USA > Illinois > Cook County > Chicago > Discovery and conquests of the Northwest, with the history of Chicago, Vol. I > Part 57
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voted for the enormous job. Gov. Ford, in his history, thus sums up this part of the story :
"Amongst them were some dexterous jugglers and managers in politics, whose whole object was to obtain the seat of government for Springfield. This delega- tion, from the beginning of the session, threw itself as a unit in support of, or opposition to, every local meas- ure of interest, but never without a bargain for votes in return on the seat of government question. Most of the other counties were small, having but one repre- sentative, and many of them with but one for the whole district; and this gave Sangamon county a decided pre- ponderance in the log-rolling system of those days. It is worthy of examination whether any just and equal legislation can ever be sustained, where some of the counties are great and powerful and others feeble. But by such means 'the long nine' rolled along like a snow- ball, gathering accessions of strength at every turn, until they swelled up a considerable party for Spring- field, which party they managed to make almost as a unit in favor of the internal improvement system, in return for which the active supporters were to vote for Springfield to be the seat of government. Thus it was made to cost the state about $6,000, 000 to remove the system of that seat of government from Vandalia to Springfield, half of which sum would have purchased all the real estate in that town at three prices; and thus, by log-rolling on the canal measure, by multiply- ing railroads, by terminating three railroads at Alton, that Alton might become a great city in opposition to St. Louis, by distributing money to some of the coun- ties to be wasted by the county commissioners, and by giving the seat of government to Springfield, was the whole state bought up and bribed, to approve the most senseless and disastrous policy which ever cripples the energies of a growing country."
We forbear even a sketch of the financial trans- actions. The banks negotiated some of the bonds, and all the banks of the country having suspended in 1837, money, such as it was, was easy. The canal loan was sent to Europe, and the negotiations there and at home
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were of the most remarkable character. The bonds were forever depreciating, and the proceeds of the loans disclosed cruel losses and much irregularity. At last Gov. Carlin called a special session of the legislature, to meet December 9, 1839. He who, a year before, remonstrated against any abandonment of the scheme, now confessed its failure. He reached the conclusion that if the state went on with the work already begun, it would find itself in debt at least $2 1, 000, 000; it already owed about $14,000,000; its annual revenue was not over $200, 000; its annual charge for interest was $800, 000; and the population of the state was not exceeding 500, 000. Not a mile of railroad had been completed, and the governor stated the assets of the state to be 430,000 acres of land, and 3, 491 lots in the towns along the canal, and some railroad iron in New York subject to the payment of duties! This was the end of the system of nearly 1,400 miles of railway, and a canal 100 miles long, and vast river improvements.
In 1838 some eight miles of track from Meredosia, were laid; subsequently, at a cost of $1,000,000, this track was extended to Springfield, and was sold by the state for $100,000, payable in state indebtedness. That was the total outcome of the whole mammoth scheme. At that session of the legislature, in the month of February, 1840, the legislature abolished its various boards, prohibited any further sale of bonds, or expenditures, discharged its force of engineers and other officers, and provided for winding up the whole business. The work on the canal was not then arrested-its life was protracted a little longer. This was the situation of affairs when the legislature adjourned in the spring of 1840. The payment of interest for 1841 on the canal loan was accomplished, but it was not possible to meet that on the other parts of the debt. The legislature that met in December, 1840, authorized the hypothe- cation of a sufficient number of the internal improve- ment bonds to pay the interest which would "legally" fall due in 1841. The reason for the use of this term "legally" was to meet the objection already raised that some of the bonds of the state had been negotiated
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outside of the requirements of the law, and were there- fore no longer a legal charge upon the state. A law was also passed authorizing the state to sell state interest bonds-to be sold in the market for what could be got for them. By these expedients the state was able to pay the January and July interest of 1841; that was the last payment that was made-no further efforts seem to have been made to that end. In February, 1842, as has already been stated, the state banks went down, to rise no more, and were put into liquidation. The state bonds were quoted as low as fourteen cents. Davidson and Stuve in their history say, page 452:
"The condition of this fair state, with her calamities thus augmented, was truly distressing. Abroad, her name was freely associated with dishonor; emigrants, dreading high taxation, gave it a wide berth, unless it was those who, having no character of their own, cared little for that of the state of their adoption; while the people here, with rare exceptions, were anxious to sell out and flee a country which presented no alternative but dishonor or exorbitant taxation. The chances to sell were, however, in adverse ratio to the desire, and while impending financial ruin, disgrace and the fear of taxation kept the state from gaining population as rapidly as had been her wont, the impracticability of effecting sales saved her against loss. In the mean- time, an utter dearth and stagnation in all kinds of business prevailed."
