south of it? What public acts recognized this as the line? What was the occasion for the controversy between Ohio and Michigan? State what was done by Michigan in relation to the matter. How was the difficulty finally settled?

CHAPTER VI.

MICHIGAN AS A STATE -BANKING

INTERNAL IMPROVEMENTS.

In the spring of 1835, a convention called for that purpose framed a constitution for a State Government, and application was made to Congress for the admission of the Territory as a State. In June, 1836, an act was passed admitting her upon condition that she should accept the boundary line as claimed by Ohio. On the 15th of December the convention convened to decide the question, voted to accept the proposition. January 26th, 1837, Congress passed an act recognizing Michigan as a State of the Union.

The population of the State in 1837, was estimated at two hundred thousand; and its territory embraced about forty thousand square miles, which was divided into thirty-six counties.

In 1837, the Legislature made provision for free banking, and in less than eight months, forty-five banks were established. With the fifteen banks that had been previously chartered, the banking capital of the State amounted to $10,115,000. With the immense amount of currency thus issued, money was very cheap, and speculation ran high. Of course the inflation soon collapsed, and thousands who had imagined themselves rich, found their currency almost worthless.

In 1837, the Legislature established a Board of Commis

sioners on Internal Improvement, with authority to construct three railroads across the State: The Southern from Monroe to New Buffalo; the Central from Detroit to St. Joseph; and the Northern from Port Huron to Grand Haven. Also, three canals: The St. Mary's Ship canal; the Clinton and Kalamazoo canal, to extend from Mt. Clemens to the mouth of the Kalamazoo river; and the Saginaw or Northern canal, to extend from Bad river to Maple river, so as to secure water communication between Saginaw and Grand Haven. The estimated cost of these improvements was over $10,000,000. To raise this sum, it was provided that the surplus revenue of the State, and five per cent. of the proceeds from the sale of lands belonging to the State, should be appropriated, and to effect a loan not to exceed $5,000,000, payable in twenty-five years, with interest at six per cent. per annum.

The bonds were sold, and a large proportion of the money realized was expended on the proposed works, but it was soon found that the interests of the State required that these works should be disposed of, and be carried on by private enterprise. The Central and Southern roads, on which most of the money had been expended, were sold by the State in 1846. The Clinton and Kalamazoo, and the Saginaw or Northern canals were abandoned, and the Northern road upon which some work had been done was converted into a wagon road.

J. E. Scripps, Esq., of Detroit, has prepared and published in the "Michigan State Gazetteer," a brief outline history of Michigan, in which is found some very valuable information concerning the Internal Improvement scheme, an extract from which is copied in a note to this chapter.

Questions-In what year was the State Constitution adopted? State what action was taken by Congress in regard to the admission of Michigan. What was the population of the State in 1837? Square

miles of territory? What is said of banking and currency? What action was taken by the Legislature in 1837, with reference to internal improvements? What was the estimated cost of these proposed improvements? What provision was made for meeting these expenses? What disposition did the State make of these works?

NOTE." The first step of the board was to purchase the Detroit & St. Joseph R. R., no part of which was in operation, though considerable work had been done between Detroit and Ypsilanti. To this place it was opened for traffic February 3, 1838. Surveys on all the other works were in 1837 completed, and 30 miles of the Southern road put under contract. The total expenditures this year were $415,618. "Meanwhile the Governor, who had been empowered by the Legislature to negotiate the $5,000,000 loan, had closed a contract with the Morris Canal and Banking company of New Jersey, by which they took the entire amount of the bonds and agreed to pay for the same, about one quarter down and the balance in quarterly instalments of $250,000 each, the bonds to be delivered at once. Three millions of these bonds they immediately turned over to the Bank of the United States, by which they were hypothecated largely in Europe. Great complaint seems to have been made at home of the Governor's recklessness in thus hastily closing so large a transaction, and in his parting with the bonds without receiving proper security for the payment. Nor was the complaint without just grounds, for in 1840, when there was still $2,158,937 due from the purchasers, it came to light that both banks were insolvent For some time the financial condition of the State was most critical, but in 1843 the Legislature passed an act authorizing the issue of new bonds for the amount that had been actually received by the State, the same to be delivered upon the surrender of the entire amount of outstanding bonds, or pro rata for any portion that might be surrendered. In this way the entire $5,000,000, except about $56,000, was gradually retired, and the bonds given in lieu thereof were duly paid in 1863.

