HUNT'S

MERCHANTS' MAGAZINE

AND

COMMERCIAL REVIEW.

MARCH, 1858.

Art. I.-DEBTS AND FINANCES of the stateS OF THE UNION.

WITH REFERENCE TO THEIR GENERAL CONDITION AND PROSPERITY.

NUMBER X.

THE WESTERN STATES-ILLINOIS, (2D ARTICLE.)

[We now resume the publication of a series of papers, under the same general title prefixed to the present article, written expressly for the Merchants' Magazine, by THOMAS Prentice KETTELL, Esq., of New York, now and for several years editor of the U. S. Economist, previously of the Democratic Review, etc., whose ability, industry, and research, are fully evinced by these and other contributions to the history of the finances of the United States. As we have heretofore stated, these articles contain the most comprehensive and reliable account of the debts, finances, and resources of the several States, that have ever been collected in a connected and convenient form, and are most valuable for reference, present and future. The first was of an introductory and general character, and related chiefly to the State debts of Europe and America, but also presented particular statistics of the debts of Great Britain, France, and the Federal Government of the United States. The second commenced the account of the indebted States respectively. For convenience of reference, we give the subjoined index to the series, showing the volumes, pages, etc., in which each previous number was published:

It will be noticed that the present article and the last in the above list are alike devoted to the State of Illinois. However, the paper now published chiefly consists of statistics of recent years, and hence not embraced in the preceding paper; and whatever portion of the history of the State is reproduced we deem desirable to a satisfactory view of the subject.

We would also refer those who may wish to consult our other articles on State debts to the number of the Merchants' Magazine of May, 1857, vol. xxxvii., pp. 531-547, in which we published the most recent financial accounts of seventeen States, with lists of references to all our previous articles in regard to those States. We shall hereafter publish a similar resume of the financial accounts of most of the States made up for the last fiscal year preceding January 1, 1858, with further lists of references.*-ED. MER. MAG.]

THE great State of Illinois is one of the most remarkable in the Union in regard to its financial history, since with great natural resources it has undergone the greatest vicissitudes. Under the influence of overwrought credit it was brought to insolvency, from which it has vigorously recovered, until it has become one of the most prosperous, if not, in fact, the most prosperous, of the Union in respect of its finances. The soil of the State is of the most fertile description, and its situation such as a glance at the map demonstrates to be the most favorable to commerce. It is, as it were, the counterpart of New York, since, like it, it abuts on the great lakes on one side, while on the other it is watered by the largest rivers. In size, Illinois ranks as one of the largest States of the Union, having an area of 55,410 square miles, or 35,462,389 acres. The general disposition of this land by the Federal Government has been as follows:

acres 35,462,389

Total acres.....

85,462,389

In 1810, Illinois had a population of 12,282 souls, of which a number were French settlers on the rich soil of the Illinois River valley. In 1814, the sales of land under the General Government commenced, and they had been annually as follows, down to the close of the last fiscal year:

Governors and other officials of several of the States are very prompt in forwarding to us copies of their public documents. We trust that those from whom we have not recently received such publications, will furnish them to us at an early day.—Editor Merchants' Magazine.

The last sale of land was in December, 1856, at the Danville district, 18,000 acres, closing the interest of the Federal Government.

The first sales were mostly on the streams and shores, and were but moderate in amount up to 1830, but were then largely developed under the speculations of succeeding years, until the great revulsion of 1837. The efforts then made at reviving the public works and the growing immigration from Europe, sustained the demand for lands until nearly all those available in the hands of the Federal Government were sold. In 1850, the government still held about 11,000,000 acres of superior lands, which were situated in the interior of the State, but unavailable because not commanded by any water courses. At that time it made a grant of 2,595,000 acres to the State of Illinois, to assist in building the Central Railroad. The State made over the grant to a company which undertook and completed this work, the effect of which has been to enable the government to sell all its remaining lands in the State of Illinois, and develop a high degree of prosperity in that region.

