USA > Illinois > Cook County > Chicago > Discovery and conquests of the Northwest, with the history of Chicago, Vol. I > Part 56
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Chicago Historical Society. 645
to ensure success, that he felt himself quite unequal to the task, and in a letter published in the Chicago Tri- bune, November 26, 1871, he says:
"The urgent, immediate demand is for an energetic, practical, learned librarian, equal to the labor required, and competent wisely to order, shape and execute it. For such a position I am physically unequal." Mean- time he had received assurances from various historical and literary societies of their warm sympathy in the society's misfortunes, and their readiness to aid it in any possible way. He was also informed that contri- butions might be obtained from the public authorities of France, and probably from other European sources, if they were sought. The New England Historical and Genealogical Society, of Boston, placed a room in their new fireproof building at the disposal of the society, to which its various donations might be sent until it could provide a safe place of deposit. Very considerable col- lections were soon made, which, by the request of the president, were subsequently forwarded to Chicago, where they were all consumed by the fire of July, 1874. True to those brave instincts for which Chicago has become famous, and which have been literally "tried by fire," these heroic, enterprising men, who held the destinies of the society in their hands, cast down, but not despairing, began again, and nobly pushed forward its work, while still trying to reinstate their own homes and churches, and the innumerable charitable and other institutions of the great struggling city. In the course of time, with a liberal view to the future, they obtained a plan for an extensive and elegant edifice, and soon after they raised sufficient money to erect a small portion of the rear-with the hope that it will gradually grow into its full and symmetrical proportions, as time and means allow, and the necessities of the society require.
The society met for the first time in its new hall, Octo- ber 16, 1877; the nucleus of its third collection then con- sisting of 703 volumes and 988 pamphlets. Here for the next fifteen years the society grew and prospered. The library, and all other departments of the society's collec-
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tions, increased rapidly. Many valuable papers were read at its meetings. Through the liberality of some of its members, aided by a legacy from Jonathan Burr, the printing of its series of collections was begun, and four volumes issued. The bequest of Miss Lucretia Pond, of Petersham, Mass,, became available for the purchase of rare books; and a fund for binding was begun by a legacy from Philo Carpenter.
In 1892 the Henry D. Gilpin fund having then by careful investment and management nearly doubled, and the legacy of $25, 000 under the will of John Crerar, having become available, it was determined to solicit from its members subscriptions for the erection of a fire- proof building for a permanent home for the society. To this appeal the members responded with open- handed liberality. The site at the corner of Dearborn avenue and Ontario street, which had become identified with the history of the society, was chosen for its per- manent home; and the collections were stored, the tem- porary building cleared away, and the present noble structure, unique in being constructed and fitted entirely of iron and stone, was erected at a cost of about $180, - 000. To the energy of its president, Edward G. Mason, Esq., this consummation of the early designs of the founders of the society is due.
The corner stone of the new building was laid, with appropriate ceremonies, November 12, 1892; and on the evening of December 15, 1896, in the presence of a brilliant and representative gathering of the citizens of Chicago, the formal exercises connected with its dedi- cation occurred, and the society entered upon a new career of even greater usefulness.
Besides its library of about 25, 000 volumes and nearly 50, 000 pamphlets, the society also possesses a valuable collection of manuscript documents; seventy-five por- traits in oils, with other works of art; and a large museum of local and miscellaneous antiquities, relics, etc.
The officers of the society, in the successive order of their service, have been as follows:
PRESIDENTS : Wm. Hubbard Brown, Walter Loomis Newberry, Jonathan Young Scammon, Edwin Holmes
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Sheldon, Isaac Newton Arnold, Elihu Benjamin Wash- burne, Edward Gay Mason.
SECRETARIES AND LIBRARIANS: William Barry, as- sisted by Samuel Stone, for the first ten years; Thomas H. Armstrong, Lemuel G. Olmstead, J. W. Hoyt, William Corkran, Belden Farrand Culver, Albert David Hager, John Moses and Charles Evans.
