Indianola was founded in 1849 on a low-lying sliver of sand on the edge of Matagorda Bay, where Powder Horn Bayou empties into the bay from Powder Horn Lake. It lay near the bayfront town of Indian Point, platted in 1846, and incorporated part of Karlshafen, established in 1844 by Prince Carl zu Solms-Braunfels, commissioner-general of the Society for the Protection of German Immigrants in Texas, as a landing point for the German colonists the society transported to New Braunfels, Fredericksburg, and other central Texas locations in the 1840s. It was also the port of entry for immigrants of French empresarioHenri Castro. From the 1850s until the 1870s, Indianola ranked second to Galveston as a Texas Gulf Coast seaport.
In the post–Civil War era, New Orleans steamboat magnate Charles Morgan sought to challenge Galveston by integrating his steamship line with the Gulf, Western Texas and Pacific Railway, which would connect Indianola to San Antonio. The Panic of 1873 disrupted Morgan's rail extension project and hurricanes in 1875 and 1886 severely damaged Indianola's transportation and mercantile infrastructure. By 1886, the Galveston, Harrisburg and San Antonio Railway had established a continuous rail connection between Galveston and San Antonio, and the International and Great Northern Railway had linked San Antonio to the Mexican National Railway at Laredo, destroying any incentive to rebuild Indianola a second time. Many of the buildings that survived the 1875 and 1886 hurricanes were moved to Victoria and Cuero.
Indianola today is an extended line of bay houses on stilts along Ocean Drive, a two-lane asphalt road that parallels the shore. There is no perceptible trace of the nineteenth-century settlement.
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