History of Chicago. From the earliest period to the present time, Part 46

Author: Andreas, Alfred Theodore
Publication date: 1884
Publisher: Chicago, A. T. Andreas
Number of Pages: 1340

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169

THE ILLINOIS & MICHIGAN CANAL.

amounts, he was favored with one or more of these ir- regular " checks," on the spot. If it was found that there was more coming to him, the balance was paid in one or more " regular" checks. The regular checks of the two issues were in denominations of $1, $2, $5, SI0, $50 and $100, the August issue being confined to the latter denomination. The total amount of the issue dated May I was $266,237: of that dated August I, $128,317 .* These checks were put in circulation, for a temporary purpose, from the canal office at Lockport, and were in part redeemed at the Branch of the State Bank of Illinois, at Chicago, and a part were received for dues. As these checks were only intended for tem- porary use, it appears from the reports of the canal offi- cers to the Legislature, in the year 1840, that they had redeemed and taken up all of both issues, except $822. From similar reports made in 1842-43, it appears that only $323 was then in circulation, and, from various subsequent reports, that this amount was reduced to $315, which it was supposed was lost or destroyed.

Although it was supposed that this scrip had been permanently retired, it would seem that the $50 and $100 checks presented at the Illinois bank for redemp- tion, although they were not again put in circulation, were not cancelled. Certain it is (as will be hereafter noticed), that eighteen years subsequently, after this tem- porary currency was supposed to have served its pur- pose, it appeared again to vex the State.

A new Legislature was elected in 1840, and the Fund Commissioners laid before that body the difficulties of meeting the interest on the public deht due in January, 1841. Work upon the railroads had been suspended a year, but the canal enterprise was still progressing. The canal scrip of 1839 having served its purpose, the canal contractors had combined to raise a loan for the further prosecution of the work. They had made their contracts when the prices of material and labor were high.t By their subsequent fall work could now be prosecuted at such cheaper rates that the contractors could well afford to take State bonds at par and sell them at considerable of a discount. They therefore had agreed to take a million of State bonds at par, in payment for their estimates, and to meet the discount, even to twenty-five per cent if necessary. General Thornton had therefore been sent to Europe and nego- tiated the loan. But it was now necessary that some- thing further be done. The credit of the State was endangered ; and upon the credit of the State rested the existence of the canal. The canal debt was the most important element of the State debt, and any efforts put forth to meet the interest on the State debt were so many steps taken to save the canal. At length, after much excitement and discussion, which it is im- possible to notice hers, a bill was passed authorizing the fund commissioner to hypothecate internal improve- ment bonds, to the amount of $300,000, and apply the proceeds to the interest "legally " due. The act also provided for the issue of interest bonds (which were to be sold for what they would bring , and an additional tax of ten cents on the hundred dollars. Upon the $Soo,ooo interest bonds issued, the State eventually realized only about thirty per cent, so Inw had its credit fallen. But through these desperate measures the State debt interest and the canal debt interest was paid up to, and including 1841. But the estimate of expenditures for 1842 could not be met, and in March, 1843, work was entirely suspended, after an outlay of over $5,000,- -

· See reports of Finance Committee (Legislative) and of proceedings of the Grand Jury of Sanganum County, on " The Great Canal Scrip Fraud, " 185). t Ford's illinui --- pp. 208, 210.

000. The collapse of the State finances in February and June, 1842, and the withdrawing of the State bank from its former position of disburser of the canal funds, destroyed the value of all the circulating paper which had sustained the enterprise and left the canal not only without a circulation but without a circulator. Nothing but a complete suspension could result. Over one hun- dred contractors along the line of the canal stopped their work, and bills commenced to pour in against the State. Up to the suspension of work over $4,600,000 had been expended upon its construction and large amounts were yet due on account of superintendents' and contractors' claims. In 1843 a law was passed to settle the claims of the latter upon a basis not to ex- ceed $250,000. They were finally compromised for $230,000. The expenses had been as follows : 1836 $ 39,260 58

1837

350,649 90

1838

911,902 40

1839

1,479,907 5S

1840

1, 117,702 30

1841

644, 875 94

IS42

155,193 33

Superintendents .

210,000 00

Contractors' damages.