The State of Illinois, as we have said, is bounded on the northeast by Lake Michigan, on the shore of which is situated the growing city of Chicago. At one hundred miles distant, in a westerly direction, the Illinois River becomes navigable, and, draining a most fertile region, pours into the Mississippi above the Ohio River, forming an outlet for produce to the ocean via New Orleans. The State of New York, in 1822, conceived the plan of connecting Lake Erie, 350 miles, with the Hudson River by canal, and the situation of Illinois obviously prompted a similar undertaking. Hence, as early as 1823, a board of commissioners was appointed to explore the route, and estimate the cost of the Illinois and Michigan Canal, 100 miles long. At that time the population of the State was less than 100,000, mostly without other connection with markets than via New Orleans; with so little resource, therefore, but little was done until the general speculative action in lands commenced in 1830. In 1829, Congres had granted 500,000 acres of land in aid of the work, the whole cost of which was then estimated at $8,654,337. The work progressed, and there was realized from the land sales up to 1836, $1,395,911, at which time 270,000 acres remained on hand. At that time, under the spur of speculation, which pervaded the whole Union, Illinois embarked largely in banks and internal improvements. It issued $3,000,000 of bonds for the capital of banks, the State Bank of Illinois and the Illinois Bank at Shawneetown. It also issued $10,250,000 of bonds for a grand railroad system, of which the Central Road was to divide the State longitudinally,

and others, to cross the State east and west. The general speculation in lands received a new impulse from these loans and the prospect of the expenditure which they would involve. The banks largely expanded their loans, mostly in discounts to produce speculators. The State negotiated its bonds at great disadvantage. mostly through the United States Bank, in exchange for its notes, and through agents, who failed in debt to it. The chief works undertaken by the State, were the canal, estimated to cost $8,654,337; the Central Railroad, estimated to cost $3,500,000; the Southern Cross Road, estimated at $1,750,000; the Alton and Terre Haute Road, $1,250,000; the Northern Cross, $1,850,000; and the Warsaw and Bloomington Road, $1,050,000. The expenditure on these works, with the $2,000,000 subscription to the State Bank of Illinois, and $1,400,000 to the Illinois Bank of Shawneetown, formed a State debt of $11,600,000, at the time the great revulsion overtook the commercial world, leaving the State in a deplorable condition. The population was than under 500,000; the public works were all stopped in an unfinished state; the annual expenditure upon them had been one source of prosperity to the people, aided by the operations of the two great banks, whose movement had been as follows:

The large loans of these banks had been to a great extent to specu lators in produce, who could not pay, and the banks finally wound up with total loss of capital, leaving the State without currency, as without means of moving produce to market. The government was without revenue, and the Governor, in his message, called attention to the fact, that there was not sufficient means at the command of the executive to procure letters from the Post office, or hold evening sessions of the Legislature.

In July, 1841, the State of Illinois stopped payment on the interest on her public debt. In that year the whole State revenue had been $103,065, and the expenses $179,807; for eight years the revenue had been $739,304, and the expenses $1,016,281-excess of expenses $276,977. The State had emitted various species of paper which had become much depreciated, and which, being receivable for public dues, deprived it of all available means. The amount of debt reported by the Governor was, in 1844, as follows:

expended upon the

Total debt.....

The canal resources were as follows-Amount canal, 1836 to 1844, $5,039,284.

The canal property was valued as follows:

It was estimated that $1,600,000 would complete the canal on what was called the "shallow cut."

It was proposed to put those lands and the entire canal into the hands of trustees who should borrow on the whole, as security, the sum needful to complete the work. When that should have been accomplished, to sell the lands necessarily enhanced in value by its operation, and pay-1st. The principal of that debt and interest until fully paid; 2d. The interest of bonds held by those who subscribed to the new loans; 3d. Annual payments upon the interest of bonds held by non-subscribers to the new loan; 4th. After the interest of all the bonds shall have been paid, to pay dividends upon the principal of the bonds held by subscribers to loan. When that payment shall have been completed the trust terminates. Without going here into the detail of the movement, we may state that it was successfully carried out, the work completed, and the lands gradually sold, producing a result contained in the following extract from the report of the trustees, January, 1858.

The following table contains a classified schedule of the entire amount received and expended by the Board of Trustees from the date of the trust in June, 1845, to November 30, 1857:—

This is an admirable result. There remains unsold of the lands 54,573 Thus the estimated value of the lands has

acres, and 965 town lots.

66

new loan"

been more than attained. The canal has been finished; the is paid off, principal and interest; interest on registered bonds and scrip paid up to the extent of $2,142,288, and $278,357 of the principal discharged. The mode of selling the lands is one-fourth cash, and the balance in three equal annual instalments. There is due of these instalments

$252,195, and the trustees estimate that they will pay this year $350,000 on the principal of the registered bonds.

This branch of the State debt has been thus disposed of. The financial evils which the State had suffered produced political action upon the State