Early Chicago, 1833–1871
A Selection of Documents from the Illinois State Archives
DOCUMENT 3COUNCIL ACTIONS IN RELATION TO CITY SCRIP
In March of 1822 the Federal government granted Illinois permission to cut a canal through the state, donated ninety feet on each side of the proposed route, and appropriated $10,000 for surveys. Chicago itself was surveyed and platted in 1830. By May of 1835 a United States Land Office was opened in Chicago to accommodate eager investors who anticipated land prices soaring after the completion of the Illinois and Michigan Canal which was to provide water transportation from the Illinois River to Lake Michigan at Chicago. Canal construction began on July 4, 1836, and Chicago was a boom town without a solid economy based on industry. On May 10, 1837, New York banks stopped making payments in specie and the Panic of 1837 ensued. In that year 618 banks failed nationwide. Chicago's economy was largely based on speculation and bankruptcies were common. Chicago itself, which had been chartered as a city on March 4, was in debt. With revenues down, bank notes worthless or severely devalued, and specie scarce, Chicago chose to issue its own currency or scrip. Notes were in one, two, and three dollar denominations, carried one percent interest per month, and were receivable for taxes. Canal construction was the central savior for the city's economy. Between 1836 and 1842 over $5,000,000 of state funds were pumped into it. However this drain was one of the principal reasons the State Bank failed in 1842. With this failure, the state was bankrupt and canal construction ceased. Chicago's economy hit bottom but by mid-century the city had recovered by becoming the marketing center for the agricultural surplus of the Upper Midwest.
Points to Consider
What was scrip?
For what purpose would Chicago issue scrip?
Nationally, what was the economic picture in 1837?
How much scrip did Chicago issue in 1837?