USA > Indiana > The history of Indiana > Part 33
Note: The text from this book was generated using artificial intelligence so there may be some errors. The full pages can be found on Archive.org (link on the Part 1 page).
Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13 | Part 14 | Part 15 | Part 16 | Part 17 | Part 18 | Part 19 | Part 20 | Part 21 | Part 22 | Part 23 | Part 24 | Part 25 | Part 26 | Part 27 | Part 28 | Part 29 | Part 30 | Part 31 | Part 32 | Part 33 | Part 34 | Part 35 | Part 36 | Part 37 | Part 38 | Part 39 | Part 40 | Part 41 | Part 42
§ 71 FINISHING THE WABASH AND ERIE CANAL
THE act of January 28, 1842, as indicated above, left the Wabash and Erie east of Lafayette in the hands
79 Documentary Journal, 1845, pt. II, 273. A memorial from the New York Savings Bank. This pictures some of the suffer- ing caused by the State's failure to pay its interest promptly. See also letters from foreign creditors to Governor Whitcomb, Indianapolis Sentinel, June 17, 1842. See also Documentary Journal, 1844, pt. I, No. 5.
437
WABASH AND ERIE
of a commissioner selected by the General Assembly. An act of January 1, 1842, had already provided for building the canal on down to Terre Haute. The com- missioner was directed to let contracts for as much of it every session as could be paid for with available funds. To expedite matters as much as possible, canal scrip was to be issued. This scrip was made receivable at the canal land offices in payment for the lands do- nated under act of Congress March 2, 1827, and con- firmed by act of February, 1841. By a later act this scrip was made receivable for all tolls, water rents, and other dues to the canal. As the canal crept slowly southward more lands were made available, under the grant of 1827. Work proceeded slowly. Tolls failed to do more than pay for repairs.80 Superintendent E. F. Lucas reported receipts from land during the year 1844, as $85,855; tolls and rents, $58,212; expenses, $94,466. It is reported that a single flood caused most of this extraordinary expense. In spite of all obstacles the canal was pushed steadily downward to Terre Haute. For 1845, the tolls were $95,473; income from land sales, $108,943; while the expense for repairs was $106,344.81 During this season the canal was short of water a great part of the time. This was to be sup- plied partly by the feeder at Northport. 82 Business was reviving rapidly and there was every indication of prosperity in the transportation business. But the rotten condition of the wooden aqueducts and the in- adequate supply of water from the feeders did not promise so well for the canal. In 1844, the canal had
80 Commissioner's Report, Documentary Journal, 1843.
81 Documentary Journal, 1845, No. 17.
82 An excellent description of the work at Northport was fur- nished the writer by Miss Anna Caseley, of the Kendallville High School. Her paper (History of Sylvan Lake and Vicinity) ought to be published. The Northport reservoir was at Rome City, Noble county.
438
HISTORY OF INDIANA
been placed under a single superintendent for its whole length.
A considerable export trade was growing up. Docks, warehouses, and elevators were springing up over night at Logansport, Attica, Peru, Lafayette, Hunting- ton, Lagro, Pittsburg, Lockport, Wabash, Fort Wayne, and Montezuma, not to mention a score of lesser towns long since disappeared and forgotten. All kinds of craft swarmed on the canal.
July 2, 1845, the surveyor, R. H. Fontleroy, was ordered by Governor Whitcomb to finish surveying the canal down to Evansville. He accordingly began the survey at the summit of the Eel River canal. To get water at this place was the most troublesome problem on the whole line from Lake Erie to the Ohio. A feeder was planned at Rawley's mill. Next, it was decided to dam Splunge creek. This would require an embank- ment one mile long and fifteen feet high. This dam was made twenty feet wide on top so that it could be used as a wagon road. The reservoir thus formed would cover 3,900 acres and hold one billion cubic feet of water. A second reservoir was planned and sur- veyed high up Eel river, near Monrovia, in Morgan county. The Monrovia reservoir was to cover 3,500 acres. From Rawley's Mill the canal survey was con- tinued down the bank of Eel river. This was the third canal site that had been laid down along this river. At Point Commerce it connected with the Central survey down White river.83 The canal crossed White river at Newberry, skirting the eastern edge of the White River valley, crossed Daviess county, touching Maysville, crossed Driftwood on an aqueduct one mile from its mouth, and left White river and passed by way of Petersburg, Pigeon Summit and Pigeon creek to Evans- ville.
