being able to speak.
Quotes: "We're really looking forward to playing there, because we'll be playing a new song that's called Manitoba. It's a tale of something that happened to someone ... I have a friend who's from Manitoba -- the Thompson area. The tale comes via her. But I don't want to say that. I don't want to spoil it for people." -Frank Black Winnipeg Sun April 2003
"He (Parks) played piano and accordion and did an arrangement for one of the songs, 'Manitoba'. It was stunning. Suddenly our song was a Burt Bacharach tune." - Frank Black tallahassee online March 2003