Rather than make a further hazard of his fortunes on the Iowa frontier, Lincoln decided to return to New Salem at the conclusion of his military service. His time in the field had hampered his campaign for office, and he was defeated soundly in the August election despite a nearly unanimous return in his home precinct.
With his political ambitions hampered, and the general store closed due to bankruptcy, Lincoln found himself out of a job in the autumn of 1832. He briefly considered an apprenticeship in the blacksmith trade, and also thought of law, but realized that he lacked the necessary education for a legal career. The following year he was named postmaster of New Salem, and also took up occasional work as a surveyor. In so doing, Lincoln generated a significant amount of debt, which he would later repay, earning him the nickname "Honest Abe."
In 1834 Lincoln made a second bid for the Illinois General Assembly. This time he succeeded. As representative from Sangamon County, he represented the nascent Whig Party, which devoted itself under the national leadership of Senators Henry Clay and Daniel Webster to a platform of internal improvements, high tariffs and the maintenance of a national bank. All of these planks stood in opposition to President Jackson, who virtually dominated the Democratic Party during his eight years in office and would cast a lengthy shadow over national politics in the years to come.
Lincoln himself would cast a lengthy shadow over Illinois state politics in the succeeding years, winning three consecutive re-election bids in Sangamon County, and serving in the General Assembly for a total of eight years. By 1838, he had amassed enough influence in Whig circles to gain the nomination and vote of the party in his bid for speaker of the House. However, the opposition would prevent his accession to the seat, a scenario that would replay itself in 1840. Such early obstacles must have proven to be an invaluable lesson in the crucial importance of diplomatic party politics.
As a legislator in Illinois, Lincoln had an active, if somewhat mixed record. He was squarely behind the legislation that established a state bank of Illinois, and he had a large hand in the Whig power play that moved the state capital from the southern outpost of Vandalia to the more centrally located Springfield. Following the example of Clay, Lincoln also sponsored a sweeping piece of legislation calling for ambitious statewide internal improvements, including an elaborate system of railroads and canals. This proposal was accepted by the assembly, although the financial chaos that ensued from the Panic of 1837 prevented most of the plans from being realized, and the state was saddled with a sizeable debt as a result.
In 1837, Lincoln took an early stand on the question of slavery, dissenting from a piece of legislation that condemned the activities of local abolition societies and lent general support to the institution of slavery. While Lincoln agreed on the harmful influence wielded by the overly zealous abolitionists, he also insisted, in contradiction of the majority opinion, that "the institution of slavery is founded on both injustice and bad policy."