Settlement and Immigration (continued)
Effects of the War of 1812
The outbreak of the War of 1812 had very little impact on the rate of settlement in the Northwest Territory, despite the fact that armed conflicts with British soldiers and their Indian allies necessitated the abandonment of some outlying posts and farms. In Spencer County, for example, the Meeks family in Luce Township was attacked by an Indian war party in May 1811, and William Meeks was killed. Raids by Indians also hampered Federal surveying efforts. By 1812, the southern third of Indiana and Illinois had been surveyed, but of the 2.8 million acres in southwestern Indiana acquired under the terms of the 1809 Treaty of Fort Wayne, the majority remained unrecorded as late as 1815. Nevertheless, a total of 324,000 acres in Indiana were sold at public auction between 1811 and 1814. Settlement advanced northeast from Vincennes along the White River, and northwest from the Ohio border along the Whitewater River. Between 1810 and 1815, Indiana's population increased from 24,520 residents to 63,897. Federal land offices established in Vincennes (1804) and Jeffersonville (1812) administered the sale of land (Figure 10). 
Following the end of the War of 1812, the rate of settlement increased at an exponential rate. With Indian resistance broken, what has been termed the "greatest westward migration in the history of the young nation" took place.  Land sales at the Federal office in Jeffersonville increased by 30 percent from 1815 to 1816. During the same period, sales increased a staggering 425 percent at the Vincennes office. In 1817, sales at Vincennes totaled more than 286,500 acres at a price of $570,923, while Jeffersonville brought in $512,701 for 256,350 acres. To facilitate land sales in central and northern Indiana, Federal land offices also were established in Brookville and Terre Haute in 1819 (Figure 11). By 1820, the United States had collected almost $5.14 million from the sale of over 2.49 million acres. Approximately 42,000 people are believed to have immigrated to Indiana in 1815 alone, and from 1810 to 1820, Indiana's population more than quintupled from 24,520 inhabitants to 147,178. The massive demand was partially due to the relative cheapness of land in Indiana, especially compared to Ohio, and the rampant land speculation and muddying of titles occurring in Kentucky. Nationwide economic prosperity, an open and flexible banking system, and rising prices for agricultural products, propelled the westward movement as well. 
The population explosion in the Northwest Territory was sufficient to allow the creation of five new states, including Indiana, between 1816 and 1821.  Statehood for Indiana had been proposed as early as 1811 by the territorial assembly. Congress passed the enabling legislation for Indiana's petition for statehood in April 1816. A state constitutional convention took place two months later. Constitutions from the neighboring states of Ohio and Kentucky served as models for Indiana's, as did the United States Constitution, with its Bill of Rights and system of checks and balances on government power. Indiana's 1816 constitution divided power among the judicial, legislative, and executive branches of government, with the lion's share of power concentrated in the hands of the legislature and, at the local level, in county officials. The franchise was limited to white males at least twenty-one years of age and residents of Indiana for a minimum of one year. The state constitution also incorporated Revolutionary-era concepts of individual liberty and freedom of worship, speech, the press, and assembly. 
Several progressive elements also were included in Indiana's first constitution. A system of free public education was established, as well as a penal system based on reformation of prisoners rather than merely punishment. The issue of slavery also was addressed. The institution had been established in Indiana by French settlers concentrated around Vincennes during the early- to mid-eighteenth century. Although the Northwest Ordinance of 1787 specifically forbade slavery, the territorial government under St. Clair and Harrison had allowed indentured servitude to continue in various guises. In 1802, Harrison made a failed attempt to have the ban upon slavery lifted, arguing that it would attract more settlers to the area. Anti-slavery forces ultimately prevailed, and Indiana's 1816 constitution confirmed that slavery was illegal in the state. The provision was not made retroactive; however, and 190 slaves were recorded in the 1820 census of Indiana. Shortly thereafter, the Indiana Supreme Court issued several decisions that made slavery and indentured servitude illegal in all instances. 
Indiana's constitution went into effect on June 29, 1816. Elections took place in August for the state's first General Assembly, and the first governor, Jonathan Jennings, was elected. In December 1816, President James Madison signed the congressional resolution that admitted Indiana to the Union as the nineteenth state.
