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for the repudiation of large parts of their debt. The resolution stated "We regard the slightest breach of plighted faith, public or private, as an evidence of a want of that moral principle upon which all obligations depend: That when any state in this Union refuses to recognize her great seal as the sufficient evidence of her obligation she will have forfeit her station in the sisterhood of States, and will no longer be worthy of their respect and confidence." The governor was directed to forward copies of the apology to each of the states. The result of the repudiation ruined
Indiana's credit for nearly twenty years.
333:, Calvin Fletcher and John Durmont. Pennington believed the canals were a waste of money and would soon be made obsolete by the railroads. Whitcomb outright rejected the idea of spending such a large sum of money, saying it would be impossible to pay back. The bill's passage met with statewide celebrations. Citizens saw it as a critical modernization of the state. Governor Noble considered the act his crowning achievement. Noble was concerned however that the assembly had not passed the 50% tax increase he had told them was necessary to take care of the debt the state was expecting to take.
254:, it was believed that the projects would be very profitable for the state and that their revenue would quickly pay back the loans, and provide the funds to complete the projects. The state's regular revenue, primarily from property taxes, were at that time less than $ 65,000 annually, and the amount of the debt was greater than the tax receipts of the entire history of the state. The sum borrowed was equal to one-sixth of all the wealth in the state. Despite the scale of the project, the representatives from the counties on the Ohio River still largely opposed the project.
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396:, caused primarily by western land speculation, left the state in dire straits financially. Income shrank, and in 1838 the state's taxation revenue was $ 45,000, but the interest on the state's growing debt was $ 193,350. Governor Wallace made the startling report to the General Assembly who began to wrangle over what action should be taken. Provisions were made to make debt payments with more borrowed money, in the hope that the projects could be finished before the state's credit was maxed out.
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Butler arrived from New York to negotiate on behalf of the state's creditors in 1846. The proposed deal was for the state to trade majority ownership of the Wabash and Erie for another 50% reduction in the debt, leaving the state owing $ 4.5 million and ending the financial crisis. Although the debt was significantly reduced, payment on it was still over half of the state budget, but the growing population of the state was quickly raising tax revenues.
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293:. The canals received the majority of the funds from the bill, because it was believed that the canals could be constructed from local materials which would help boost the local economy. A later investigation showed that parts of the state were entirely unsuited for the canals, and the project were doomed from the start. However, the state had not conducted surveys of the land before passing the bill to ensure their suitability.
423:, president of the Bank of Indiana, was sent by Governor Bigger to negotiate with the state's London creditors in a hope to avoid total bankruptcy in 1841. He negotiated the transfer of all of the projects, except the Wabash and Erie, to the creditors in exchange for a 50% reduction in the debt they held, lowering the total state debt to $ 9 million.
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the state. As a compromise, additional projects were agreed on so that all the cities in the state would be connected by either canal, railroad, or turnpike. To appease the majority of the population that lived along the Ohio River, the bill called for the
Vincennes Trace to be paved, making it usable year round.
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raising the originally projected labor costs. This posed a problem for the government, because they did not provide enough funds to complete each of the projects at the rates being paid, instead expecting them to start making money on their own, and funding their own completion. There was a brief by
Governor
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Lafayette. The
Whitewater Valley was the most populous part of the state, and to win over their representatives, funding was added for a canal to be built in their valley. To also get support from the central part of the state, and to connect Indianapolis to the new canals, a Central Canal was also funded.
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In 2008, all that remains of the Wabash and Erie is a restored fifteen-mile (24 km) stretch and a few ponds. Much of the canal lands were sold to railroad companies and were excellent land for constructing rail lines. The turnpikes and railroads turned out to be the most successful projects, and
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The
Whitewater Canal had about one fifth of the line completed, and although it was not finished, the existing portion remained in use until 1847 when a portion of the canal collapsed and rendered the northern section unusable. The southern section continued in use until 1865 when it was closed after
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within a year. The 1841 budget had over $ 500,000 in debt payments, plus regular spending, but revenues that year were only $ 72,000. The state was unofficially bankrupt. The proponents of the system had promised their constituents that taxes would not need to be increased, and that once the projects
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onto the
Indiana table land, so the project could not be finished. Had the project instead started in Indianapolis, it would have been able to earn income on freight and passengers along the relatively flat central Indiana portion, and been able to fund itself to construct the grade into Madison. The
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Although the government lost millions, there were significant benefits for the areas of the state where the projects succeeded. On average, land value in the state rose 400%, and the cost of shipping goods for farmers was drastically decreased, and increasing the profit on their goods. The investors
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The Whigs suffered from the failure of the project and
Democrat James Whitcomb, an opponent of the projects from the beginning, was elected governor. A Democratic majority had already came to power in the statehouse the year before. With their support he began negotiations to end the crisis. Charles
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In hope to increase revenues, the state reformed property tax assessment to be based on property values, as opposed to a set amount per acre. The modest reform boosted revenues by 25% in the following year, but was still nowhere near enough to cover the gap. Governor
Wallace announced to the General
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The Wabash and Erie Canal was the most successful of the canal projects, and was profitable early on, but never to the extent expected. The
Central Canal was a major failure, with only a few miles of canal dug near Indianapolis before the project was out of money. The Whitewater Canal was proceeding
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to dramatically expand the scope of the internal improvements. At first, members only intended to continue funding the Wabash and Erie, but many representatives opposed the spending because it would have little benefit for their own constituents as the canal bypassed most of the major settlements in
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repurchased by the state thirty years later. Its tolls covered its operating costs, but it was never profitable. The
Central Canal was abandoned as a total loss, the expense to finish it was considered to be too great for any possible profitability, and the area was found to be unsuited for canals.