This was the work undertaken by the bondholders
83 Documentary Journal, 1845, No. 17, 2.
439
WABASH AND ERIE
under the Butler bill. The surveyor placed the total cost at $2,502,813, of which $966,544 had already been expended. The canal was in operation by 1847, as far down as Coal creek near Cayuga, thirty-six miles above Terre Haute. The water was insufficient below Lafay- ette and feeders had to be constructed, one at St. Mary's and another eight miles west of Logansport at Crooked creek. The whole canal from Lake Erie to the Ohio was 458 miles long. The board hoped to have the whole line to Evansville under construction by 1850.84 During the year 1848 there were 189 miles of canal in use, extending from Coal creek to the Ohio State line. Ninety-six miles of construction were under contract, and 1,780 men were at work, scattered from Coal creek to Patoka Summit. Three hundred and forty-two thousand dollars were expended for con- struction, and $35,000 for repairs. Tolls had risen to $146,148.
The work was not successful during 1849, although the board began in the spring with more than ordinary vigor. A flood during the winter caused $31,600 dam- age on the Eel River section. Contracts were let at Washington, Daviess county, June 27, 1849, for the sec- tion from Newberry to Maysville-twenty-three miles -for $160,000. The construction from Maysville to Petersburg-twenty miles-was placed under contract at Petersburg, November 14, for $278,000. The canal was opened to commerce from the Ohio line to Lodi. But the prosperity of the early part of the season was not to last. Cholera broke out in several places along the canal, especially at Toledo and Lafayette, and the plague affected the canal in every direction. It stopped the sale of land, it cut the tolls to $135,000, $11,000 be- low the previous year, although a long stretch of canal was opened for the first time, it demoralized the con- struction gangs, and, finally, it killed trustee Thomas
84 Documentary Journal, 1847, pt. II, No. 6.
440
HISTORY OF INDIANA
H. Blake at Cincinnati as he was returning from Wash- ington, D. C., on business for the canal.85
For the season of 1850 the canal opened, March 18, and closed December 8-261 days. During this time there was no interruption. The long delayed hopes of the promoters seemed at last about to be realized. Boats arrived at Lodi, October 25, 1849; they passed the Eel River division to Point Commerce and Washington, June 7, 1850. This latter point is seventy-nine miles from Coal Creek, 268 miles from the State line, and 352 miles from Toledo. The last section, from Peters- burg to Evansville, was placed under contract, Septem- ber 6, 1850, and was to be completed in 1852. This year the cholera broke out among the workmen and killed 150 men. A panic set in and the fleeing work- men carried the plague all over the country. The tolls this year ran up to $157,158, a gain of $22,500.
The whole canal was closed for a full month during the season of 1851, on account of floods. Notwith- standing this, the tolls increased $22,000. The work was received from the contractors down to the White river crossing at Newberry, 281 miles from the State line. One thousand two hundred men were at work during the season. The trustees ordered the part of the canal in Evansville to be made sixty feet wide in order to form a local harbor. The annual report shows $58,549 for repairs, and that $65,000 had been expended for bridges, of which there were 150 over the canal.86 Many of these that had been built earlier were rotten and many complaints on this account found their way into court. Seven of these suits were carried into the State supreme court. The canal trustees were slow in adjusting damages, and an act of February 13, 1851, directed that injured parties should file their com-
85 Governor Wright, Message of 1850, in House Journal. See also Documentary Journal, 1849, pt. II, No. 11.
86Documentary Journal, 1851, pt. I, No. 7.
441
TOLEDO TO EVANSVILLE
plaints with the canal board, and if no relief was se- cured in ninety days they should file suit in the circuit court.87 A law similar to the one mentioned above gave authority to road supervisors to institute suit to compel the canal board to rebuild rotten bridges.88 The citizens of Williamsport tried by mandamus suit to force the board to build a lateral canal over to that town, and, failing in their suit, they dug one them- selves and forcibly connected it with the main canal. This left the main canal almost dry for some time. 89
The water was let into the Maysville division in June, 1852. Laden boats then made the trip all the way from Toledo to Maysville, 392 miles. At a meet- ing held in May, 1852, it was agreed to lower all tolls and tariffs on the canal forty per cent. After this re- duction the total receipts still rose to $193,400, a gain of $14,000. This was the high-water mark for toll on the Wabash and Erie. This is the more significant because it came before the whole canal was opened. The work was about done to Petersburg, and $262,281 had been expended on the Evansville division, showing that it, too, was well-nigh completed. There was trans- ported on the canal this year 2,300,000 bushels of corn, 1,606,000 bushels of wheat, and 88,000 barrels of salt. The expenses of operation this year were $67,237.90 Deducting this from the gross tolls, there remained $126,163 as the net returns of the canal at its best. This would pay five per cent on two and one-half mil- lions. While this does not look very favorable to us, yet in the steadily increasing tolls one can see some grounds for the hope that with a terminal on the Ohio river tolls would increase enough so that the whole canal would become dividend-paying.
