The five years ending with 1840, embrace the years of great speculation, when the lands went into the hands of persons who got them on credit, and held them for speculation. More lands in the hands of speculators have been hanging upon the market in competition with the government lands, and with the 8,000,000 acres held by the State for various purposes, and sold from time to time. This depressed the average quantity of government lands sold in that State during the subsequent five years. The State of Illinois very early commenced the system of public improvements by State loans. The opening of the New York and Erie Canal in 1824, gave an immense impulse to Western progress, and it will be observed in the table of land sales that they doubled in 1828 and 1829, continuing to increase until the bubble burst. The great success of the Erie Canal afforded a tempting example to Illinois, because her situation in relation to the lakes is nearly the same. She abuts on Lake Michigan as New York does on Lake Erie, and her great river, Illinois, holds the same relation to the State navigation as does the Hudson to Lake Erie. Hence, the connection of the two latter by the Erie afforded an exact model for the connection of the two former. As early as 1823, the route had been explored. The population was too sparse to undertake it, however, until, in 1829, Congress made the grant of 290,914 acres, mentioned in the above table, in aid of it. The State then passed an act to raise a loan of $500,000, to carry it on. The work was placed under a special commission, and was to extend from Peru, on the Illinois River, to the Chicago River, five miles from its mouth, say 100 miles. When that work was projected there were but about 15,000 families in the whole State, and the expense of the work was estimated at $8,651,337, yet this canal was but a subordinate part of an immense syɛtem of internal improvements for which an act was past in 1837. This act created a Board of Fund Commissioners to manage the fiscal concerns of the public works, and a Board of Public Works to determine routes and superintend the execution. This internal improvement system embraced the fol lowing works, showing the total length of each railroad projected in the State, and the aggregate length of all the railroads:- Central Railroad.... Miles. Per mile. Total. Amount expended. $145,765 Southern Cross Railroad. 42,763 Northern Cross Railroad.. Shelbyville and Paris Branch Central Railroad... In addition these were two banks State Bank of Illinois, capital $3,515,000, State interest... $11,470,444 $728,125 Bank of Illinois, Total...... 2,000,000 $23,524,781 These were among the first projects of the young State. There were then 70,000 log-cabin farmers in the State, and these loans were about $300 each family. For all the purposes mentioned, stocks were issued. The works commenced under this law, and the effort to sell the bonds at a moment when the financial horizon began to lower, and all other States were desperately pressing the market, produced ruinous losses. In 1842, the State debt had assumed the following shape. Deduct 7 bonds of $1,000 each received from Commercial Bank of $7,217,122 00 7,000 00 $7,210,122 00 Balance..... Internal Improvement scrip, and scrip issued by Board of Auditors outstanding... Cash obtained by Fund Commissioner upon 724 bonds of $1,000 each, hypothecated to Macalister & Stebbins, yet outstanding, as per statement of Fund Com. missioner, with interest at the rate of 7 per cent per annum on this sum... Sold to contractors on Northern Cross Railroad, 94 bonds of $1,000 each, 84 of which were hypothecated to Fund Commissioner, by the contractors, for the sum of $42,000, Illinois State Bank paper, leaving balance of $10,000........... 896,669 94 172,405 00 Total debt on account of bank and Internal Improvement bonds and scrip...... $8,279,195 94 The annual interest on this debt was $830,182. To meet these liabilities the State had the following resources at the time unavailable: Lands remaining unsold of Canal Grants... acres Lands granted to the State, under the provisions of an act entitled “ An Amounting to.... Amount due Canal Fund from sale of lands, town lots, stone, timber.. 238,985 57 210,132 85 40,332 00 489,750 42 $201,964 In 1840, the following named purchasers of bonds had failed to pay for them ac cording to contract, to wit: the The bonds, as the names of the buying parties indicate, were put upon market with little scruple. The New York Free Banking Law, which had been started in 1838, at that time allowed stocks of Western States to be taken as security for circulating bills, and this opened a market for many. The American Exchange Bank in New York, and the other institutions named, bought them for that purpose. Many of those banks failed utterly, and the State never got anything. General Thornton was sent to London by the contractors on the canal to sell the bonds they had taken from the State, and his terms were such as he could get. Messrs. Wright & Co. were a banking house largely interested in Cairo city, and through them $500,000 worth of railroad iron for the Central Railroad was