George Washington Smith.

A history of southern Illinois : a narrative account of its historical progress, its people, and its principal interests (Volume v.1) online

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A meeting of the Free Democracy will take place in Waterloo, on Monday,
Sept. 13th lust., whereat Hon. Lyman Trumbull, Hon. Jehu Baker and others,
will address the people upon the different political topics of the day. Members of
all parties are cordially invited to be present, and hear and determine for


What is that name of "Free Democrats" put forth for unless to
deceive the people, and make them believe that Trumbull and his fol-
lowers are not the same party as that which raises the black flag of
Abolitionism in the northern part of this state, and makes war upon
the Democratic party throughout the state. When I put that question
to them at Waterloo on Saturday last, one of them rose and stated that
they had changed their name for political effect in order to get votes.
There was a candid admission. Their object in changing their party
organization and principles in different localities was avowed to be an
attempt to cheat and deceive some portion of the people until after the
election. Why cannot a political party that is conscious of the rectitude
of its purposes and the soundness of its principles declare them every-
where alike? I would disdain to hold any political principles that I
could not avow in the same terms in Kentucky that I declared in Illinois,
in Charleston as well as in Chicago, in New Orleans as well as in New
York. So long as we live under a constitution common to all the states,
our political faith ought to be as broad, as liberal, and just as that
constitution itself, and should be proclaimed alike in every portion of
the Union. But it is apparent that our opponents find it necessary,
for partisan effect, to change their colors in different counties in order


to catch the popular breeze, and hope with these discordant materials
combined together to secure a majority in the legislature for the pur-
pose of putting down the Democratic party. This combination did suc-
ceed in 1854 so far as to elect a majority of their confederates to the
legislature, and the first important act which they performed was to
elect a senator in the place of the eminent and gallant Senator Shields.
His term expired in the United States senate at that time, and he had
to be crushed by the Abolition coalition for the simple reason that he
would not join in their conspiracy to wage war against one-half of the
Union. That was the only objection to General Shields. He had served
the people of the state with ability in the legislature, he had served
you with fidelity and ability as auditor, he had performed his duties to
the satisfaction of the whole country at the head of the land depart-
ment at Washington, he had covered the state and the Union with
immortal glory on the bloody fields of Mexico in defense of the honor
of our flag, and yet he had to be stricken down by this unholy combina-
tion. And for what cause? Merely because he would not join a com-
bination of one-half of the states to make war upon the other half, after
having poured out his heart's blood for all the states in the Union.
Trumbull was put in his place by Abolitionism. How did Trumbull
get there? Before the Abolitionists would consent to go into an elec-
tion for United States senator they required all the members of this
new combination to show their hands upon this question of Abolitionism.
Lovejoy, one of their high-priests, brought in resolutions defining the
Abolition creed, and required them to commit themselves on it by their
votes yea or nay. In that creed, as laid down by Lovejoy, they de-
clared first, that the Wilmot Proviso must be put on all the territories
of the United States, north as well as south of 36 degrees 30 minutes, and
that no more territory should ever be acquired unless slavery was at first
prohibited therein ; second, that no more states should ever be received
into the Union unless slavery was first prohibited, by constitutional
provision, in such states; third, that the Fugitive Slave law must be
immediately repealed, or, failing in that, then such amendments were
to be made to it as would render it useless and inefficient for the objects
for which it was passed, etc. The next day after these resolutions were
offered they were voted upon, part of them carried, and the others
defeated, the same men who voted for them, with only two exceptions,
voting soon after for Abraham Lincoln as their candidate for the United
States senate. He came within one or two votes of being elected, but
he could not quite get the number required for the simple, reason that
his friend Trumbull, who was a party to the bargain by which Lincoln
was to take Shields 's place, controlled a few abolitionized Democrats in
the legislature, and would not allow them all to vote for him, thus
wronging Lincoln by permitting him on each ballot to be almost elected,
but not quite, until he forced them to drop Lincoln and elect him
(Trumbull), in order to unite the party. Thus you find, that although
the legislature was carried that year by the bargain between Trumbull,
Lincoln, and the Abolitionists, and the union of these discordant ele-
ments in one harmonious party; yet Trumbull violated his pledge, and
played a Yankee trick on Lincoln when they came to divide the spoils.
Perhaps you would like a little evidence on this point. If you would, I
will call Col. James H. Matheny, of Springfield, to the stand, Mr. Lin-
coln's especial confidential friend for the last twenty years, and see