230,000 00

Total. $5,139,492 03

This great enterprise, however, after six years of activity, was not to be abandoned. Like other public works, it was to be taken up by the wise men of the East, who possessed that requisite to material develop- ment which all new countries lack-an abundance of capital. The old lesson containing as its moral the hopelessness of premature enterprise was being taught to the young State by that stern master experience. But the projectors of the Illinois & Michigan Canal were determined to try another "tack," in order to en- ter the harbor of financial prosperity. This- was determined upon even before they had cleared away the wrecks of 1842. As if by magic the right man seemed to spring up at the right time; for it was in June of that year that Arthur Bronson, of New York, and a large owner of real estate in Chicago, came West to look after his property. As early as 1833, when he purchased a portion of Kinzie's and Wolcott's additions, he had taken a deep interest in the enterprise. While Mr. Bronson was being interviewed by leading citizens as to the best means to procure funds for the completion of the canal, various plans were being proposed. Such men as William B. Ogden, Justin Butterfield, Michael Ryan, Senator from the LaSalle District, and Hon. Isaac N. Arnold,* favored a plan by which the bond- holders should loan a sufficient sum for the completion of the canal, its payment being secured by the revenues of the canal, and the proceeds derived from the sale of canal lands and lots. The works and this income were to be placed in the hands of trustees, two of whom were to be chosen by the aforesaid bond-holders, and the third appointed by the State. Mr. Bronson approved of this and when, in the fall of 1842, he returned to New York, he drafted the outline of a contract which would be ac- ceptable to the State and to the holders of bonds. Mr. Ryan visited the East, to dissipate the idea which had gained grounds in some quarters, that the State in- tended to repudiate its bonds. Mr. Arnold and Mr. Bronson also maintained a continued correspondence in regard to this foreign loan. The former also laid the matter directly before the people, in a forcible address which he delivered in November, 1842, before the

* Blanchard's " History of Illinois," p. Gy. Ford's " Illmois," p. 295, 296 and 247.

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170

HISTORY OF EARLY CHICAGO.

Mechanics' Institute of Chicago. Mr. Arnold's action in the matter no doubt went far toward inducing foreign

sistance of Engineer Gooding. thoroughly examined the condition of the canal work, instituted an examination and Eastern capitalists to look favorably upon the pro- . of the finances of the canal management. Mr. Ryan, ject and also to assist in the passage of the bill during the legislative session of 1842-43, which embodied the ideas advanced by him and his co-laborers. Justin Butterfield drafted the bill which was introduced into the. House, and it became a law February 21, 1843. Mr. Arnold was at the time chairman of the committee on finance, and rendered most efficient service in the pas- sage of the bill. The Governor was authorized to negotiate a loan of $1,600,000, for a term not exceed- ing six years, and at a rate of not more than six per cent. For its payment he pledged the revenues and lands of the canal, which were to be placed in the hands of three trustees, when the loan should be negotiated. In case the bond-holders would not subscribe to the loan, the Governor was empowered to enter into a con- tract with them, making no further pledge of the faith of the State than to agree that the canal and its rev- enues should be placed in their hands, through their chosen trustees. The act also agreed that nothing should be done to interfere with the rights then secured to the holders of canal bonds; provided that $400,000 of the loan should be paid in the first year, after the execution of the trust deeds; and authorized the board of trustees to make " such changes and altera- tions in the original plan of said canal as they may deem advisable, having due regard to economy, etc." In March Governor Ford appointed Michael Ryan and Charles Oakley commissioners to negotiate the loan. They proceeded at once to New York, where they succeeded in obtaining a subscription to a portion of the loan, at least. Subsequently they visited London, and laid their plan before prominent European capital-