The Panic of 1819
Statehood led to a reduced Federal presence in the region, particularly with regard to the military. The emphasis of government passed from the maintenance of security and protection against hostile powers to economic development, particularly via public land sales. Congress had created the institutional framework for achieving this objective with the Northwest Ordinance of 1787 and the various Federal land laws passed between the 1780s and 1805. The first pioneers in the region built upon this administrative structure, creating processes and institutions that suited American goals for transforming the landscape of the Northwest to suit their needs. These constituted the processes followed by the vast majority of settlers in the Northwest who reached the region between 1810 and 1830. Consequently, by 1815, the frontier experience had become increasingly orderly, standardized, and cyclical. 
Public land sales were the engine that powered development within Indiana, and this process continued to be controlled by the Federal land offices established throughout the Northwest. As the chief administrator for placing huge quantities of land on the market and recording sales, the land agent stood at the center of the Federal bureaucracy, hiring clerks and survey crews to undertake the arduous chore of surveying land and recording sales. In recognition of their influential role, land agents also occupied significant positions in frontier society and politics. As such, they became the central figures of Federal authority in the Northwest. 
The methodical and systematic distribution of land from the public domain to private hands suffered a major setback with the national financial panic in 1819. After the War of 1812, unfettered circulation of currency without specie guarantees by the Second Bank of the United States and state-chartered banks created rapid inflation and fictitious values on everything from land and agricultural produce to manufactured goods. When the Bank of the United States was forced by administrative necessities to require guarantees of currency with specie, it was discovered that many state banks lacked the monetary resources demanded. Much of the circulating currency, in essence, proved worthless. The United States Treasury began to refuse acceptance of the currency for discharge of debts, unhinging the credit system through which the majority of settlers had acquired land in the Northwest Territory. Scrambling to remain financially solvent, state banks called in loans of all types, consequently depressing trade and stultifying market activity throughout the country. Rapid deflation, economic depression, forfeitures, and defaults on taxes followed in rapid succession. 
Reversions of land to the United States in 1819 totaled 365,000 acres, of which 153,000 were located in the Northwest Territory. The following year, the unpaid balance due on land sales reached more than $21 million, an amount equal to more than one-fifth of the total national debt. Of that amount, $6.6 million was for land in the Northwest. The situation was made more critical by a slump in agricultural prices. In 1820, the value of export products from the Ohio Valley was only half what it had been the year before.  Congress eventually responded to the crisis with two pieces of legislation: the Land Act of 1820 and the Relief Act of 1821.
THE LAND ACT OF 1820
Passed by Congress on 24 April 1820, the Land Act of 1820 abolished the credit system and required cash sales for public lands after 1 July 1820. The law has been called "the single most important piece of land legislation since the original 1785 ordinance," since it created "the most liberal provisions [for buying title to land claims] in the history of the republic."  Tracts as small as 80 acres were made available at a cost of only $1.25 per acre. Only $100 was needed to gain clear title to 80 acres of land, whereas, under the credit system, $80 had been required to make just a one-fourth payment on 160 acres. The new law consequently made land purchases more affordable than ever before to a broader spectrum of the American public. Further, it helped quell land speculation, even in the aftermath of numerous forfeitures brought on by the financial difficulties associated with the Panic of 1819. 
The 1820 land law did not address the $23 million in land debt that resulted from overextended buyers and the 1819 panic. Many Westerners petitioned Congress to provide a means of relief, especially in light of the fact that national policies concerning trade and banking practices had contributed greatly to the magnitude of the financial depression. Congress responded with the Relief Act of 1821, which allowed debtors to relinquish a portion of their land and have all previous payments applied to the remaining land. Such a measure allowed many farmers to retain ownership of their land, particularly given the limited availability of credit since 1819.
Thomas Lincoln was among many Indiana farmers who secured final title to his land under this law. Within seven months of the law's passage, the balance due to the Federal government on all lands diminished by almost one half. Subsequent relief efforts made steady progress toward eliminating the debt possible by 1830. 
The twin objectives of encouraging settlement in the Northwest Territory and maintaining a democratic process for land distribution dated back to the Land Ordinance of 1785. The 1820 land law and the 1821 relief act provided the final impetus required to achieve these goals. According to Cayton, this legislation made possible the completion of a remarkably egalitarian process of transferring land from one group (Indians) to another through the intermediary action of a government on a scale "unmatched anywhere else in the history of the world." During the 1820s, Indiana land offices sold 1,963,947 acres at a cost of $2.5 million. Between 1830 and 1837, a staggering 5.55 million acres of land in Indiana transferred from the public domain to private hands. In the year 1837, the Fort Wayne land office alone collected over $1.62 million for 1,294,357 acres. 
Last Updated: 19-Jan-2003