what he will say upon the subject of this bargain. Matheny is now the
Black Republican or Abolition candidate for congress in the Springfield
district against the gallant Colonel Harris, and is making speeches all
over that part of the state against me and in favor of Lincoln, in con-
cert with Trumbull. He ought to be a good witness, and I will read an
extract from a speech which he made in 1856, when he was mad be-
cause his friend Lincoln had been cheated. It is one of numerous
speeches of the same tenor that were made about that time, exposing
this bargain between Lincoln, Trumbull and the Abolitionists. Math-
eny then said :

"The Whigs, Abolitionists, Know Nothings and renegade Democrats
made a solemn compact for the purpose of carrying this state against
the Democracy, on this plan : 1st. That they would all combine and
elect Mr. Trumbull to congress, and thereby carry his district for the
legislature, in order to throw all the strength that could be obtained
into that body against the Democrats. 2d. That when the legislature
should meet, the officers of that body, such as speaker, clerks, door
keepers, etc., would be given to the Abolitionists; and 3d. That the
Whigs were to have the United States senator. That, accordingly, in
good faith, Trumbull was elected to congress, and his district carried
for the legislature, and, when it convened, the Abolitionists got all the
officers of that body, and thus far the "bond" was fairly executed.
The Whigs, on their part, demanded the election of Abraham Lincoln
to the United States senate, that the bond might be fulfilled, the other
parties to the contract having already secured to themselves all that
was called for. But, in the most perfidious manner, they refused to
elect Mr. Lincoln; and the mean, low-lived, sneaking Trumbull suc-
ceeded, by pledging all that was required by any party, in thrusting
Lincoln aside and foisting himself, an excrescence from the rotten bowels
of the Democracy, into the United States senate ; and thus it has ever
been, that an honest man makes a bad bargain when he conspires or
contracts with rogues."

Matheny thought that his friend Lincoln made a bad bargain when
he conspired and contracted with such rogues as Trumbull and his
Abolition associates in that campaign. Lincoln was shoved off the track,
and he and his friends all at once began to mope ; became sour and
mad, and disposed to tell, but dare not ; and thus they stood for a long
time, until the Abolitionists coaxed and nattered him back by their
assurances that he should certainly be a senator in Douglas's place.
In that way the Abolitionists have been enabled to hold Lincoln to the
alliance up to this time, and now they have brought him into a fight
against me, and he is to see if he is again to be cheated by them. Lin-
coln this time, though, required more of them than a promise, and holds
their bond, if not security, that Lovejoy shall not cheat him as Trumbull

When the Republican convention assembled at Springfield, in June
last, for the purpose of nominating state officers only, the Abolition-
ists could not get Lincoln and his friends into it until they would
pledge themselves that Lincoln should be their candidate for the
senate ; and you will find, in proof of this, that that convention passed
a resolution unanimously declaring that Abraham Lincoln was the
"first, last and only choice" of the Republicans for United States
senator. He was not willing to have it understood that he was merely


as the road was built and in operation, there was a rapid rise in the
prices of land. Cities sprang up and farms were opened. This in-
creased valuation of these lands soon brought in an increasing amount
of taxes and thus the burden of the state debt was gradually lifted.
The cost of the road, according to a statement made by Mr. Ackerman
in 1883, at that time president of the road, was $40,000,000. The sale
of the lands along the line of the road produced some income for the
company, but within a few years the company was in debt over $23,-
000,000. Mr. Ackerman further says that the road was kept from
bankruptcy by the heroic work of its officers, assisted by Richard Cob-
den on behalf of the English shareholders.