ists. They represented that the whole canal debt did not exceed $5,000,000, that the work could be completed for $1,600,000 in three years; that its income, with the proceeds derived from the sale of canal lands, would be sufficient to pay off the loan, and that holders of canal stock in this country had agreed to advance their pro- portion of the loan on one million stock. Although pleading her present inability to meet her debts, the commissioners protested that the State of Illinois had no intention of repudiating any portion of them by the passage of the canal act. The bond-holders, however, replied that the canal bonds were issued on the faith of the State and that she was bound to provide for the pay- ment of the interest. They were unwilling to subscribe under the provisions of the legislative act, but that if the statements made by the commissioners could be verified to the satisfaction of Messrs. Baring Brothers & Co., and Magniac, Jardine & Co., bankers, and if Governor Ford would enter into the contract, author- ized by the twenty-first section of the act, with several minor conditions, they would subscribe to the loan- provided they should be entitled to register canal bonds held by them to the extent of eight times the amount of such subscription. A committee of well-known Boston men were therefore appointed, consisting of William Sturgis, T. W. Ward, and Abbott Lawrence. In the early part of November, 1843, Captain W. II. Swift, a United States Engineer, and ex-Governor John Davis, of Massachusetts, having been appointed agents of the Boston committee, came to Illinois to make an examina- tion of the canal and its finances. Captain Swift trav- eled over the route of the canal from Chicago to La- Salle, where Mr. Davis met him, having ascended the Illinois River Together they ascended the valley of the Fox River, from Ottawa, and having, with the as-

the commissioner, Governor Ford and General Fry, the acting commissioner, gave them every possible assist- ance. As a result Messrs. Swift and Davis in their re- port to Messrs Baring Brothers, et al., fiscal agents of the bond-holders, sustained the statements made by Messrs. Ryan and Oakley, commissioners of the State. They reported that the canal liabilities were $4,846,756, and that the securities for the redemption of the $1.600,- ooo were satisfactory. Governor Ford then drafted the contract with the bond-holders and trust deed to them, containing the guarantees of the defective legisla- tive act, and after many trials and tribulations the work of obtaining subscriptions to the loan was finished. The loan was negotiated by W. H. Swift and David Leavitt, trustees on the part of the bond-holders, and Jacob Fry, State trustee ; and as the reader has been informed, the $1,600,000 was to be expended in prosecuting the "shal- low-cut," or cheap plan, the surface waters of the Des- plaines and Calumet being relied upon as feeders for the upper end of the canal. Undoubtedly the father of the "shallow-cut " plan was Russel E. Heacock, a pioneer lawyer and an able man. His early residence was near the outlet of the proposed canal, and he had interested himself deeply in the progress of the work ; so that when there seemed a probability that, on account of the expense of the undertaking, the State would abandon the canal altogether, Mr. Heacock threw his energies into the determination to have a canal, even if a cheap one. He argued, he pleaded, he talked, he wrote, and at last became known in person as "shallow cut." No doubt, in view of his success in the matter, he was perfectly willing to have the name attached to 1 him ..

But although the Legislature had " authorized " the finishing of the canal on the "shallow-cut" plan, it could not decree that water should run up hill, and it was yet an unsolved problem, notwithstanding all figures and reports, whether a sufficient supply of water could be obtained to operate the canal on this high level. Ex- perience has shown that, without another " idea," this scheme would have been a failure. During the dry portion of the season the water from Mud Lake and the Desplaines River is inadequate to the demands of navigation at the lower level, where the other feeders are obtained. The happy thought which finally devel- oped into a plan to overcome this objection, came from the practical men connected with the Chicago Mechan- ics' Institute. In the fall of 1843 a committee from that institution, consisting of John Gage, Ira Miltimore, and H. L. Fulton, prepared a plan for raising water, by steam pumps, from the Chicago River, and supplying it to the canal on the summit level, above the Desplaines and other feeders. Governor Ford gave them little encouragement, but Governor Davis was so impressed with the feasibility of the project that he presented it to the consideration of his principals, and the plan was finally adopted. The "idea " was conceived by Ira Miltimore, who constructed Chicago's first water works, and was one of her most talented engineers.

By July, 1845, Mr. Gooding, the canal engineer, had perfected his department, with Edward B. Talcott as principal assistant. The force, in addition, consisted of two resident engineers, six assistants, rodmen, draughts- men, etc. Operations on the canal were first begun in September, 1843, but on account of the great preva- lence of sickness in the valley of the Hlinois, little prog- ress was made until after Engineer Gooding had com-

171

THE ILLINOIS & MICHIGAN CANAL.

