In the decades
between gaining statehood in 1818 and the outbreak of the Civil War in 1861,
Illinoisians turned to new economic opportunities, and increasingly integrated themselves into the emerging national
economy. Their efforts met with grave setbacks, as in the case of long-delayed
Illinois and Michigan Canal project, and the larger economic depressions
of 1837 and 1857. But by 1861 Illinois had emerged as the home of a prosperous
agricultural economy. Chicago, blessed with its location at the southwestern
edge of the Great Lakes chain, became the nation's northwestern transportation
hub and commanded a vast agricultural hinterland that extended to the North
Woods and the Great Plains.
Working men found Illinois
hospitable from the start. A general labor shortage pushed wages higher
than those found in Europe, or even on the eastern seaboard. For those
seeking a farm, public lands abounded. Such conditions attracted immigrants.
American settlers first arrived
in Illinois from the southern and mid-Atlantic states, and gathered along
southern Illinois river bottoms. There they found rich soils and ready
access to water transportation linking them with home. The introduction
of steamboats further encouraged settlement along rivers in the 1820s,
and settlers slowly pushed northward along navigable streams. Illinois'
early, riverine economy moved goods down the Wabash, Ohio, Illinois and
Mississippi Rivers to the trading ports of St. Louis and New Orleans.
Steamboats carried large loads of bulk goods, especially agricultural
products, while smaller flatboats floated downstream carrying lighter
loads, including cords of wood to refuel steamboats' raging furnaces.
As a young man Abraham Lincoln found work on such a flatboat, and traveled
as far as New Orleans.
While many white men found
the early Illinois economy's high wages and abundance of land to their
liking, labor often provided starker alternatives for women and African-Americans.
Frontier women usually performed hard, manual labor on the farm while
also maintaining their child-rearing and housekeeping duties. Few found opportunities for the profitable wage work that many men enjoyed. While Illinois'
state constitution officially barred black slavery, loopholes allowed
slaves held by the French (who tolerated slavery) to remain enslaved in
Illinois. Supporters of slavery also negotiated a system of "indentured
servitude" that allowed masters to keep African-Americans in a state
of practical slavery masked by the convention of contract labor.
By the 1830s American settlement
had extended into central and northern Illinois. In 1820 the federal government
had maintained land offices in only three southern Illinois towns; by
1831 eight such offices handled a rapidly growing land business as far
north as Chicago and Galena. The rush to settle Illinois provoked widespread
land speculation. Many settlers with a few dollars to spare acquired extra
plots of land in hopes that prices would continue to appreciate. The
more ambitious planned out future towns on their properties and attempted
to round up settlers to purchase the lots at inflated fees. Eastern land
speculators also moved into Illinois, acquiring large blocks of property
through straw buyers and proxies, and retailing individual farms in the
East. Many settlers took offense at these tactics however, and organized
settlers associations. These organizations sniffed out straw buyers at
land auctions and vigorously discouraged their activities, occasionally
resorting to violence.
In 1825 the State of New
York completed the Erie Canal, which linked the navigable Hudson River
(and hence, New York City) with the Great Lakes. This watershed development
made Chicago a major lake port shipping Illinois' agricultural products
eastward. Suddenly Illinoisians found themselves tied
to eastern merchants and markets as well as those in St. Louis and New
The completion of the Erie
Canal facilitated northeasterners' migration to Illinois, and hastened
the development of northern Illinois. It also sparked a mania for canal-building
in other states, including Pennsylvania, Ohio and Illinois. A narrow neck
of marshy land separated the navigable Illinois River (which drained into
the Mississippi above St. Louis) from the Chicago River and Lake Michigan.
Indians had paddled their canoes from one river to the other during high
water. Illinoisans, especially the ambitious Yankee settlers that increasingly
poured into northern Illinois in the 1830s, began the drumbeat for a major
canal linking the Mississippi Valley and the Great Lakes. Such a waterway
would make Illinois the keystone of a national transportation system stretching
from New Orleans to New York.
In the mid-1830s such entrepreneurial
enthusiasm swept legislators determined to use state government for the
promotion of economic development into power in Illinois. Among their
number was a young Abraham Lincoln. The idea of an
Illinois and Michigan Canal, which had kicked around for nearly ten years,
sped through the legislature. In 1837 the legislature expanded their ambitions
with an additional $10 million in obligations for internal improvements,
including the canal and the construction of a wildly ambitious railway
grid spanning the state.