Impressed with the great importance of this institu- tion in a city like Chicago, standing as it does the great metropolitan representative of the northwest, the society has quietly, but persistently, and with intelligent zeal, resumed and pursued its work-a work ever opening out into broader fields and embracing wider circles. The great strides of modern civilization bring us face to face with all the countries and peoples of the earth. We talk daily with Japan, Egypt and Zululand as easily, and by the same medium, as with New York or Boston, and their history becomes ours in divers ways, whether we will or no. We can no longer narrow our lives to our own neighborhood. We are a part of the great whole, and whatever concerns the remotest nation or people concerns us. Every historical society which comprehends the extent and magnitude of its relations will gather into its archives whatever throws light upon the history of the world and man's relations with the great problem of life, whether in the darkness of bar- barism or the light of a high civilization. And thus does the work of the intelligent historiographer become one of the most broadening and comprehensive in the whole circuit of human pursuits. *
* The sketch by Mrs. Barry brings the records of the society only down to 1879, since which time they have been continued from data kindly furnished by Chas. Evans, the present secretary and librarian.
R. BLANCHARD.
FINANCIAL HISTORY OF ILLINOIS AND CHICAGO.
BY JAMES W. SHEAHAN, OF THE CHICAGO "TRIBUNE." WRITTEN IN 1879.
The state of Illinois was admitted into the Union on the 3rd day of December, 1818, and during the years that have intervened has had a memorable history in the matter of debt, poverty, bankruptcy and taxation. Her record in these particulars is, in many respects, similar to that of many other states, old and new; but her record is unstained by dishonor, is free from all taint of repudiation, and her present glorious condition of wealth, prosperity and high commercial as well as political grandeur is a fitting result of her steadfast de- votion to honor and justice in all her financial dealings. On the last day of 1880, Illinois will be free from debt of every kind, with a handsome surplus in the treasury and a steady income, which lessens the ordinary burden of maintaining one of the best administered and most charitable state governments of the Union.
A brief sketch of the origin, the growth and the great magnitude of her public debt; of the courage and fidelity with which her people rejected, under the strong temp- tations of poverty, destitution, fraud, absolute loss of credit and the example of other states, every suggestion of repudiation; the steps they took to meet that debt by self-imposed taxation, and the final triumph of honest purposes, honestly carried into execution, may find a fitting place in the history of the great northwest.
The new state at the time of its admission contained about 50,000 inhabitants, the census of June, 1820, showing a population of 55,211, and this whole popula-
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tion resided, with few exceptions, south of a line drawn west from Alton to the Wabash river.
The science of government and the principles of political economy were but little studied or known in those days. The inhabitants of Illinois were mainly from the southern states, and their habits, traditions and general opinions were widely different from the more advanced systems of the northern and eastern states. One of the peculiarities of the day, and, until very recently, adhered to in some of the southern states, was a resort to public lotteries, instead of to taxation, in order to raise money to meet public ex- penditures. When the war with Great Britain closed, the population of the territory was small, and money was a rarity. Peltry found a ready sale, and became a medium of exchange; values were computed in deer and coon skins. The legislature of the territory were ready converts to the system (which still has its advo- cates) of making money cheap and plenty by the mere
process of printing. Ohio and Kentucky had met the scarcity of money by chartering a large number of banks; the notes of these banks found their way into Illinois. It was promptly discovered and decided that Illinois need be under no obligations to these states for currency, so the territorial legislature in 1816 chartered "The Bank of Illinois," located at Shawneetown, on the Ohio river, and a year later another bank at Kas- kaskia, and still another one at Edwardsville.
ยท These banks were all banks of issue, and their notes were soon put in circulation. To give them credit, the legislature of the territory was induced to make them substantially a legal tender; that is, it enacted laws staying all legal process for the collection of debts unless the creditor would receive the notes of these banks in satisfaction of the execution; and subsequently this law was made to include also the notes of the banks of Ohio, Kentucky, Tennessee and Missouri. Money was thus made plenty, and it became very cheap, and times were supposed to be good. Incidental to this abundance of money grew the famous charter of the city and bank
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of Cairo, which provided for building a magnificent city -the capital to be obtained from the sale of lots at $ 1 50 each-$50 of which was to be expended in building the city, and the other $ 100 was to constitute the capital of the bank. That charter was but a reflex of the popular mind under the excitement and speculative spirit pro- duced by the great inflation.