The charter granted to the Illinois Central Railroad Company con-
veyed to that corporation all the lands which congress had so gener-
ously given to the state by the act of September 20, 1850. The pro-
visons of the charter pertaining to the returns which the company
should make to the state for the gift of the lands, were the result of
much discussion and several compromises. The memorial addressed
to the legislature by the nine gentlemen contained near the close, this
clause : ' ' And the said company, from and after the completion of

the said road, will pay to the state of Illinois, annually per cent

of the gross earnings of the said railroad, without deduction or charge
for expenses or for any other matter or cause." After a thorough
discussion of all the interests involved, the following sections were in*
corporated in the charter:

Section 18. In consideration of the grants, privileges, and fran-
chises herein conferred upon said company for the purposes aforesaid,
the said company shall, on the first Mondays of December and June in
each year, pay into the treasury of the state of Illinois five per centum
on the gross or total proceeds, receipts or income derived from said road
and branches, for the six months then next preceding.

The same section then provides for the keeping of accurate and
detailed records of such income, and for reports, etc., to the governor.
Section 22 of the charter provides that all the lands shall be exempt
from taxation till sold by the company. It also provides for the
exemption of all the stock of the road for six years. Then follows this
provision :

Section 22. After the expiration of six years, the stock, property,
and assets, belonging to said company shall be listed by the president,
secretary or other officer, with the auditor of state, and an annual tax
for state purposes shall be assessed by the auditor upon all the property
and assets of every name, kind and description belonging to said cor-
poration. Whenever the taxes levied for state purposes shall exceed
three-fourths of one per centum per annum, such excess shall be de-
ducted from the gross proceeds or income herein required to be paid
by said corporation to the state, and the said corporation is hereby
exempted from all taxation of every kind, except as herein provided
for. The revenue or income arising from said taxation and the said
five per cent of gross or total proceeds, receipts or income aforesaid,
shall be paid into the state treasury in money, and applied to the pay-
ment of the interest-paying state indebtedness until the extinction
thereof; Provided, in case the five per cent, provided to be paid into

the state treasury and the state taxes to be paid by the corporation,
VOL i u


do not amount to seven per cent of the gross or total proceeds, receipts,
or income, then the said company shall pay into the state treasury the
difference so as to make the whole amount paid equal, at least, to seven
per cent of the gross receipts of said corporation.

The first four semi-annual payments made to the state treasury by
the Illinois Central Company consisted of five per cent of the gross
earnings. Since April 30, 1857, the payments have heen made on a
basis of seven per cent of the gross earnings. The first semi-annual
payment made October 31, 1855, amounted to $29,751.59. The last
semi-annual payment made October 31, 1911, was $620,388.12. The
total paid into the state treasury in the past fifty-one years is $30,942,-
282.80. In at least two instances in the past fifty years, the Illinois
Central Company has advanced the semi-annual payment several
months before it was due, and thus relieved the state from the embar-
rassment of a deficit in the treasury.

As stated above, the company has annually paid seven per cent of
its gross earnings into the treasury with the understanding that this
is the maximum amount to be paid in lieu of all forms of taxation.
The attorney-general, the Hon. W. H. Stead, has furnished to the audi-
tor of public accounts an opinion upon the subject of taxation of the
Illinois Central Railroad Company, which briefly stated is as follows:

1. As provided in section 18 of the charter, the said company is
required to pay into the state treasury semi-annually on the first Mon-
days in December and June, five per cent of the gross earnings for
the preceding six months.

2. Section 22 of the charter makes it the duty of said company to
list the stock, property, and assets belonging to the said company with
the auditor of public accounts for the purpose of taxation.

3. It is the duty of the auditor of public accounts to levy upon
said property as listed, an annual state tax which shall be paid as are
other state taxes. (Provision is made that this tax shall never exceed
75 cents on the $100.)

4. This tax so levied and collected must be paid into the state
treasury; and if this tax, together with the five per cent of the gross
earnings shall not equal seven per cent of the gross earnings, then the
company is bound by the charter to make good such deficiency.

5. If the tax levied by the auditor of public accounts together with
the five per cent of the gross earnings shall exceed seven per cent of
the gross earnings the said tax must nevertheless be paid in full.