Gov. Ford thus describes the condition of affairs at this time in Illinois:
No further attempt was made after July, 1841, to pay interest on the public debt. For want of full knowledge of her condition abroad, and of the condition of other new states, in a short time Illinois, and some others in the west, became a stench in the nostrils of the civilized world. The people at home began to wake up in terror; the people abroad, who wished to settle in a new country, avoided Illinois as they would pesti- lence and famine; and there was great danger that the future immi- grants would be men who, having no regard for their own characters, would also have none for that of the state where they might live. The terrors of high taxation were before all eyes, both at home and abroad. Every one at home wanted to sell his property and move away, and but few, either at home or abroad, wanted to purchase. The impossibility of selling kept us from losing population, and the fear of disgrace, or high taxes, prevented us from gaining materially.
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In 1824 the affairs of the infant state of Illinois were brought to a crisis of the most terrible character. It was then proposed to make African slavery an institu- tion of the state. At that moment, when the dark shadow of the national curse thus threatened this broad state, there was, seemingly by the hand of a special Providence, a man raised up to meet the calamity at the threshold, and to resist it so bravely and so successfully, that it was not only kept beyond the limits of the state, but its introduction here was forever thereafter pro- hibited. That man was Edward Coles, the second governor of Illinois. His name will live in honor while that of Illinois is remembered, and so long as human liberty has an advocate on earth.
In 1842 Illinois was in the dust. Her treasury was empty-her credit destroyed. Her name was a world wide reproach. She was bankrupt-hopelessly. She knew not what to do. She was overwhelmed in debt, and had no property. Her people were in debt far beyond their means of payment. Her statesmen were weak and cowardly.
They had involved the state in all her trouble, and had not the courage to take the
consequences. It only needed a demagogue bold enough to avow the purpose, and dishonor and shame would have completed the dire misfortune. Again the hand of Providence seemed to have been especially interposed to save the state. Another candidate hav- ing been nominated, death intervened and removed him before the election, and the man needed by the state to meet the pending calamity was selected unex- pectedly, and was made governor in December, 1842. That man was Thomas Ford-a name which, because of his own great merits of integrity and ability, is for- ever entitled to distinction and credit, but which is entitled to grateful remembrance because of his heroic and inflexible purity and the firmness, by which he rescued Illinois from the peril into which she had fallen, and of which she was overwhelmed in despair. No braver, truer, nobler man ever served the state; no brighter record tells the public deeds of even the great- est of her sons. Gov. Ford, in his own history of the
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state, thus describes the condition of affairs when he entered the office of governor:
There was no party in the legislature of 1842-43 in favor of an imme- diate increase of taxation to pay interest on the public debt. Many there were who wanted to do nothing for five or ten years; and to trust to luck and accident for the means of improvement. There were a very few who were in favor of repudiating the whole debt of the state, who denied the power of the legislature to bind the people by contracting it, and who were in favor of giving up to the public creditor all the property purchased with the borrowed money, and all the public works con- structed by it, as all that ever could or ought to be done in the way of payment. But the great majority of the legislature held different opinions. Resolutions were passed which clearly stated the inability of the state to meet its engagements, and fully recognized our moral and legal obligations to provide for ultimate payment. The pay imme- diately was out of the question. Heavy taxation then would have depopulated the country, and the debt would never be paid.
