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 Shawneetown and Edwardsville for the sale of public lands; and in 1816 more than 500,000 acres were sold. In 1818, however, many citizens were in debt for their lands, and “squatters” invaded the rights of settlers. Congress therefore reduced the price of land from $2 to $1.25 per acre, and adopted the policy of pre-emption, preference being given to the claims of existing settlers. The Indians, however, resisted measures looking toward the extinguishment of their claims to the country. Their dissatisfaction with the treaties signed in 1795 and 1804 caused them to espouse the British cause in the War of 1812, and in 1812 they overpowered a body of soldiers and settlers who had abandoned Fort Dearborn (See ). For a number of years after the end of the conflict, the Indians were comparatively peaceful; but in 1831 the delay of the Sauk and Foxes in withdrawing from the lands in northern Illinois, caused Governor John Reynolds (1788–1865) to call out the militia. The following year Black Hawk, a Sauk leader, opened an unsuccessful war in northern Illinois and Wisconsin (the Black Hawk War); and by 1833 all Indians in Illinois had been removed from the state.

The financial and industrial policy of the state was unfortunate. Money being scarce, the legislature in 1819 chartered a state bank which was authorized to do business on the credit of the state. In a few years the bank failed, and the state in 1831 borrowed money to redeem the depreciated notes issued by the bank. A second state bank was chartered in 1835; two years later it suspended payment, and in 1843 the legislature provided for its liquidation. The state also undertook to establish a system of internal improvements, granting a loan for the construction of the Illinois and Michigan canal in 1836, and in 1837 appropriating $10,000,000 for the building of railroads and other improvements. The experiment proved unsuccessful; the state’s credit declined and a heavy debt was incurred, and in 1840 the policy of aiding public improvements was abandoned. Through the efforts of Governor Thomas Ford (1800–1850) a movement to repudiate the state debt was defeated, and a plan was adopted by which the entire debt could be reduced without excessive taxation, and by 1880 practically the entire debt was extinguished.

A notable incident in the history of the state was the immigration of the Mormons from Missouri, about 1840. Their principal settlements were in Hancock county. They succeeded in securing favours from the legislature, and their city of Nauvoo had courts and a military organization that was independent of state control. Political intrigue, claims of independence from the state, as well as charges of polygamy and lawless conduct, aroused such intense opposition to the sect that in 1844 a civil war broke out in Hancock county which resulted in the murder of Joseph Smith and the removal of the Mormons from Illinois in 1846.

The slavery question, however, was the problem of lasting political importance. Slaves had been brought into the Illinois country by the French, and Governor Arthur St Clair (1734–1818) interpreted the article of the Ordinance of 1787, which forbade slavery in the North-West Territory, as a prohibition of the introduction of slaves into the Territory, not an interference with existing conditions. The idea also arose that while negroes could not become slaves, they could be held as indentured servants, and such servitude was recognized in the Indiana Code of 1803, the Illinois constitution of 1818, and Statutes of 1819; indeed there would probably have been a recognition of slavery in the constitution of 1818 had it not been feared that such recognition would have prevented the admission of the state to the Union. In 1823 the legislature referred to the people a resolution for a constitutional convention to amend the constitution. The aim, not expressed, was the legalization of slavery. Although a majority of the public men of the state, indeed probably a majority of the entire population, was either born in the Southern states or descended from Southern people, the resolution of the legislature was rejected, the leader of the opposition being Governor Edward Coles (1786–1868), a Virginia slave-holder, who had freed his slaves on coming to Illinois, and at least one half the votes against the proposed amendment of the constitution were cast by men of Southern birth. The opposition to slavery, however, was at first economic, not philanthropic. In 1837 there was only one abolition society in the state, but chiefly through the agitation of Elijah P. Lovejoy (see ), the abolition sentiment grew. In 1842 the moral issue had become political, and the Liberty Party was organized, which in 1848 united with the Free Soil Party; but as the Whig Party approved the policy of non-extension of slavery, these parties did not succeed so well united as under separate existence. In 1854, however, the Liberty and Free Soil parties, the Democrats opposed to the Kansas-Nebraska Bill, and some Whigs united, secured a majority in the legislature, and elected Lyman Trumbull United States senator. Two years later these elements formally organized as the Republican Party, though that name had been used locally in 1854, and elected their candidates for state offices. This was the first time that the Democratic Party had been defeated, its organization having been in control since the admission of Illinois to the Union. An important influence in this political revolution was a change in the character of the population. Until 1848 the Southern element predominated in the population, but after that year the immigration from the Northern states was greater than that from the South, and the foreign element also increased. The opposition to slavery continued to be political and economic rather than philanthropic. The constitution of 1848, which abolished slavery, also forbade the immigration of slaves into the state. In 1858 occurred the famous contest for the office of United States senator between Stephen A. Douglas (Democrat) and Abraham Lincoln (Republican). Douglas was elected, but the vote showed that Illinois was becoming more Northern in sympathy, and two years later Lincoln, then candidate for the presidency, carried the state.

The policy of Illinois in the early period of secession was one of marked loyalty to the Union; even in the S. part of the state, where there was a strong feeling against national interference with slavery, the majority of the people had no sympathy with the pro-slavery men in their efforts to dissolve the Union. The legislature of 1861 provided for a war fund of $2,000,000; and Capt. James H. Stokes (1814–1890) of Chicago transferred a large amount of munitions of war from St Louis, where the secession sentiment was strong, to Alton. The state contributed 255,092 men to the Federal armies. From 1862–1864, however, there was considerable opposition to a continuance of the war. This was at first political; the legislature of 1862 was Democratic, and for political purposes that body adopted resolutions against further conflict, and recommended an armistice, and a national convention to conclude peace. The same year a convention, whose duty was to revise the constitution, met. It declared that the law which called it into being was no longer binding, and that it was supreme in all matters incident to amending the constitution. Among its acts was the assumption of the right of ratifying a proposed amendment to the constitution of the United States which prohibited Congress from interfering with the institution of slavery within a state, although the right of ratification belonged to the legislature. The convention also inserted clauses preventing negroes and mulattoes from immigrating into the state and from voting and holding office; and although the constitution as a whole was rejected by the people, these clauses were ratified. In 1863 more pronounced opposition to the policy of the National Government developed. A mass meeting, which met at Springfield in July, at the instance of