87 Laws of Indiana, 1851.
88 Laws of Indiana, 1852.
89 Documentary Journal, 1854, No. 21.
90 Documentary Journal, 1852, pt. II, No. 7.
442
HISTORY OF INDIANA
While the outlook in this direction was encouraging to the canal builders, the outlook in other directions was extremely gloomy. Complaints, honest and dis- honest, ending in lawsuits, multiplied all along the canal. Floods tied up navigation for days, weeks, or even months. Fleets of boats were grounded for weeks at a time in shallow water, or by breaks in the embank- ments, while their cargoes of farm products, sometimes live animals, depreciated or became utterly worthless. At best there was traffic during only eight months of the year. The Evansville and Terre Haute railroad was already under construction, and the Fort Wayne and Covington (Wabash Valley), and the Crawfords- ville and Vincennes had been organized. These, it will be noticed, paralleled the canal throughout its length.91 The tolls for 1853 dropped to $181,207, due to poor crops. A great deal of trouble was had with the banks along the deep cut south of Petersburg. A flood in White river destroyed all the aqueducts from Point Commerce to Newberry and piled the drift high against the big aqueduct at that place. The citizens, thinking the extreme high water due to the big aqueduct, in- dicted the trustees for maintaining a nuisance ; but the legislature stopped the prosecution.92 All the locks, gates, dams, towpaths, and bridges were reported rotten and giving away.
The Birch Creek reservoir was built during this year. It covered about six square miles, and the in- habitants of the district regarded it as a fruitful source of malaria. The general Assembly had it investigated in 1854 and it was reported quite healthful.93 A mob of armed men blackened their faces and cut the dam at midday, May 10, 1855. This left the whole of the Eel River section dry. The loss on the dam was over
91 Documentary Journal, 1852, pt. II, No. 7
92 Laws of Indiana, 1853, March 4.
93 History of Clay County, Index.
443
FAILURE
$10,000. Governor Wright sent the militia from Evans- ville under General Dodds and Captain Denby to pro- tect the work. They found everything quiet and spent the season hunting, fishing, and playing cards with the settlers. The next day after the soldiers left, the dam was again leveled. Many men were arrested, but were promptly released by the local magistrates.94 This trouble was never settled, and this division of the canal was rendered useless by the lawlessness of the people of that neighborhood. The reservoirs were swamps full of the natural growth of the forest, and in summer became stagnant frog ponds.
By the year 1856 it was manifest to all that the canal was doomed. The tolls dropped to $113,000 and expenses for repairs rose to $106,000. The whole sec- tion from Terre Haute to Evansville was rendered use- less on account of the destruction of the Birch creek reservoir. Again the board of trustees reduced the toll rates on the canal. This failed to hold the trade. All the lighter articles of commerce were shipped by rail.95 Fortunately for the State, the scrip issued to finance the canal was about all redeemed. Over $1,- 200,000 had been issued and all was now in except $15,000. The State was thus free of all obligations to it.96
The report of 1857 left no question of the future of the canal. The tolls were $60,000 for the whole line. There was no regular navigation, no through traffic, as had been hoped. South of Terre Haute the tolls were $8,000 and repair expenses $40,000. The repairs for the whole line amounted to $115,000. The St. Joseph river broke around the feeder dam and it required $7,500 to repair the breach.97 A series of local floods in the Wabash valley during the summer of 1858 did