It required but a brief time for this condition of affairs to collapse. "Everybody was inextricably in debt to everybody." (Davidson and Stuve.)
Such was the condition of affairs when, on January I, 1819, the first state government of Illinois was inaugur- ated. The currency was irredeemable; gold and silver there was none. The legislature of the new state sought to avert the coming crash by chartering a new Bank of Illinois, with a capital of $2, 000, 000. This bank, how- ever, failed to organize.
In 1820 the banks of Illinois and those of all the neighboring states suspended, many of them were bank- rupt, and the brief holiday of inflation was succeeded by the gloom of financial ruin. The legislature of 1820-21 met the difficulty by chartering "The Illinois State Bank," based wholly on the credit of the state. The parent bank was located at Vandalia, with branches at Edwardsville, Brownsville, Shawneetown, and one in Edwards county. The notes were to be loaned to the people in sums of $100, on personal security; and all sums over $100, and not exceeding $1,000, to any one borrower, on real estate of double the value of the loan. The bank notes bore interest at 2 per cent, and were made legal tender to the extent that executions for debts were stayed, unless endorsed, payable in bills of the bank. Three hundred thousand dollars of these notes were ordered to be issued directly, and that sum was soon issued. The notes at once depreciated, and as the state revenue was paid in this money, the opera- tions of the government were clogged. The notes were payable ten years after date. In 1831, the state bor- rowed $100,000 of Col. Thomas Wiggins, and with the money redeemed the notes and wound up the bank.
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Directly and indirectly, it is estimated that the state lost $500,000 by this abortive scheme of banking .*
This was in 1831, and the date is significant, as showing the fleeting effect of even the most costly experience.
In January, 1835, just four years after the collapse and winding up of the "Illinois State Bank," at such heavy cost, the legislature again ventured upon the ex- periment of banking without capital, and making money cheap and plenty by the mere issue of promises to pay. Severely as the state and the people had already suf- fered by this delusion, the most costly of all its ventures was now authorized.
A new state bank was chartered, with a capital of $1, 500,000, and the right to increase that capital $1, 000, 000 more. Six branches were authorized. The state was to take $ 100, 000 of the stock, and the remain- ing $1, 400, 000 were to be subscribed by individuals The subscriptions to the stock far exceeded the amount authorized, and after the awards, the stock commanded 13 per cent premium. The note circulation was not to exceed two and one-half times the sum of the paid-up stock.
The city of Alton at that time aspired to be the con- trolling center of western trade. Lead from the Galena mines was then an important article of trade. The merchants of Alton held large interests in the bank, and by the aid of loans, undertook to purchase all the lead offered for sale-to corner the entire production. The competition raised the price of lead enormously, the fancy prices attracted all the metal to Alton, but it could not be sold. Other merchants, by the aid of the bank, engaged in like speculations in produce; all proved disastrous. "It was estimated," say Davidson and Stuve, "that the bank lost by the Alton operations $1,000,000; but these reverses were not generally known." So prosperous was the new bank, that a year after its charter, the legislature was convened in Decem- ber-January, 1835-36, in special session. The governor recommended that the state subscribe to the extra
* Davidson and Stuve, History of Illinois.
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$ 1, 000, 000 of bank stock; he represented that the stock was then at 113 and would rise to 130, and the state would realize $300,000 in premiums. The legislature was not then as advanced as the governor; it, however, authorized the sale of the $100, 000 of stock held by the state.
What the legislature of 1836 hesitated to do, the legislature of 1837 was prepared to do on a much mag- nified scale. It added $2,000, 000 to the capital stock of the bank, the whole increase to be taken by the state.