He further says:
The people of Bond county, as soon as the internal improvement sys- tem passed, had declared in a public meeting that the system must lead to taxation and utter ruin, that the people were not bound to pay any of the debt contracted for it; and that Bond county would never assist in paying a cent of it. Accordingly, they refused to pay taxes for sev- eral years. When the system went down and left the state in the ruin- ous condition predicted by the Bond county meeting, many people remembered that there might be a question raised as to the obligation of payment. Public men everywhere, of all parties, stood in awe of this question; there was a kind of general silence as to what would be popu- lar or unpopular. The two great political parties were watching each other with eagle eyes, to see that no one should get the advantage of the other. The whigs, driven to desperation by repeated ill-success in elections, were many of them in favor of repudiation, as a means of bettering their party. Very many democrats were in favor of the same course, for fear of losing the power the democratic party already pos- sessed. It was thought to be a very dangerous subject to meddle with. At a democratic convention which nominated Mr. Snyder for governor, a resolution against repudiation offered by Mr. Arnold, of Chicago, was laid on the table by an overwhelming vote of the convention, so as not to commit the party one way or the other. It was evident that this was to be a troublesome question, and a great many of the politicians on both sides were as ready to take one side of it as the other, and their choice depended upon which might finally appear to be the most power- ful. The whigs were afraid if they advocated the debt-paying policy, the democrats would take the other side and leave the whigs no chance of ever coming into a majority; and the democrats were afraid if they advocated a correct policy, the other side might be more popular, and might be taken by the whigs. I speak only of the leaders of parties; amongst whom on all sides there was a strong suspicion that repudia- tion might be more popular than taxation.
And he thus states his conviction of what then might have been done :
It is my solemn belief that when I came into office, I had the power to make Illinois a repudiating state. It is true, I was not the leader of any party; but my position as governor would have given me leadership enough to have carried the democratic party, except in a few counties in the north, in favor of repudiation. If I had merely stood still and done nothing, the result would have been the same. In that case, a
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majority of both parties would have led to either active or passive repu- diation. The politicians on neither side, without a bold lead to the contrary, by some high in office, would never have dared to risk their popularity by being the first to advocate an increase of taxes to be paid by a tax-hating people.
The governor was a practical man, and an honest man, and one more intent upon accomplishing the public interests than upon glorifying himself. We have already stated that he obtained the legislation by which he was able to close out the indebtedness of the state to the banks. The legislature was induced by him to settle with the banks, whereby those institutions surrendered state bonds, held by them as collateral for the capital stock of the banks, subscribed for by the state. Subsequently, and after long and laborious negotiation, the foreign holders of the canal debt were induced to make a further loan of $1,600,000 to complete the canal, the property to be conveyed to trustees, and held by them until the canal debt and interest was paid. Though the canal debt was not paid, nor the state dis- charged from it, that debt was placed in a condition that it would be eventually paid out of the earnings of the work itself. By the bank settlements, the state was released of $3,000,000 of debt, and from the im- mediate pressure of the canal debt, amounting with deferred interest, to more than $4,000,000. The gov- ernor had fought and beaten down the spirit of repudia- tion. During these very days of trial and struggle, the state was visited with a succession of storms and floods, carrying off the crops, and reducing the people in several sections to actual want.
But this was only temporarily bridging over an ex- tremity. Something more, and of a permanent char- acter, was required. A delay in the canal negotiation, posponed for a season, other measures were proposed by this fearless and faithful public officer. He proposed, but it was not until a later date, that he obtained the legislation imposing a direct tax of one and one-half mills, to pay interest on the debt of the state. This, be it remembered, was enacted at a time when, for two successive seasons, there had been a failure of crops, a devastation by floods, and an unprecedented visitation
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of malarial fevers and other diseases. Under the firm hand of the inflexible governor, the state levied this direct tax to pay interest on the debt-a debt which had left nothing substantial to represent it. It was some time before the machinery for reconstructing the credit of the state could be put in motion. The pro- ceeds of this one and one-half mill tax, levied by the act of 1845, were to be applied to the payment of interest on all the bonds of the state, including the canal bonds; as the interest on the latter consumed nearly one-half the proceeds of the tax, there was, even after the tax began to be collected, a large and annual deficiency of of interest which continued to be added to the long account of unpaid interest. At the time of the suspen- sion of interest in 1841, the annual charge for interest was $830,000. This was reduced somewhat by the settlement with the banks, but it was still, for that day, an immense charge.