94 Documentary Journal, 1855, pt. II, No. 3.
95 Documentary Journal, 1856, pt. II, No. 6. Trustees' Report. 96 Ibid., pt. I, No. 3, State Auditor's Report.
97 Documentary Journal, 1857, pt. II, No. 4.
444
HISTORY OF INDIANA
heavy damage. Wild Cat, Wea, Coal creek, Spring creek, and Otter creek overflowed and carried away their aqueducts. The Wabash broke over its banks in Terre Haute and destroyed forty-six rods of canal. The entire damage was $55,000. Navigation was sus- pended from June 10 to August 26. The annual ex- penses of the canal, $181,000, exceeded tolls and land sales combined by $60,000. The stockholders ordered the trustees to close any part of the canal not paying expenses. The part from Terre Haute to Evansville was at once closed.98 After the canal board, in Janu- ary, 1859, ordered all officers to quit, only a few local engineers, at reduced salaries, remained in service. In this year, a bondholder, named John Ferguson, secured an injunction from Justice McLean preventing the use of any money, except tolls, for making repairs. The canal was then divided into three sections which were let to persons who would keep the canal in repair for its use.99 The south section from Terre Haute to Evansville was not kept repaired at all. The Birch Creek reservoir was cut for the last time. The first breach in the long fill across Daviess county was left unfixed. Navigation was finally abandoned south of Terre Haute in 1860, although a few miles in Vander- burgh county remained open a year longer. Two men, Miller and Hedges, undertook to keep the line open from the Eel river dam to Terre Haute and with the aid of a gift of $1,000 from the city succeeded for a short time. The part from Terre Haute to Toledo re- mained open during the year. The Wabash railroad began a rate war at this time and soon attracted all trade from the canal. The railroad did this by a free use of rebates. By 1870 little more than a succession of stagnant pools marked the site of the former canal. A law of February 14, 1873, permitted the county com-
98 Documentary Journal, 1858, pt. I, No. 3.
99 Documentary Journal, 1859, pt. I, No. 3.
445
CANAL CLOSED
missioners to keep local sections of the canal in repair, but only a few temporary repairs were made. The trustees formally surrendered their trust in 1874. They had paid $436,545 for repairs and had received $274,- 019 in tolls.100
A decree was obtained in 1874 under which the canal was sold, February 12, 1876. There was realized from this sale $96,260. All told, the bondholders re- ceived about forty per cent of the $800,000 which they had advanced for the completion of the canal.
The bondholders were not entirely silenced by the joint resolution of the General Assembly of 1857. Fear- ing that a future General Assembly might be induced to pay the debt, or some part of it, the General Assem- bly of 1871 submitted a constitutional amendment to the voters providing that "No law or resolution shall ever be passed by the General Assembly of the State of Indiana that shall recognize any liability of this State to pay or redeem any certificate of stock issued in pur- suance" of the settlement of 1847. This was agreed to by the next General Assembly and submitted to the voters.101 By proclamation of the governor this was voted on February 18, 1873. The voters took little interest in the election. Indianapolis cast 2,679 votes for and 14 against the amendment. Evansville's vote favored it by 1,365 to 12; Terre Haute, 1,502 for, and 1,520 against; Fort Wayne, 950 for, 12 against. The amendment was carried and the question settled. Thus closed the story of the old Wabash and Erie. The State and bondholders had expended all told, $8,259,244. They had received from land and tolls, $5,477,238. A magnificent land grant by the federal government had been squandered. The total amount of land donated was 1,457,366 acres, or 2,277 sections; an area equal
100 Twenty-eighth Annual Report, 1874, Documentary Journal, No. 14.
101 Laws of Indiana, 1873, 83.
446
HISTORY OF INDIANA
to the five largest counties or the ten smallest.102. This was twice as much as the whole donation for the com- mon schools.103
102 Donaldson, Public Domain, 755.
103 American Almanac, 1857, 323, gives a brief summary o! State and canal debts.
CHAPTER XVII
THE SECOND STATE BANK OF INDIANA, 1834-1857
§ 72 CHARTERING THE BANK, 1834
THE second period in Indiana banking began with the charter of a new State bank in 1834.1 The agita- tion for a State bank began as soon as the election of 1832 settled the fate of the Second bank of the United States. The State bank of 1834 was the heir in In- diana of this United States bank whose charter ex- pired in 1836. It was favored and upheld by the Clay party in the State. Why the voters of the State always supported Jackson, and at the same time favored the United States bank, a high tariff, and internal improve- ments is one of the unexplained facts of Indiana poli- tics of this period. A State bank was not, however, an issue in the State election of 1832. After it was ascertained that Clay was defeated and that the Second bank of the United States would not be rechartered, speculation began as to what would take its place.
Soon after the October election in 1832, a move- ment was started to reorganize the old Farmers and Mechanics' bank of Madison, Indiana. This bank had always borne a good reputation, and the character of its officers assured it a good standing among business men.2 John Sering was a member of its board of
1 Dewey (State Banking Before the Civil War, 43), says this was an extension of the earlier charter. This is an error. The charter of the earlier bank was annulled in 1822 by the Knox county, Indiana, circuit court. The first State bank is treated in .chapter X, above.
2 These were Victor King, president; John Vawter, John Ser- ing, John Woodburn, and Milton Stapp, directors; J. F. D. Lanier, cashier. Indiana Democrat, Oct. 13, 1832.