The old, defunct, suspended "Bank of Illinois," established at Shawneetown, in territorial days, was revived, with its capital stock increased to $ 1, 700, 000, of which $1,000,000 was taken by the state. These banks were made depositories of all the state funds, and for the proceeds of all state internal improvement bonds. This legislation was in January, 1837, and the banks had about fairly got in operation when the panic of 1837 occurred. In May the banks suspended specie payments, a special session of the legislature met in July, and the suspension of the banks was legalized. Subsequent legislatures renewed the legalization of the suspension, and the state bank dragged along its paper at a large discount, until, "in February, 1842, the monster institution, with a circulation exceeding $3,000, - 000, snapped its thread of life and passed into dissolu- tion, spreading devastation upon every hand, far and wide." (Davidson and Stuve, page 424. )
The State bank, and the Bank of Illinois, at Shaw- neetown, were wound up by an act of the legislature January 24, 1843. Of the terms of the settlement we will have something to say hereafter.
The refusal of President Jackson to approve the re- chartering of the Bank of the United States, though perhaps dictated by the highest purposes and sound policy, produced consequences which the great presi- dent hardly anticipated, and even before the date pre- scribed by law for the expiration of the charter of the great bank, there had already begun an inflation .of paper money, under the inspiration of which the coun- try was then rushing to financial disaster and bank-
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ruptcy. The crushing of the one "monster" was fol- lowed by the birth of hundreds. We have already told the history, as briefly as possible, of the several schemes of banking projected in the state of Illinois, and of their lamentable and costly termination.
The antagonism of the national government toward the National bank, particularly when shown by the withdrawal of the public deposits from that institution, necessitated the adoption of some other policy. The subtreasury system had not then been devised; the use of banks was a natural continuation of the old system, modified by the extinction of the great national "regu- lator." The government deposits were then transferred to state banks, those selected being popularly called the "pet banks." So soon as the fate of the United States bank had been definitely determined, there was a strong demand for state banks, and these issuing money in great abundance, led to that inflation out of which grew an era of widespread speculation, and a rivalry between sections and states; for improvements in the way of rail- roads and canals.
It was under the fever of this great internal improve- ment demand, that the state of Illinois, at the sessions of 1835 and 1836, overlooked or put out of sight the history of the previous costly experiments of banking, and again chartered banks on a more magnificent scale, to the extent and at the cost already stated. It cannot be denied that this revival of charters for banks in which the state was to be a partner, was due to the popular demand for works of public improvement. The means for this purpose could only be obtained through the agency of banks; the banks were state agents, and were to be sustained by the credit and resources of the state, and were expected to furnish all the bank paper needed to float the credit of the state. The laws were ample for this purpose, so far as this could be accomplished by statute, but no legislation has yet been framed which can compel public confidence nor sustain credit where there are no substantial and available means. So, the legislature having provided the bank in 1835, and that bank having during that
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time of universal speculation been eminently successful, the legislature of 1836 enlarged the banking system, that the state might engage in the great system of rail- way and other improvements, which was to construct a highway to market from every quarter-section farm in the state.
At the election in 1834, Joseph Duncan was elected governor of Illinois. He was then, and had been, a successful member of congress. He was personally opposed to the anti-bank policy of President Jackson, but this was not generally known until after the election. He was inaugurated in December of that year, and in his address boldly denounced the policy of the president. He was elected as a democrat, and sought to capture the popular sentiment by strongly recommending the construction of state roads, cordially approving the pro- ject of the Illinois and Michigan canal, and urging liberal charters for railways. He of course proposed banks, and the legislation of 1834-35 was substantially that suggested by him. So successful were the banks then created, that a special session of the legislature was held in the winter of 1835-36, and the banks were enlarged. Speculation had become wild in the extreme.
