The hysteria that was caused by what was a minor raid conducted by Scott into the interior of the Bluegrass was really set off by the upcoming election between Bramlett and Wickliffe. Wickliffe was running on a no-more-money, no-more-men platform, and seen as a secessionist. Both political parties were just as adept at propaganda as today.
There is no doubt that this raid was seen, at first, as a major incursion to disrupt the vote of the Unionists hence the declaring of martial law for a short time. The pro-Union paper such as the Louisville Daily Journal was written with an eye on keeping the state true to the Union and did not hesitate to magnify any event, minor or not. Remember the rule of a newspaper, even today, if it bleeds, it leads. One other point, Morgan had just led Federals on a 1000 mile chase through three states so it probably seemed true that another invasion would be possible, some accounts say Pegram was on a rescue mission to spring Morgan.

It is really interesting to read what was put out in the public arena and then read the military reports.