In February, 1843, the Governor informed the Legislature that the two banks had surrendered to him the State obligations and that he was ready to burn them in front of the State-house.
The rate of tax for 1843 and the following years was fixed, March 6, 1843, at twenty cents on $100, payable in specie or auditor's warrants, and nothing else. The interest on the public debt was suspended for 1842 and 1843. The Bank of the State was put in liquidation January 24, 1843. It was ordered to pay out its specie as its debts were called for, pro rata, on a computation of its debts; certificates receivable for debts to the bank to be issued for the residue. The Court might declare the charter forfeited and appoint three receivers, four years being allowed for winding up. Notes to the bank were to be renewed on the payment of one-fifth; the property of the bank was not to be sold for less than two-thirds of the valuation made by three appraisers. The specie in the Bank of the State was exempted from execution. This act provided for separating bank and State. Joint resolutions were passed February 21, 1843: "Whereas, under our former policy, public works were commenced and prosecuted, and vast and extravagant schemes of internal improvements adopted, utterly disproportioned to our resources and means," and debts have been contracted beyond ability to pay, and the will to pay is doubted, therefore they recognize the obligation to fulfill promises and detest repudiation. "Seduced by an inflated currency and the consequent apparent prosperity," these debts were contracted; but contraction has crippled resources. Inflation "had its origin and aliment in the over-action of the credit system," both in England and here. Patience and labor are needed, with time, to pay.
The charter of the Bank of Illinois was repealed and it was put in liquidation March 5, 1843. It was ordered that the last asset to be realized should be the debt of the State to the bank.
The charter of the city and Bank of Cairo, of 1818, was repealed March 4, 1843, and commissioners were appointed tO wind it up, paying out its specie pro rata on its debt, and giving certificates for the residue. The commissioners were also to inquire whether the officers had broken any laws in their management.
After the failure of the Bank of Illinois a few of its directors secretly borrowed of it $100,000 in specie with which to purchase bonds, which might be delivered to the State in discharge of the debt to it. The bonds were worth thirty cents on the dollar. Other directors discharged their stock notes with State bonds. The Governor hesitated to receive these bonds, but fearing that, if he refused, the State would get nothing, he made a conditional contract to receive them if the Legislature should approve. The first action of the Legislature in 1844 was that "it would be better to lose the whole amount which the bank owed the State than countenance in the least degree the villainy of its officers;" but it afterwards allowed the bonds to be taken at 48 cents on $1.[1]
- ↑ Ford, 399.