Chicago was then in her infancy, but real estate in that city reached prices which it never permanently commanded for forty years later. The immigration to the state was, in those days great. In 1836, public lands to the value of $5, 000, 000 were entered in Illinois. Speculation was, however, rife in all the infant cities and towns. Lots in Chicago and in the hundreds of other Illinois cities and towns, were purchased, unsight and unseen, by speculators at the east, just as mining prop- erty in the mountains of Colorado and Wyoming is now bought. Gov. Ford, in his history, mentions the state- ment that the staple articles of Illinois export were town plats, and that there was danger of crowding the state with towns to the exclusion of land for agriculture. Under the excitement of this craze a new legislature was elected in August, 1836. The subject of internal improvements was the all-absorbing issue; it was con- sidered that all that was necessary to build up these
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towns, and populate the state was the construction of railways. Simultaneously with the meeting of the legislature, a monster convention was held at the seat of government, to promote this grand scheme. The scheme itself was, to a great extent indefinite, but its advocates insisted that it should be comprehensive enough to meet the wants of every locality. The legis- lature was overwhelmed by an outside pressure, which it was unable, even if disposed, to resist.
On February 27, 1837, the legislature passed the "act to establish and maintain a general system of in- ternal improvements." This act authorized and directed the expenditure of various sums for the purposes and objects stated. We include in this list the additions made thereto by subsequent legislation:
Improvement of Great Wabash River $ 100,000 Illinois River.
100,000
Rock River. . . 100,000
Kaskaskia River. 50,000
Little Wabash River. 50,000
Great Western Mail Route from St. Louis to Vincennes.
250,000
Central Railroad, from Cairo to the Illinois & Michigan Canal .. Southern Railroad, from Alton to Mt. Carmel.
1,600,000
Railroad from Alton to Shawneetown ..
Northern Cross Railroad, from Quincy to Indiana State Line .. 1,800,000 Branch of Central Hillsboro to Terre Haute. 650,000
Railroad, from Peoria via Mt. Carmel and Carthage to Warsaw . Railroad, from Alton to Hillsboro to the Central Railroad .... 600,000
700,000 Railroad, from Belleville via Lebanon to intersect Southern Cross Railroad. 150,000
Railroad, from Bloomington to Mackinaw, in Tazewell County, thence to Pekin. 350,000
Also, an appropriation of $250,000 out of the first proceeds of the internal improvement bonds, to be dis- tributed per capita of the population, to those counties in which no railroad was directed to be constructed, and in which no navigable stream was to be improved. This money was to be expended in making roads and bridges.
Two "Boards" were of course organized to operate the machinery of this system. One was a board of "Fund Commissioners," to manage the financial part; the other was a board of "Commissioners of Public Works." This latter board had jurisdiction over all the public works, except the canal. The law required that portion of the Northern Cross railroad between
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Springfield and Jacksonville to be built immediately. But all the other roads were required to be begun at each end, and at important towns on the line, the work to progress in both directions from every point at which it was begun. The jealousy which inspired such legislation as that, was characteristic of that time. No locality was willing that another should have even a day in advance in the march to unlimited prosperity.
The construction of the canal had, up to this time, been carried on by the proceeds of the sale of lands and of lots in Chicago and other towns along the line of the canal. In order to obtain votes for the internal improvement system, the legislature included in this act of 1837 an authority to make a loan for the sum of $500,000 for the canal, and thereafter that work became part of the system.
The act of 1837 authorized an expenditure of $IO, - 230,000. At the legislature of 1839, additional expendi- tures were authorized directly, to the amount of $ 1, 000, - 000, including two new short railways; and it also in- cluded indirectly and prospectively, a new railway from Alton to Carlinville, and additional river improvements. The crowning act was an authority to negotiate a loan of $4,000,000, to continue the work on the canal.
Connected with the legislation on this subject was that of the removal of the seat of the state government. When it was removed from Kaskaskia, the location at Vandalia was limited to twenty years. Alton had the promise for the future, but Alton had become, in its own expectation, the future commercial metropolis of the Mississippi Valley, and in consideration of being made the terminus of three railways, renounced the claim to be the state capital. Springfield was the aspirant. Sangamon county was a large one, and had nine members of the general assembly, two senators, and seven representatives. These nine votes were of consequence in the passage or defeat of the internal improvement measure. They were primarily for the removal of the seat of government to Springfield, and when the building of a state capitol at Springfield was included in the scheme, the nine votes of Sangamon
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