pleted his first estimate of the cost of the work, in October, 1845. Up to November 30, 1845, the pay- ments on the subscriptions to the $1,600,000 loan had amounted to $308,000. In April of the next year the European subscribers paid their first installment upon a basis of thirty-two per cent. The American subscrib- ers had paid on a basis of forty per cent. By a subse- quent vote of the board the payments were equalized, so that, according to the amount subscribed, each could register the same percentage of indebtedness against the canal. Previous to this equalization, the total amount subscribed in Illinois was $160,852; from the date of the organization of the canal board in June, 1845, to November 30, 1846, Illinois subscribers paid in $94,810; New York, $273,841; French and English, $721,000, of which the French contributed about one- quarter. The total receipts from all sources during that time amounted to $1, 105,358. This was a very important year in the history of the canal. There never was more of a certainty that the enterprise would be completed, in one shape or another. Several points yet remained undecided. Among the most important were those involved in the consideration of the plan submitted by the Mechanics' Institute to pump a water supply into the Desplaines through the Chicago River. The commissioners had determined that it was neces- sary to obtain a supply of about six thousand feet per minute more than could be furnished by the Calumet and Desplaines at low water. To accomplish this, two plans had been suggested; one was to construct a feeder, over thirty miles in length, from the Fox River; the other was the plan proposed by the Mechanics' Institute. The pumping plan was adopted, both as the cheapest and most effective. It was during 1845-46, also, that the Illinois & Michigan Canal was not only coming clearly into light as the foundation of Chicago's prosperity, but it was discovered that the firm estab- lishment of the enterprise saved this city to the State of Illinois. To explain the matter it is necessary to remind the reader that the ordinance of 1787 authorized the organization of three states south of a line drawn due east and west from the most southerly bend of Lake Michigan to the Mississippi River, and two States north of such a line might be formed. It is clearly set forth in John Wentworth's reminiscences that many settlements north of this line were unanimously in favor of being attached to Wisconsin. Within the limits of the disputed tract resided the two Illinois Congressmen, and upon them many citizens residing north of 42º 30' lavished promise after promise, in case they would support the annexation. Mr. Wentworth says:

" The disputed tract had two Congressmen, the Hon. Joseph P. Hoge, of Galena, now an eminent lawyer in San Francisco, and myself. And Wisconsin, offered to make us the first two Sen- ators, and also offered to give the disputed tract the first Governor. It was proposed to enact a law submitting the binding force of the ordinance of 1787 to the Supreme Court of the United States. Our Chicago people were much divided upon the question, and I really believe serious consequences would have grown out of it but for the embarrassments that would be caused by having the Illinois & Michi- gan Canal owned by two states. As an original question, all the five states being nut of the Union, there is no doubt but Congress would have enforced the provisions of the ordinance, and Illinois been cut off from the lakes, and her Legislature saved from the an- noyance of Chicago lobbyists. But might made right. Wisconsin being out of the Uninn, she could only come into it with boundaries prescribed by a majority of the states in it, and I lost the honor of being a Wisconsin United States Senator."

One of the first acts of the hoard of 1847 was to take the unfinished work on the summit-level of the canal into its own hands, so as to complete the main line by the spring of 1848. During the year the third European

and the fourth American installments on the loan were called in, the receipts, inclusive of November, amount- ing to $1,577,000, or nearly $400,000 more than the ex- penditures. Of course there were drawbacks to the progress of the work, and during 1847 and 1848 a feel- ing of dissatisfaction found expression through Colonel Oakley, the State trustee. He brought grave charges of mismanagement and favoritism against Mr. Gooding, the engineer. Testimony was taken on the charges, which were denied in a very conclusive letter written by that gentleman. Certain it was that the charges were not proven. Neither were those brought against Messrs. Swift and Leavitt, the bond-holders' trustees, to the effect that they were delaying the completion of the canal, in order that they might retain profitable offices. Notwithstanding an investigation, they retained their offices, and went on vigorously prosecuting the work. The severe sickness experienced in the valley of the Illinois in 1846, the strike of the canal laborers on the summit-level in 1847, and the disagreements between the State trustee, the bondholders' trustees, the engineer, the Governor and the public, no doubt did delay the progress of the work.

By April, 1848, all was ready for the passage of the first boat. On the roth of that month the "General Fry" arrived from Lockport, and passed over the sum- mit-level to Chicago, being towed by the Propeller " A. Rossiter."