The great victory, however, was won when the state resolved to pay the debt and interest, and levied the first tax therefor. After that it was a mere question of time. The moral victory was already accomplished. The people under the guidance of honest Thomas Ford, their governor, had triumphed over every temp- tation to be false to the state, to their honor and to their creditors. Gov. Ford thus recapitulates the con- dition of affairs as he found them on entering office in December, 1842, and when he left office in 1846:
In the conclusion of this history, the author must be permitted to indulge in a slight retrospection of the past. In 1842, when he came into office, the state was in debt about $14,000,000 for moneys wasted upon internal improvements, and in banking; the domestic treasury of the state was in arrear $313,000 for the ordinary expenses of government; auditors' warrants were freely selling at a discount of 50 per cent; the people were unable to pay even moderate taxes to replenish the treas- ury, in which not one cent was contained, even to pay postage on let- ters to and from the public offices; the great canal, after spending $5,000,000 on it, was about to be abandoned; the banks upon which the people had relied for a currency, had become insolvent, their paper had fallen so low as to cease to circulate as money, and as yet no other money had taken its place, leaving the people wholly destitute of a circulating medium, and universally in debt; immigration to the State had almost ceased; real estate was wholly unsaleable; the people abroad, terrified by the prospect of high taxation, refused to come among us for settlement, and our own people at home were no less alarmed and terrified at the magnitude of our debt, then apparently so much exceed- ing any known resources of the country. Many were driven to absolute
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despair of ever paying a cent of it; and it would have required but little countenance and encouragement in the then disheartened and wavering condition of the public mind to have plunged the state into the one terrible infamy of open repudiation. This is by no means an exagger- ated picture of our affairs in 1842.
In December, 1846, when the author went out of office, the domestic debt of the treasury, instead of being $313,000, was only $31,000, with $9,000 in the treasury; auditors' warrants were at par, or very nearly so; the banks had been put into liquidation in a manner just to all parties, and so as to maintain the character of the state for moderation and integrity; violent counsels were rejected; the notes of the banks had entirely disappeared, and had been replaced in circulation by a reasonable abundance of gold and silver coin, and the notes of solvent banks of other states; the people had very generally paid their private debts; a very considerable portion of the state debt had been paid also; about $3,000,000 had been paid by a sale of the public property, and by putting the banks into liquidation; and a sum of $5,000,000 had been provided for, to be paid after the completion of the canal; being a reduction of $8,000,000 of the state debt which had been paid, redeemed, or provided for whilst the author was in office.
The state itself, although broken, and at one time discredited, and a by-word throughout the civilized world, had, to the astonishment of every one, been able to borrow on the credit of its property; the further sum of $1,600,000 to finish the canal; and that great work is now (1847) in a fair way of completion. The people abroad have once more begun to seek this goodly land for their future homes. From 1843 until 1846, our population rapidly increased, and is now (1847) increasing faster than ever it did before. Our own people have become contented and happy, and the former discredit resting upon them abroad for supposed willful delinquency in paying the state debt, no longer exists.
