Canal Construction 1836–1848

     On July 4, 1836,  a gala celebration at the south branch of the Chicago River marked the official start of construction on the Illinois Michigan Canal.   However, in the first year, construction was hampered by weather and lack of manpower and equipment.  This time was spent in building access roads, acquiring equipment and workers, and building crude structures to house the workers. By 1838, most sections of the canal were under contract. 
    One complicating factor was the Panic of 1837.  This has been attributed to a policy of Andrew Jackson requiring that all federal lands purchased after 8/15/1836 be purchased in gold or silver. As a result of this action, land prices declined;  value of stocks and commodities tanked: banks closed ;unemployment increased.  This panic took time to reach the Midwest ; but eventually it’s effects were felt.  It was possible to continue canal construction using creative financing until 1841.  Measures used included: special bonds sold at discounted rates; scrip paid to contractors with a promise to pay face value and interest when funds become available.  By the end of 1841, all construction ceased.  The state could not meet its bond obligations and defaulted on its interest payments.  The value of its bonds crashed to 15 cents on the dollar.    In 1842, the Illinois Treasury collected $98,546.00 in taxes and had a yearly expense of $ 800,000 in interest payments.  Please note this debt was for all public work projects not just the I and M canal.
    In 1842, Governor Ford faced a total debt $15,187,348.  With the state assembly he developed a multipoint program to deal with the fiscal crisis.  Points included: 1) Modest property tax increase to help fund interest payments on state obligations; 2) dropped all state internal improvement projects except the I M Canal; 3) Proposed the shallow cut plan to complete the canal at a cost of 1.6 million dollars–mounts considerable lesser amount than the originally  proposed deep cut.  The deep cut was a plan to make the canal deeper than 6 feet in the Summit section in order to provide water for the canal from the Chicago River.  The shallow cut cancelled this plan and provided water to the canal with pumps at Bridgeport and additional feeder canals. 
     General Assembly approved Governor Ford’s plan on 2/21/1843.  The Canal was to be managed by 3 trustees.  One was appointed by the state. The other 2 were elected by the bondholders of the 1.6 million to complete the canal.   The bonds were sold to American and foreign investors. 
     Work on the canal was resumed in July of 1845.  Construction was slow during 1845–1846
Due to many factors.  There was a shortage of labor.  The weather was poor.  After 4 years of abandonment much of the canal was in a state of disrepair.  This needed to be corrected.
By 1847, construction advanced rapidly.  The Canal was open for navigation on April.10, 1848.  First boat through the canal was the General Fry which travelled from Lockport to Chicago.

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