"In 1838, $530,496 was expended on the Internal Improvement works, and considerable surveying and clearing was done, besides the completion of the Central railroad to Ypsilanti. In 1839 the expenditure was $693,883. The Central road was opened to Ann Arbor and the Southern to Petersburgh. An attempt to com mence work on the Sault canal was defeated by a collision between the contractors and the United States officials at Fort Brady.

"In 1840 the Governor in his message to the Legislature deplored the Internal Improvement scheme, and recommended the suspension of further work, except where necessary to complete and utilize what had already been commenced. This year $463,816 was expended, the Central road being brought to within four miles of Dexter, the Southern opened to Adrian, and a heavy amount of work being done upon the Clinton & Kalamazoo canal between Mt. Clemens and Rochester. In 1841 there was expended $419,139. The Central was opened to Dexter, July 4, and was immediately pushed on to Jackson. The Southern had not got beyond Adrian. The Northern railroad, upon which considerable clearing and grading had been done, was this year ordered by the Legislature to be completed as a wagon road.

"January 1, 1842, the Central was opened to Jackson. The Southern was during this year made ready for the iron as far as Hillsdale, but the credit of the State

was not at that time good enough to enable it to buy iron on credit, and cash it had none. Sixteen miles of the Clinton & Kalamazoo canal were completed at a cost of $338,330, but it had not yet been brought into use. The Legislature in January, 1842, by resolution forbade the letting of any further contracts on the public works, but provision was made for extending the Central and Southern railroads. The year 1843 saw the latter opened to Hillsdale. The expenditures in 1842 were $170,545. and in 1843 $160,416. In 1844 the Central road was opened to Marshall and graded to Kalamazoo. The Southern was this year re-built between Monroe and Adrian, the superstructure having rotted out, and the Palmyra & Jacksonburg road was purchased by the State for $22,000. This latter road had been prepared for the iron from Palmyra to Tecumseh, but had been allowed to go to decay without ever being put in full operation. The Central railroad was now earning from year to year a moderate profit over expenses, the Southern road a very trifling amount, if anything, and none of the other public works were at all productive. In 1845 the Central was finished to Battle Creek and some progress made with the reconstruction of the Tecumseh branch of the Southern. The expensiveness of keeping strap-railroads in repair had by this time been found to be a serious drawback to the productiveness of railroad property, and the commissioners in their report for this year suggested the importance of immediately reconstructing both roads with Trail, and recommended as the only feasible method of securing the accomplishment of this enterprise, the sale of the roads to some responsible company. In this year the navigation of the Clinton & Kalamazoo canal was inaugurated by a small boat of 20 tons burden.

"On February 1, 1846, the Central road was completed to Kalamazoo; on the 23d of September its sale to the Michigan Central Railroad company was perfected, the purchase price being $2,000,000 and the payments being made in bonds and other State indebtedness. One month later the sale of the Southern road to the Michigan Southern Railroad company was consummated by the payment of the first instalment of the purchase price, which had been fixed at $500,000, payable also in State indebtedness within 10 years. By these sales the State debt was greatly diminished and the two roads placed in the hands of strong and enterprising companies, by whom they were speedily completed, and under whom they have since achieved reputations for admirable management second to those of no other railroads in the country.

"The canal still remained to the State. This was in 1846 put in navigable order between Mt. Clemens and Utica, but only $43 was received in tolls. The following year further repairs were made and an ineffectual effort made to lease the work. From this time it appears to have been wholly neglected by the State. Between Rochester and Utica it has since been utilized for water-power purposes, but below Utica it has been allowed to go wholly to decay."

The total land surface of Michigan comprises an area of 56,243 square miles, while the area of its waters is computed at 36,324 square miles.

From the time when the State sold its Public Works, to the present, it has steadily progressed in wealth and population. The census of 1870 showed a population of 1,184,059, and we now have a little over 3,000 miles of railroad within the State, and a lake coast of nearly 1,500 miles.

The surface of the Upper Peninsula is rugged and hilly. It has, nevertheless, much valuable pine timber, and is, perhaps, the richest mineral region in the world, especially in copper and iron.

The upper portion of the Lower Peninsula is still covered with dense forests of pine and hard wood, though the manufacture of lumber, as a branch of industry, has for a number of years been extensively prosecuted. The soil of the Lower Peninsula is varied, and well adapted to the raising of all kinds of products that may be grown in this latitude.

In the Saginaw valley, salt is manufactured in abundance. We also have, in the State, rich mines of coal, iron, copper,

and silver.

Questions - How many square miles of land has Michigan? The area of its waters? What was its population in 1870? How many miles of railroad has it? The extent of its lake coast? What is said of the Upper Peninsula? Of the Lower Peninsula ?