6. The provisions of the charter apply to the Illinois Central Rail-
road from Cairo via Centralia to La Salle, 300.99 miles ; from La Salle
via Galena to Dunleith, 146.73 miles; from Centralia to Chicago, 249.78
miles; total 697.5 miles. The provisions of the charter do not apply
to any roads leased, purchased, or built by the company other than the
697.5 miles referred to above.

The said company listed its property with the auditor of public
accounts from 1855 to 1859, but since that time until the spring of
1906 it did not do so, claiming that the seven per cent of its gross
earnings was the maximum amount which the company was required
by the charter to pay into the state treasury. In the spring of 1906
the company listed its property with the auditor and has continued to
do so since. The suit entered by Governor Deneen and Attorney Gen-


eral Stead resulted in the collection of a large amount of unpaid taxes,
but now the road after paying in five per cent of its gross earnings and
then submitting to taxation as any other railroad finds that five per
cent plus the taxes does not equal seven per cent of the gross receipts
and the deficit is made up as is shown by the following letter from the
auditor of public accounts :

Springfield, 111.. February 15, 1912. MB. GEO. W. SMITH,
Carbondale, 111. Dear Sir: Replying to your favor of the 14th instant I
beg to inform you that the value of the stock, property and assets of the Illinois
Central Railroad Company, listed by said Company to the Auditor of Public
Accounts as required by the provisions of "An Act to incorporate the Illinois
Central Railroad Company," approved February 10, 1851, is as follows :

Value of right of way $60.354,234.00

Value of buildings on right of way 2,339,832.00

Value of main track 24,695,733.00

Value of Second. 3rd, 4th and additional main tracts 9,427.063.00

Value of side and turn-out tracks 3,792,670.00

Value of rolling stock 12,550,247.00

Value of personal property other than rolling stock 933,329.00

Value of stocks, bonds, cash and other assets 67,973,984.55

Aggregate value of all property and assets $182,067,092.55

Payments into the State Treasury by the Illinois Central R. R. Co. since
May 1, 1906, are as follows :

7 per cent on gross receipts for 6 mos. ending Oct. 31, 1906 $600,102.55

7 per cent on gross receipts for 6 mos. ending Apr. 30, 1907 596,210.28

7 per cent on gross receipts for 6 mos. ending Oct. 31, 1907 642,325.84

7 per cent on gross receipts for 6 mos. ending Apr. 30, 1908 533,342.89

7 per cent on gross receipts for 6 mos. ending Oct. 31, 1908 559,773.55

7 per cent on gross receipts for 6 mos. ending Apr. 30, 1909 563,307.52

7 per cent on gross receipts for 6 mos. ending Oct. 31, 1909 589,361.82

7 per cent on gross receipts for 6 mos. ending Apr. 30, 1910 607,918.20

7 per cent on gross receipts for 6 mos. ending Oct. 31, 1910 610,009.64

7 per cent on gross receipts for 6 mos. ending Apr. 20, 1911 619,096.12

7 per cent on gross receipts for 6 mos. ending Oct. 31, 1911 620,388.12

The State tax rate for the year 1910 was assessed against one-third of the
above total valuation of stock, property and assets which amounted to $60,689,-
030.85. the tax rate extended against said valuation being 30c on the $100, and was
computed in the assessment as follows:
5 per cent on $8,684,545.71 gross receipts for 6 mos. ending

Apr. 30, 1910 $434,227.29

5 per cent on $8.714,423.45 gross receipts for 6 mos. ending

Oct. 31, 1910 435.721.17

State tax assessed on stock, property & assets for 1910 182,067.09

Balance necessary to make the taxes equal 7 per cent of gross receipts. 165,912.29

Total tax due for 1910 $1,217,927.84

Statement of the amounts paid into the State Treasury on account of 7

per cent of the gross receipts is as follows:

June 1910, 7 per cent on $8,684,545.71 gross receipts for 6 mos.

ending Apr. 30, 1910 $607,918.20

December 1910. 7 per cent on $8,714,423.45 gross receipts for 6 mos.

ending Oct. 31, 1910 610,009.64

Total tax paid the State Treasurer $1,217.927.84

Yours truly,


Auditor P. A.