procured on the bonds, and some cash advances for the use of that road in addition. The bonds sold to J. Delafield, of the New York Phoenix Bank, were to be paid for in instalments at par, on the condition that no more stock was to be put upon the market. The State, however, made an issue of sterling bonds, which knocked the market price down 20 per cent, and Delafield repudiated the contract, on the ground that the State had violated it. The State was now bankrupt, with all the public works incomplete. They remained in this position until 1843, when it was proposed to make the canal lands a special pledge for a sum necessary to complete the canal. This was estimated to require $1,600,000. Accordingly, the Legislature of Illinois passed a law for the purpose of raising the funds necessary to complete the Illinois and Michigan Canal, authorizing the Governor to place the canal and all the canal lands in trust for the security of the lenders. The main provisions of this act are- "1. That the Governor should be authorized to negotiate a loan solely on the credit of the canal and its lands of $1,600,000, to bear 6 per cent annual interest. The holders of existing canal bonds, and other claims on the canal, are to have the first right to subscribe in proportion to their claims, and the claims in respect of which they so subscribe to be duly registered. That this canal and canal property should be vested in three trustees, one to be named by the Governor, and two by the subscribers to the loan. "That at least $400,000 of this loan should be paid in during the course of the first year after the execution of the trust deeds. "That the canal shall be finished in three years from the commencement of the trust. "That no sales of the canal lands shall be made until three months after the completion of the canal, when the trustees are to offer them for sale. "That all the proceeds of the canal and canal property should be first applied to the repayment of interest and principal of the proposed loan of $1,600,000. "2. To payment of interest on the canal stock registered by holders who are subscribers to this new loan. "3. To payment of interest on the canal stock, not so registered. "4. To reimbursement of the registered canal stock held by the subscribers to the said loan; and after the due performance of these various engagements on the part of the trustees, the canal shall revert to the State of Illinois. "The property assigned to trustees as security for the loan was as follows: The canal, that cost the State..... The lands, amounting to 230,476 acres, valued, after the completion of the canal, at $10 per acre. Lots in the various towns on the canal, valued at.. Total...... $5,000,000 2,304,670 1,900,000 $9,204,670 Messrs. Ryan & Oakley were appointed commissioners to raise the amount, and aided by David Leavitt, Esq., President of the American Exchange Bank, which was a large holder of the canal bonds, succeeded in obtaining the required sum-the leading banking houses in London taking up the subject. The loan was completed, Messrs. David Leavitt and W. Swift were appointed trustees on behalf of the bondholders, and the work pushed to completion. The lands, on being sold, more than realized the estimated values on which the trust was based, and the revenues of the work have equalled expectations, so far as to leave but little room to doubt that the canal will soon, fulfilling its condition by discharging the canal indebtedness, revert to the State. The other great work, and perhaps the most important to the State interest, is the great Central Railroad. This work, as mentioned in the above table, was to have been 457 miles long, at an estimated cost of $8,809,145, and the State actually, before its failure, expended upon it $1,016,905, mostly for a depôt in Cairo, for clearing out the track, and in grading and embankments. The iron which had been purchased for this road was afterward sold at a loss. The Federal Government had a claim upon it for duties, it not having been laid upon the road within the time required by the then law for the remission duties. The works were going rapidly to destruction, but nothing was done until September 20, 1850, the Federal Congress made a grant of lands in aid of it. The following is a synopsis of that law: ACT OF CONGRESS DONATING LANDS. SECTION 1. Grants right of way through the public lands, 200 feet wide, with privilege of taking materials for construction; earth, stone, timber, &c. SEC. 2. Grants every alternate section of land, 12 sections wide, the whole length of road and branches. In case the lands there are occupied, an equivalent quantity elsewhere, not over 15 miles from the road. The road to be commenced simultaneously at both ends. The lands to be sold only as the work progresses. This grant does not include the reserve canal lands. SEC. 3. United States land reserved sections not to be sold for less than double the minimum price of the public lands. SEC. 4. The road to remain a public highway for the use of the United States Government, free from toll or other charges. SEC. 5. If the road is not completed in ten years, the State of Illinois shall |