The association was founded by Rachel Ann Wishaw and George W. L. Bickley, a Virginia-born doctor, editor, and "adventurer" who lived in Cincinnati. He organized the first castle, or local branch, in Cincinnati in 1854 and soon took the order to the South, where it was well received. It grew slowly until 1859 and reached its height in 1860.
Following the Mexican-American War of 1846, the group's original goal was to provide a force to colonize the northern part of Mexico and the West Indies. This would extend pro-slavery interests. The Knights became especially active in Texas. Bickley's main goal was the annexation of Mexico. Hounded by creditors, he left Cincinnati in the late 1850s and traveled through the East and South promoting an expedition to seize Mexico to establish a new territory for slavery. He found his greatest support in Texas. In a short time, he organized thirty-two chapters there. In the spring of 1860, the group made the first of two attempts to invade Mexico from Texas. A small band reached the Rio Grande but failed otherwise.
Appealing to the Confederacy's friends in the North, the Order soon spread to Kentucky as well as the southern parts of such Union states of Indiana, Ohio, Illinois, and Missouri. It became strongest among Peace Democrats, who felt that the Civil War was a mistake and that the increasing power of the Federal government was leading to tyranny. In the summer of 1863, Congress authorized a military draft which the administration soon put into operation. Leaders of the Democratic Party opposed to Abraham Lincoln's administration denounced the draft and other wartime measures, such as the President's temporary suspension of the writ of habeas corpus and arrest of seditious persons.
During the 1863 Gettysburg Campaign, scam artists in south-central Pennsylvania sold Pennsylvania Dutch farmers paper tickets purported to be from the Knights of the Golden Circle for a dollar. Along with a series of secret hand gestures, these tickets were supposed to protect the possessions and horses of the ticket holders from seizure by invading Confederate soldiers. When Jubal Early's infantry division passed through York County, Pennsylvania, they scoffed at the ticket holders and took what they needed anyway. They often paid with Confederate currency or drafts on the Confederate government. Cavalry commander J.E.B. Stuart also reported the alleged KGC tickets when documenting the campaign.
In late 1863, the Knights of the Golden Circle was reorganized as the Order of American Knights. In 1864, it became the Order of the Sons of Liberty, with Ohio politician Clement L. Vallandigham, most prominent of the Copperheads, as its supreme commander. In most areas only a minority of its membership was radical enough to discourage enlistments, resist the draft, and shield deserters. Numerous peace meetings were held. A few agitators, some of them encouraged by Southern money, talked of a revolt in the Old Northwest, which could have ended the war.
Southern newspapers wishfully reported stories of widespread disaffection in the North. John Hunt Morgan's 1863 Great Raid into Indiana and Ohio was initiated in the expectation that the disaffected element would rally to his standard. Governor Oliver P. Morton of Indiana and General Henry B. Carrington effectively curbed the Sons of Liberty in the fall of 1864. With mounting Union victories late in 1864, the order's agitation for a negotiated peace lost appeal, and the organization officially dissolved.
Alternatively, some claim the KGC operated until 1916. An entire chapter is dedicated to the KGC in a book entitled Jesse James was One of His Names.
A comic book series based on The Wild Wild West TV series featured the Knights of the Golden Circle enlisting the aid of Dr. Miguelito Loveless to assassinate President Grant and the president of Brazil during the Philadelphia Centennial Exposition of 1876.
The plot of the series was optioned for motion picture development.