depreciated paper at more than its specie value. In reporting their proceedings to the Legislature they add: "It is folly to hope for better times while the channels of trade are choked up with depreciated paper. So long as the banks are continued in existence, so long will the prosperity of our people be retarded. They have almost sucked the life-blood out of the State already. Instead of bringing in foreign capital and disseminating it amongst the people, they have been effective engines in the hands of foreign speculators to drain the State of all its substantial wealth. Since the establishment of these institutions, there have been $10 millions of money borrowed and expended amongst the citizens of Illinois. Wealth has also been obtained from immigration, and the exportation of domestic products, and yet all this has disappeared as if by enchantment, and the State, in 1842, finds itself steeped in poverty and depending for a currency upon depreciated paper." The implication that the banks were to blame for all this was plainly unjust.
Under a resolution of the Legislature that the State officers should negotiate with the two banks terms for the separation of bank and State, the Bank of the State proposed to yield up to the State the State bonds and State scrip which it held, and to cancel the debt of the State to it, which was nearly $500,000, in exchange for the stock owned by the State. The former amount exceeded the latter by $52,404. The Bank of Illinois agreed likewise to purchase of the State all its stock in that Bank, giving evidences of State debt for it. The State was indebted to this bank $370,000, $200,000 of which was for an advance which this bank had made at the urgent request of the Fund Commissioners and the Governor, that it would advance for a few months the amount which it was expected to borrow in New York. The latter negotiation fell through and the State never repaid the bank. The facts here stated show most distinctly that the banks were by no means the only sinning parties. When the time of catastrophe came, the Legislature and all the civil officers turned upon the banks with ferocity; but the truth stands out in the clearest light that the banks, blameworthy as they were in other respects, had been in a very important degree helped to their ruin by the internal improvement folly for which the civil government of the State was responsible.
Ford says that if the "swindling banks" had swindled only one-quarter as much as they were swindled by the State and by individuals, they would have been perfectly solvent. In regard to confidence, also, he says that "if the banks owed five times as much as they were able to pay, and the people owed to each other and to the banks more than they were able to pay, and yet if the whole people could be persuaded to believe the incredible falsehood that all were able to pay, this was 'confidence,' which, if once destroyed, could only be restored by the restoration of a similar general delusion." His description of the state of things in 1842 is that the people of Illinois were indebted to the merchants. They in turn were indebted to the banks or to foreign merchants. The banks owed everybody. None were able to pay.