In 1846 the people, by popular vote, elected a state convention to remodel the constitution. This body met in 1847. The constitution then formed was rati- fied by the people in March, 1848. Our interest in this constitution is merely to show that a proposition to place in the constitution an irrepealable section impos- ing a tax to pay the state debt, was voted down. Demagogues and cowards affected to doubt the people's honesty. That section was, however, submitted as an article of the constitution, to be voted upon separately by the people, so that its defeat would not carry with it the defeat of the whole constitution. The vote on this section, imposing a permanent tax of two mills on the dollar, on all the taxable property of the state, to be applied to the payment of the principal of the state debt other than the canal debt, was ratified by the peo- ple, they voting directly upon the merits of the pro- position.
The state had now made provisions as follows:
1. An annual tax to pay the interest on all the public debt.
-
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2. An annual tax to pay the principal of the state debt other than the canal debt.
3. A setting apart of the earnings of the canal to pay that debt.
Then, in 1850, was the contract with the Illinois Central railroad, by which, in lieu of other taxes, the Illinois Central Railroad Company agreed to pay into the state treasury, a sum equal to 7 per cent of its gross earnings. The state had thus made ample provision for the payment of its debts. In 1847 the state provided for funding the principal of all its debts, except the canal debt, and in 1857 provided for funding all the arrearages of interest on all its debts, issuing bonds therefor, thus paying interest on the interest which had fallen in arrears during the years of helplessness.
It is not the purpose of this paper to relate the detailed history of the debt.
Notwithstanding the payments and reductions made in the twelve years, from 1841 to 1853, such had been the accumulations of unpaid interest, that on January 1, 1853, the principal and overdue interest still unpaid amounted to $ 17, 398,985. Under the act of 1857, the arrearages of interest accrued and then unpaid were funded to the amount of $2,973, 029.
From the date of the act of 1845, imposing a tax to pay interest on the debt, down to Nov. 30, 1860, the direct taxes collected from the people of Illinois and paid on account of principal and interest of their public debt, was as follows:
RECEIVED AND DISBURSED.
112 MILL INTEREST TAX.
2 MILL TAX, PRINCIPAL.
To November 30, 1850. . $ 165,789
1850 to 1852. 492,167
1848 to 1850. 296,327
1852 to 1854. 771,221
1850 to 1852 .. 366,394
1854 to 1856. 1,113,413
1852 to 1854. 528,258
1856 to 1858. 1,387,554
1854 to 1856.
966,204
1856 to 1858.
1,047,884
1858 to 1860. 949,082
Total .$4,451,333
1858 to 1860. 1,192,010
Total $5,052,153
Grand Total. $9,503,486
With these and other payments, the state debt, November 30, 1860, still remaining unpaid, was $10, - 346,017.
To November 30, 1846 .. $ 62,024
1846 to 1848. 234,944
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The legislature of Illinois authorized the city of Chicago to make certain expenditures for the purpose of deepening and otherwise improving the Illinois and Michigan canal. This fact gave the city a lien on the canal for the amount not exceeding $2,800,000 to be refunded at the pleasure of the state, from the earnings of the canal. The great fire in Chicago took place in October, 1871, and the legislature, at a special session, assumed this expenditure, and bonds to that amount were issued to the city in satisfaction of the lien. In this way $2, 800, 000 more was added to the cost of the canal, and the bonds issued for that purpose were added to the debt of the state then unpaid.
The debt of Illinois has been comparatively a light burden since 1860. Up to that time the tax had been a grievous one. A half million of people in 1845 bravely began to tax themselves to pay interest on a debt, which then, with accumulated interest, was nearly $ 18,000,000. Three years later they adopted a perma- nent tax, to pay the principal of that debt. The great recovery which followed the adoption of these meas- ures, soon enabled the state not only to meet its cur- rent liabilities for interest, but also to begin the pay- ment of the principal, and funding the long over due interest, to begin the reduction. In addition to this, the state in 1856 began to receive an increasing income from the Illinois Central Railroad Company. In 1870 the two mill tax was discontinued, being no longer needed; the interest fund tax was reduced to a nominal sum. The whole tax for ten years on account of the public debt has been nominal, or wholly omitted, and the state treasury has during that time been always in advance of the maturity of the outstanding bonds, which the creditors preferred to hold, than to surrender.
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