Stephenson moved to Terre Haute, Indiana, in the early 1850s, where he became active in the temperance movement and the nascent Republican Party.

After a lengthy pressure campaign from prominent Republicans, Lincoln appointed Stephenson as Librarian of Congress, replacing long-term incumbent John Silva Meehan despite opposition from the Joint Committee on the Library.

Believing the library had fallen into neglect under Meehan's administration, Stephenson began a mass change of staff soon after taking office, firing all but one assistant.

He campaigned on behalf of Abraham Lincoln in the 1859 Senate race in Illinois against Stephen Douglas, where Stephenson was described as an "efficient speaker" by Indiana politician William P.

[9] Shortly after Lincoln's victory in the presidential election, Stephenson began to pursue a political appointment as the librarian of Congress, using connections within the Republican Party.

His brother, Reuben Henry Stephenson, worked as the librarian of the Young Men's Mercantile Library of Cincinnati, and this may have influenced him to pursue the position.

In March 1861, Senator Henry S. Lane wrote to Lincoln in support, stating that Stephenson was a "gentleman of fine education" and that his appointment would "give great pleasure to the Republicans of his neighborhood".

[10] Stephenson arrived in Washington, D.C., at some point before May 1861 and wrote a letter to Lincoln asking to be appointed, urging haste so as to become acquainted with the library before the opening of the next session of Congress.

Meehan's longtime ally and associate James Pearce's lack of clear support for the Union following the secession of the Southern states significantly impacted his political influence.

Librarian of Congress Ainsworth Rand Spofford attributed Meehan's age and period of service as the primary factor for his replacement, writing that he had become "a very ancient fossil".

Stephenson defended his actions to the Joint Committee, stating in the annual report that the firing of the previous staff was because "his conviction, induced by several months of trial and observation, as well as by the facts as to the condition of the Library already recited, of their incapacity for their several posts.

[15][16] Around the beginning of August 1861, Stephenson offered the position of assistant librarian to Ainsworth Rand Spofford, a war journalist who had begun to browse the Library of Congress when not writing.

[23] Due to the ongoing civil war, Stephenson began to spend extended periods in military service soon after his appointment as Librarian of Congress.

Spofford noted that he "devoted a large portion of his time" to care for ill soldiers of the 19th Indiana Infantry Regiment in late September 1861, placed into a temporary hospital inside the Patent Office.

[26] In 1863, he served as the aide-de-camp of Solomon Meredith, commander of the Iron Brigade of the Army of the Potomac, seeing action at Fitzhugh's Crossing, Chancellorsville, and Gettysburg.

Seeking to succeed him as librarian, Spofford began a lengthy letter-writing campaign, soliciting endorsements from every congressional representative and senator.

[27][28][29] William Dawson Johnston, writing in 1904, attributed Stephenson's resignation to his engagement in "speculations created by the War", but no firm evidence has emerged corroborating the claim.

[27][29][30] In 1872, the library's former London agent, was awarded $1,480 by Congress after he was found to have been "unjustly defrauded by the conduct of the Librarian" in 1863; this may have been related to Stephenson's financial speculations.

He is recorded as a resident of Washington, D.C., in the 1870 census, in a 1871 edition of Boyd's Directory, and in two 1877 court cases revolving around a furniture ownership dispute.