1837 proved to be a singularly
bad time for taking such financial risks. In that year the American economy
nosedived into a prolonged depression on the heels of a decade's western
speculations and the wrecking of the national credit and currency system
that accompanied President Andrew Jackson's refusal to recharter the Bank
of the United States.
In the antebellum United
States commerce developed without a national system of currency, or legal
tender. Instead, individual banks issued notes that could be redeemed
for gold specie on request. Most banks routinely issued more currency
than they had gold bullion, and relied upon their good name to maintain
the value of their notes. Nevertheless, many banks skirted the edges of
disaster by issuing far more currency than they could hope to support.
During its heyday the Bank of the United States, a private bank chartered
by the United States government, kept such banks in line by frequently
presenting their notes for redemption. This ever-present threat provided
an ad hoc system of bank regulation.
The depression thoroughly
derailed the state's bold railway plan. But the Illinois and Michigan
Canal project, despite a set of grave financial setbacks including the
state's repudiation of its bonded debt, continued forward. The construction
of the canal demanded large amounts of labor, and only increased the general
labor shortage. Many Irishmen answered the call and immigrated to Illinois
to take up work on the waterway. Their arrival began to change the face
of Illinois society, introducing the Catholic religion to a state previously dominated by the Protestant faith.
As the canal work ground
on, another technological innovation introduced a rival system of transportation
that would prove far more consequential for Illinois' development. Railroads
could be constructed for far less than canals, and could carry freight
and passengers more quickly to their destinations. The first small railroad
in Illinois had debuted in 1839, but it was not until the late 1840s that
financiers, engineers and political leaders surmounted the spectacular
failure of 1837 and began large-scale railroad construction.
In 1848 Chicago emerged as
a commercial hub. In that year the long-awaited Illinois and Michigan
Canal reached Lake Michigan. Telegraph lines also linked the city to individuals
and markets across the United States. Plank roads linked the city with
nearby commercial centers, and construction began on the first railroad
linking Chicago with more distant western points. Cyrus McCormick, the
inventor of the mechanical reaper, arrived from Virginia, and the first
stockyard began its operations in Chicago. Suddenly these pieces fit into
place, and pushed Chicago from the status of a lake port largely known
for land speculation into its role as the hub of the northwestern United
No American city gained more
from the rise of railroads than Chicago. Its unique location at the southwestern
edge of the Great Lakes placed Chicago at the center of the developing
West's transportation network. The Illinois and Michigan
Canal gathered grain and other agricultural products from rural Illinois
in to Chicago, taking business away from rival St. Louis. Chicago merchants
purchased these materials and forwarded them to the East via the Great
Lakes and the Erie Canal.
In the following decades a vast web of railroads
would extend Chicago's commercial reach westward to the Rocky Mountains,
assembling the lumber of the North Woods and the grain and beef of the
Great Plains in vast warehouses and elevators. Chicago merchants would
use these rails to distribute hardware, household goods, and even pre-fabricated
homes themselves to their vast commercial hinterland.
Yet the push westward did not usher in
an arcadian era of economic bounty and growth. The development of railroads
produced winners and losers. Chicago's transportation advantages
swept riches into its coffers as surely as they gathered in logs and steers.
Chicago merchants' railroad-enhanced reach pushed struggling local merchants
and retailers aside in many western communities, and brought their profit
margins to Chicagoans.
Prairie towns' economic
fortunes rose and fell with the arrival of the railroad. Those bypassed by the
roads often disappeared. The river towns that dominated the North-South
riverine economy similarly depended upon the railroads' extension from
East to West. Those that attracted railroads thrived. Those that could
not add the railroad to their river-based trade regressed in wealth and
Economic development emerged
as the work of human actors embroiled in a larger political and social
context. As railroads pushed toward the new territories won from Mexico
in 1847, they deepened the sectional crisis that led toward the Civil
Senator Stephen Douglas saw a transcontinental railroad
linking the Mississippi Valley with gold-rich California in the nation's
immediate future. Southern partisans argued that New Orleans or Memphis
should serve as the road's eastern terminus. St. Louis boosters threw
their city's hat into the ring. Ever eager to promote Chicago's commercial
interests, Douglas saw that the disorganized state of the Nebraska territories
blocked a northern route including Chicago. With the dynamics
of westward expansion and commercial rivalries in mind, he stepped forward
with the bold Kansas-Nebraska Act of 1854 that introduced "popular
sovereignty" as the solution to the national slavery question,
precipitated the organization of the Republican Party, and thrust Abraham
Lincoln onto the national stage.
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