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$2,000,000 of the stock. The bank was located at Kaskaskia, and subscription books were opened at Kaskaskia, Golconda, Edwardsville, Harrisonville, Belleville, Vienna, Carlyle, Palmyra, Carmi, Shawneetown, Palestine, Jonesboro and Brownsville. The stock could be paid in State warrants.
In 1821, the Legislature passed an act chartering the State Bank of Illinois at Vandalia, with branches at Edwardsville, Brownsville, Shawneetown, and at the county seat of Edwards county. The act provided for issuing $300,000 in notes, on the credit of the State. The State Treasurer was authorized to deposit the public moneys with the bank, and contractors were to be paid in its notes. Congress was memorialized to authorize the landoffices to receive the notes of the bank in payment for lands. The charter of the bank established in 1819 was repealed by this act.
As to the character and operations of this institution, Ford's History has this to say:
"It was founded without money and wholly on the credit of the State. It was authorized to issue one, two, three, five, ten and twenty-dollar notes, in the likeness of bank bills, bearing two per cent. annual interest, and payable by the State in ten years. A principal bank was established at Vandalia, and four or five branches in other places; the Legislature elected all the directors and officers, a large number of whom were members of the Legislature, and all of them professional politicians. The bank was directed by law to lend its bills to the people, to the amount of one hundred dollars, on personal security; and upon the security of mortgages upon land for a greater sum. These bills were to be receivable in payment of all State and county taxes, and for all costs and fees, and salaries of public officers; and if a creditor refused to endorse on his execution his willingness to receive them in payment of debt, the debtor could replevy or stay its collection for three years, by giving personal security.
"In the summer of 1821, the new bank went into operation. Every man who could get an indorser borrowed his hundred dollars. The directors, it is believed, were
all politicians; and either were then, or expected to be, candidates for office. Lending to everybody, and refusing none, was the surest road to popularity. Accordingly, $300,000 of the new money was soon lent, without much attention to security or care for eventual payment. It first fell twenty-five cents, then fifty, and then seventy cents. below par. And as the bills of the Ohio and Kentucky banks had driven all other money out of the State, so this new issue effectually kept it out. Such a total absence was there of the silver coins, that it became utterly impossible, in the course of trade, to make small change. The people, from necessity, were compelled to cut the new bills into two pieces, so as to make two halves of a dollar. This again further aided to keep out even the smallest silver coin. For about four years there was no other kind of money but this uncurrent State bank paper. In the meantime, very few persons pretended to pay their debts to the bank. More than half of those who had borrowed considered what they had gotten from it as so much clear gain, and never intended to pay it from the first.
"By the year 1824, it became impossible to carry on the State government with such money. The State revenue varied from twenty-five to thirty thousand dollars per annum, which was raised almost exclusively by a tax on lands, then owned by non-residents, in the military tract lying northwest of the Illinois river. The resident land tax in other parts of the State was paid into the county treasuries. The annual expenditures of the State government were about equal to the annual revenues; and as the taxes were collected in the bills of the State bank, the Legislature, to carry on the government, was compelled to provide for its own pay, and that of all the public officers, and the expenses of the government, by taking and giving enough of the depreciated bills to equal in value the sums required to be paid. So that each member, instead of receiving three dollars per day, received nine dollars per day. The salaries of the Governor and Judges, and all other expenses, were paid in the same way. So that, if $30,000 was required to pay the expenses of government for a year, under this system it took $90,000 to do it. And thus, by the financial aid of an insolvent bank, the legislature managed to treble the public expenses, without increasing the revenues or amount of service to the State. In fact, this State lost two-thirds of its revenue, and expended three times the amount necessary to carry on the government. In the course of ten years it must have lost
more than $150,000, by receiving depreciated currency; $150,000 more by paying it out, and $100,000 of the loans, which were never repaid by the borrowers, and which the State had to make good, by receiving the bills of the bank for taxes, by funding some at six per cent. interest, and paying a part in cash in the year 1831."
The result of all this was that the banks became insolvent, and everywhere hard times prevailed, and in 1843, the Legislature passed an act compelling the banks to go into liquidation, and here ended the first trials of the people with reckless banking.
FIRST CANVASS BEFORE THE PEOPLE FOR GOVERNOR.
In 1822, there were no distinctive parties in Illinois, and the race for Governor was free for all. The candidates were Joseph Phillips, then Chief Justice of the Supreme Court; Edward Coles, Register of the Land office at Edwardsville; Thomas C. Browne, Associate Justice of the Supreme Court, and James B. Moore, General of the State Militia. The State was then very sparsely settled. The election took place in August, and the total vote of all the candidates was but 6,309. Coles received 2,810; Phillips, 2,760; Moore, 522, and Browne, 217. Coles' plurality over Phillips was but 50. There is a striking contrast between the vote of the State then and now. In the election of 1880, the total vote for State officers was 620,995.
It will be observed that there were two candidates for the office of Governor from the Supreme Court. Since then, however, the Supreme Court has been tacitly divorced from the politics of the State, out of deference to to an unmistakable expression of public sentiment in favor of a pure, unpartizan judiciary.
The second State Government was inaugurated December 5, 1822, with Edward Coles, of Madison, as Governor; Adolphus S. Hubbard, of Gallatin, Lieutenant-Governor; Samuel D. Lockwood, of Madison, Secretary of State; Elijah C. Berry, of Fayette, Auditor of Public Accounts; R. K. McLaughlin, of Fayette, Treasurer; James Turney, of Washington, Attorney-General.
The Third General Assembly convened December 2, 1822, and adjourned February 11, 1823. Lieut.-Gov. Hubbard presided over the Senate, and Thomas Lippincott was elected Secretary. William M. Alexander was elected Speaker of the House, and Charles Dunn Clerk.
This was a stormy session. In the campaign, in which Gov. Coles was elected, the question of making Illinois a slave State had been broadly mooted, and a pro-slavery Legislature had been elected. In his inaugural address Gov. Coles took strong ground against slavery, which arrayed both branches of the Legislature against him, but of the final outcome of the controversy we speak at length in a subsequent chapter.