The experience of Illinois in the banking business, had been so un-
fortunate that there was inserted in the constitution of 1848, Article


X, Section 5, this provision: "No act of the general assembly, author-
izing corporations or associations with banking powers, shall go into
effect or in any manner be enforced, unless the same shall be submitted
to the people at the general election next succeeding the passage of the
same, and be approved by a majority of all the votes cast at such elec-
tion for and against such law." Section 4, of the same article pro-
vided that all stockholders in banking associations issuing bank notes,
should be individually responsible proportionately to the stock held by
each, for all liabilities of the corporation or association. Since the
winding up of affairs of the old State Bank and the Bank of Illinois
there were no banks in Illinois issuing bank bills. The only money in
circulation was gold and silver, and paper money from banks located
in other states.

In 1838, the legislature of New York passed a law which created a
system of banking quite different from anything before tried in this
country. This bill provided the following plan, briefly outlined:

1. A person or persons might deposit with the comptroller of the
state a certain amount of United States bonds, New York state bonds,
or other state bonds, or mortgages to be approved by that officer, as

2. The comptroller issued to such persons bank bills which when
properly signed by the bank officers might be put into circulation as

3. Said notes when put in circulation were to be redeemed by the
bank when presented for redemption by the holder within a limited
time, or

4. The comptroller could sell the bonds deposited with him and
redeem said bank notes.

5. In case the state had to wind up the affairs of any such bank
and the securities on deposit did not bring an amount equal to the
outstanding bank notes, the available cash from the sale of the bonds
was used in paying as large a per cent as possible on the dollar, and
all else was lost to the bank-note holder.

Upon the face of this law it looked as if there was scarcely any
chance for loss to the bank-note holder and of course there could be
none to the state as it was acting merely in the capacity of an agent
of trust. Following the ratification of the constitution of 1848, there
began almost immediately an agitation for banks of issue in Illinois.
In the session of 1851 the legislature passed a banking law modeled
upon the New York law outlined above. This law could not go into
effect until ratified by the majority of the votes cast at a general elec-
tion. The general election was provided for in November, 1851, and
the vote stood for the law, 37,626; against the law, 31,405 a very
light vote.

This law was called the ' ' Free Banking Law, ' ' because anyone could
Illinois state bonds, other state bonds. A provision in the law con-
go into the banking business. That is one did not have to have a spe-
cially enacted charter. The securities were to be deposited with the
auditor of public accounts, and might consist of United States bonds,
templated the depreciation in value of state bonds and so they were
not taken for their full face value. No bank could be organized with
a smaller bank issue than $50,000. It was also provided in the law
that if any bank refused to redeem its issue, it was liable to a fine of
twelve and one-half per cent on the amount presented for redemption.


One way the bank managed to keep people from presenting their
bills for redemption was as follows: A bank, say in Springfield, Illi-
nois, would send $25,000 of its own issue to a bank in Massachusetts,
say in Boston ; the Boston bank returning a like amount to the Spring-
field bank. Each bank would then pay out this money over its counter
in small quantities and in this way the Springfield bank issue would
become scattered all over New England and no person holding but a
few dollars would think of coming to Springfield to get his bills re-
deemed. The issue of the Boston bank would be scattered through the
west. In this way, and in other ways the money of Illinois became
scattered in other states while in the ordinary business transactions in
this state one would handle a large number of bills daily which had
been issued in other states.

No doubt many corporations went into the banking business under
this law with clean hands and carried on a properly conducted banking
business but there were ways by which irresponsible and dishonest men
might go into the banking business and make large sums of money
without very much capital invested.

These banks were known as Wild Cat banks. The name is said to
have originated from the picture of a wild cat engraved on the bills of
one of these irresponsible banks in Michigan. However, they may have
been named from the fact that the words "wild cat" were often applied
to any irresponsible venture or scheme.

There were, in Illinois, organized under this law, one hundred and
fifteen banks of issue. Up to 1860 the "ultimate security" was suffi-
cient at any time to redeem all outstanding bills, but when the Civil
war came on the securities of the southern states, on deposit in the

Online LibraryGeorge Washington SmithA history of southern Illinois : a narrative account of its historical progress, its people, and its principal interests (Volume v.1) → online text (page 34 of 65)