From the records at the Henry County Historical Society
When the State of Indiana was admitted to the Union in 1816 Indians held more than three fourths of the land and Congress forbade private purchase or occupancy of the Indiana lands by the white man. The treaty negotiated in 1818 at St. Mary's, Ohio, provided for tribesmen to cede all of their land south of the Wabash River, except small reservations, and for Indians to vacate this part of the state within three years.
Following the treaty, land seekers came west and among the many small communities, which sprang up, was Hillsboro, then known as the Harvey neighborhood.
The first to locate there was Benjamin Harvey who had came to Wayne county earlier and married there. With a brother he blazed a trail largely following the course of the Little Blue River through the wilderness to the site of Hillsboro. Many Indian villages were near here at the time, the largest being about two miles north of what is now New Castle.
Land sales in the summer and fall of 1821 opened the territory, but delays in surveys prevented sale of land in Prairie township until 1822 when William, Absalom, James and Benjamin Harvey, Barclay Benbow, Abijah Cox, John Harris, Jacob Western, Robert Smith, Jacob Witter and Philip Harkrider entered tracts in the township at $1.25 per acre.
Absalom Harvey, who also owned land in and near New Castle, was the donor of 28 acres to the county including the acre where the courthouse now stands. He was the grandfather of Mrs. James Patterson of the south New Castle.
Prairie township was named by early settlers from the low, rolling meadows which characterize much of the terrain. The first white child born in the township was Joel Harvey on October 18, 1821. He was the grandfather of W. A. Harvey of Bloomington, Indiana, a Church of Christ Minister.
Hillsboro, which was laid out by Jacob and Thomas Huston and Thomas Rhinehart, flourished from the beginning and became even more prominent than neighboring Mt. Summit and Springport. Clement Murphy laid additions to the village in 1852 bringing the original 60 lots to 72.
Mr. Murphy was the grandfather of William C. Bond. The Murphy home was just east of the church where in later years was located the Samuel Downs homestead.
The establishment of a grist and textile mill on the banks of the Little Blue River just south of Hillsboro provided the community with its first industry in 1838 and inaugurated an era of prosperity. Daniel Mowrer who came with McAfee and Mowrer families to the new country from Franklin county, Pa., set up the mill and pioneer folk came from miles around to boy cloth and other products, exchange wool, and have their grain ground.
So busy did the mill become two shifts of workers were employed with 20 men working steadily day and night. Mean while, other industries also sprang up---two blacksmith shops, Samuel Canaday's wagon shop, two shoe shops, a harness business, a cabinet and coffin shop operated by Joseph Allinder, and a store kept by Joel Hazelton and David Haynes.
In 1851 a post office was established with Samuel Canaday the first postmaster. For many years a school was maintained at Hillsboro and William Clift is believed to be the first teacher.
Elder Elijah Martindale at Hillsboro established the Church of Christ on Little Blue River on June 20, 1840 with Asahel Woodward, Benjamin Harvey, Clement Murphy, Nathan Canaday and William Millikan as trustees. Samuel S. Canaday was chosen as clerk of the church. It would remain at Hillsboro for nearly 150 years.
Decline of the community is popularly attributed to the fact that New Castle was named the county seat, but other local historians claim there were too many smaller villages in the earlier days and that it was inevitable that some of them would disappear and the residents move to larger centers.