As the boat passed through the city it was greeted with cheering, which was renewed at the different bridges. Upon its entrance into the river, Mayor Wood- worth welcomed the delegation from Lockport, and an eloquent speech was delivered by Charles Walker. The formal opening of the canal, on April 16, was the occa- sion of a fete, even more enthusiastic than that of July 4, 1836. Boats started from LaSalle and Chicago at the same moment. That from Chicago, bearing canal officials and prominent citizens, arrived at Lockport, at noon of the fete day. Mayor Woodworth delivered the address of welcome and G. A. Parks the oration. Upon the 24th of the month the "General Thornton " arrived at Chicago, from LaSalle, laden with sugar and other goods, from New Orleans and en route to Buffalo. The freight was transferred to the steamer " Louisiana," and arrived at Buffalo, April 30, two weeks before the first boat by the Erie Canal had reached that port. The canal was at length completed.

Having thus been able to witness the completion of a work upon which he had been actively engaged for twelve years, Mr. Gooding, soon after the passage of the first boats through the canal, was removed by the Governor, and Edward B. Talcott, his former assistant,

Ents, Laccato

was appointed in his place. In October, however, upon the death of Robert Stuart, the secretary of the board, Mr. Gooding, was appointed to that position. During the fall a large sale of lots took place at Chicago, and a dividend of six per cent was authorized on the princi- pal of the $1,600,000 loan. The amount of canal property was now vested in the board of trustees was 224,965 acres of land and 5,927 town lots, appraised at $2, 126,- 355. The main canal from Bridgeport to LaSalle, not including the four miles of river from Bridgeport to Chicago harbor, was ninety-six miles in length, sixty feet wide at the surface, thirty-six feet at the bottom,

172

HISTORY OF EARLY CHICAGO.

and six feet deep. At this time, in fair weather, the waters of the lake were about eight feet below the sum- mit-level of the canal. The pumping engines therefore proved to be most necessary auxiliaries for the success- ful working of the canal. They were two in number, of about 160-horse power each, and pumped seven thou- sand cubic feet of water per minute. The cost of the extensive engine-house and the machinery was $54,000. The engines were first put in motion on February 10, 1848. Along the line of the canal were seventeen locks, four aqueducts, culverts, bridges, dams, canal basins, lock-houses, waste wiers, the inevitable tow paths, and all the usual accompaniments of such an in- stitution. The rates of toll ranged from three and a half cents on common freight boats per mile to six cents on passenger boats ; and for each passenger over eight years old four mills per mile, sixty pounds of bag- gage being transported free. The toll on articles of commerce varied from three to twenty-five cents per thousand pounds.

When the work was completed, the sturdy men, the day laborers, became homesteaders, squatters, or purchas- ers of town lots. Almost all became settlers along the line between Chicago and LaSalle; the remainder were nomadic and are perhaps following the directors of internal improvements up to these times. They, and the more pretentious workers upon the canal, were no doubt gratified at the life which even the first season of navigation presented. The waters of the canal were covered with craft of every kind, and the locks were in constant motion. The canal was closed by ice on the night of November 29, 1848, but during-the two hun- dred and twenty-four days of navigation that season the tolls collected at Chicago amounted to $52,000, and $35,000 at LaSalle. The sale of canal lots in Chicago for the season amounted to $400,000. Money circu- lated freely. Business of all kinds was encouraged to a remarkable activity. A new era of financial prosper- ity was not only inaugurated by the completion of the canal, but by the rapid advance in value of lands; and, by virtue of the provision of the new constitution, levy- ing a special tax of two mills for the purpose, the burdensome debt of $1,600,000, which clung to the enterprise, was, in a few years, completely extinguished. Thus, it would seem, after many years, that the bread which had been cast upon the troubled financial waters, was returning to bless the people of the State.

The expenditures on this great public work from the organization of the board of trustees, in May, 1845, to November 30, 1848, or the date of closing of the first season of navigation, was $1,719,859.32 ; receipts, $1,949,042.09. 'T'his balance was charged with the sum of $128,300 prior to the opening of navigation in 1849, including interest and principal of loan, construction of Calumet feeders, repairs and incidental expenses.

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History of Chicago. From the earliest period to the present time, Part 46

Author: Andreas, Alfred Theodore Publication date: 1884 Publisher: Chicago, A. T. Andreas Number of Pages: 1340

Author: Andreas, Alfred Theodore
Publication date: 1884
Publisher: Chicago, A. T. Andreas
Number of Pages: 1340