The Civil War brought great changes in the state. In the elections of 1860, Indiana voted for Lincoln, who had spent his boyhood in the Hoosier state. Although there was some proslavery sentiment in Indiana, represented by the Knights of the Golden Circle, Oliver P. Morton, governor during the war, held the state unswervingly to the Union cause even after constitutional government broke down in 1862. General John Hunt Morgan led a Confederate raid into Indiana in 1863, but otherwise little action occurred in the state.

Manufacturing, which had been stimulated in Indiana by the needs of the war, developed rapidly after the war. Factories sprang up, and the old rustic pattern was broken. However, Indiana’s farmers continued to be an important force in the state, and in the hard times following the Panic of 1873 indebted farmers expressed their discontent by supporting the Granger movement and later the Greenback party in 1876 and the Populist party in the 1890s.

In 1800, Indiana Territory was formed and included the states of Indiana, Illinois, and Wisconsin, and parts of Michigan and Minnesota. Vincennes was made the capital, which in 1813 was moved to Corydon. A constitutional convention met in 1816, and Indiana achieved statehood. Jonathan Jennings, an opponent of slavery, was elected governor. Indianapolis was laid out as the state capital, and the executive moved there in 1824–25.

Indiana was the site of several experimental communities in the early 19th cent., notably the Rappite (1815) and Owenite (1825) settlements at New Harmony. In the 1840s the Wabash and Erie Canal opened between Lafayette and Toledo, Ohio, giving Indiana a water route via Lake Erie to eastern markets. Also in the 1840s the state’s first railroad line was completed between Indianapolis and Madison. The Hoosier spirit of simplicity and forthrightness that developed during Indiana’s early years of statehood figured in the writings of Edward Eggleston in The Hoosier Schoolmaster and was represented in much later days by James Whitcomb Riley, George Ade, Gene Stratton Porter, and also in the nostalgic lyric by Paul Dresser (brother of Indiana-born novelist Theodore Dreiser) for the song “On the Banks of the Wabash, Far Away.”