448
HISTORY OF INDIANA
directors and J. F. D. Lanier was its cashier. A new set of banknote plates was struck, and every arrange- ment made to take the tide of opportunity at its flood. There was in Indiana no branch of the Second bank of the United States ; nevertheless its currency and power reached and controlled the State through the branches at Cincinnati and Louisville.
Early in the session of 1832, a bill for a State bank charter was introduced in the Indiana General Assem- bly. The report on this bill by the senate committee, of which John Ewing3 was chairman, is the best exposi- tion of the various views of the legislature on the sub- ject of banking. In this report, which was dated Janu- ary 1, 1833, Mr. Ewing suggested five plans by which a circulating medium for Indiana might be secured :
First, The General Assembly might memorialize the Congress of the United States to recharter a na- tional bank. Second, Congress might be induced to issue a national currency and apportion it among the States according to population. Third, The General Assembly might issue a State currency predicated upon the proceeds of canals, school lands, the Michigan road, and salt springs, and managed by a board of commis- sioners. Fourth, The General Assembly might order an issue of treasury notes bearing five per cent interest. Fifth, The General Assembly might organize a part- nership bank-State and people.
The first State bank of Indiana had almost de- stroyed credit, endangered the validity of contracts, and so lessened the confidence of man in man that ordi- nary business was seriously deranged. Moreover, it had injured the credit of the State, and had given to its citizens a weakened reputation for financial integrity.
3 John Ewing was born in Ireland; came to Vincennes and engaged in mercantile pursuits; represented his county in the House in 1819 and in the Senate from 1825 to 1835, and from 1842 to 1844. He also served in the twenty-third and twenty-fifth Congresses.
449
SECOND STATE BANK
Mr. Ewing thought it the duty of the State to guard against the repetition of such a calamity, and oppose every possible bar to such an issue of "Owl Creek" cur- rency. Finally, he said, the committee believed a na- tional paper currency preferable to any State emis- sions. A national bank was thought better than a State bank on account of its wider power, its national affiliation, and its greater uniformity.4
In general, the members of the committee agreed with Mr. Ewing. They favored a national bank with State branches, State controlled; and recommended that Indiana organize a branch, and by issuing State five per cent bonds buy $800,000 of this national cur- rency. Out of the dividends, they estimated, the five per cent on the loan could be paid, and the surplus would go far toward the establishment of free primary schools throughout the State.
At the same time there was a bill before the Senate to charter a co-partnership bank with nine branches.5 If any branch failed to pay six per cent it was to be closed. The State was to take one-half of the stock, which was to be non-taxable, and the charter was to run twenty-seven years. Another bill for chartering State banks had been introduced, and passed in the House. There were at this time three bank bills before the General Assembly. The Committee Bill was not discussed.
There was a long, earnest, and sometimes angry discussion of these measures. Some members favored a free banking law; others favored none at all, believ- ing nothing but "hard money" should circulate. A large majority, however, favored a State bank but could not agree on a charter. A motion to postpone action till the following session prevailed, in the Senate
4 This report is given in the Indiana Journal, Jan. 2, 1833. This paper was the organ of the Whigs.
5 Indiana Journal, Jan. 5, 1833.
450
HISTORY OF INDIANA
by a vote of 14 to 13. The Jackson men, seemingly, were as much dejected by the defeat as the Clay men.6
The general necessity of a bank was conceded. There was some objection to enacting a State monopoly, and the experience with the old State bank made men hesitate to charter another like it. But on the whole the people were strongly in favor of a State bank and were deeply disappointed at the failure of the Senate to enact a charter.
The bank question contested with that of internal improvements for the chief place in the campaign of
6 The three bills are worthy of attention as a reflection of the popular views on banking. The Committee Bill provided for the Bank of the State of Indiana, to be located at Indianapolis, with power vested in the first directors to establish five branches in whatever counties they thought best. The $1,600,000 capital was to be divided into shares of $50 each, and one-half was to be furnished by the State, the other half by individuals. Seven direc- tors for the parent bank were to be elected annually by the Gen- eral Assembly, who were to choose six directors for each branch. The individual stockholders were to elect six directors for the parent bank and seven each for the branches. Non-residents were not to vote in stockholders' meetings. Each director must own at least ten shares, and no one could sit as director in two branches. The stock was non-taxable; six per cent was made the legal rate of interest; the charter was to run twenty-seven years, and the State auditor and treasurer were to visit and inspect the bank and branches.
Need help finding more records? Try our genealogical records directory which has more than 1 million sources to help you more easily locate the available records.