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Although the debt decrease lessened the strain on the state, the debt payment was still far more than the state could afford. On January 13, 1845, the General Assembly passed a resolution issuing an official apology to the state's creditors and the state and federal governments of the United States
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losing traffic to a railroad built adjacent to the canal. The Wabash and Erie was finally completed in 1848 and continued to operate for thirty-two years, but the high-rise portions of the canal in the central part of the state were found to be high maintenance and the frequent victim of muskrats.
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The creditors had taken the public works expecting that they could be quickly completed and become profitable, but were disappointed to discover that not to be the case for all the projects. The Vincennes Trace was renamed the Paoli Pike, and operated for several years as a private toll road until
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objected to canals as a total waste of money, and insisted on the creation of railroads instead; he threatened a veto of any canal project. Because the state refused to help fund the project, it had to rely on the federal funds and the income the commission collected from selling lands adjacent to
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Many in the Indiana General Assembly considered the grant insufficient, and requested the grant be expanded to a one-mile (1.6 km) wide strip, but Congress did not act. Most of the population at the time lived along the Ohio River, and the canal would be little benefit to them, but they would
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proposed the creation of county boards to set property values. The result of the new system led to as much as a 400% tax increase in some parts of the state. Citizens decried the draconian tax hikes, and many refused to pay. The General Assembly was forced to repeal the system the following year.
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From the early onset it was noted that the different projects did not work together, but instead competed with each other for funds and land. By trying to construct all the project at once, there was also a labor shortage and the projects began competing with each other for workers, significantly
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entered Indiana. Funded by the federal government, the project laid a large highway across the central part of the state. By 1834 the opposition to the canal had disappeared and the project was being constructed at little cost to the state and was proving to be profitable, so the General Assembly
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The cost of upkeep, and competition from the railroad eventually led to the collapse of the canal and its company in the 1870. The rail line from Madison to Indianapolis was also abandoned by the creditors and sold to a group entrepreneurs, who were able to raise funds to complete the line. The
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The gamble proved to be a bad decision and by 1839 there was no money left for the projects and work was halted. Work only continued on the Wabash and Erie where workers were paid with stock in the canal, and not cash, and supplies were purchased using the federal funding. At that time 140 miles
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A Lafayette Turnpike was also approved, and to gain support of the representatives from the population centers in the far northern part of the state, the Michigan Road was also paved. To appease the railroad faction, two lines were approved connecting Lawrenceburg to Indianapolis, and Madison to
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On March 2, 1827, Congress made a new offer to the state, granting a half mile wide strip and to assist in the funding of construction. This time the General Assembly accepted the offer, passing legislation on January 5, 1828, to create a canal commission to lay out the path of the canal, but no
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The act is considered one of the greatest debacles in the history of Indiana. Public blame was placed on the Whig party who had been in control of the General Assembly and the governorship during the passage of the act and the subsequent bankruptcy, though only nine members of both houses voted
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The 1820s were spent repairing the state's finances and paying down the debt. A request was sent to Congress asking for the federal government to assist the young state in improving the transportation situation. Canals were at that time being constructed in several of the eastern states and
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System by building canals through Indiana. With their support, on May 26, 1824, Congress granted Indiana a stretch of land 320 feet (98 m) wide on any route a commission would map out, but the state had to promise to begin construction of a canal on the land within twelve years.
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creditors in exchange for a 50% reduction in debt. Again in 1846, the last project was handed over for another 50% reduction in the debt. Of the eight projects in the measure, none were completed by the state and only two were finished by the creditors who took them over.
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to attempt to force the commission to only build one route at a time to conserve funds and avoid what was becoming seen as an impending financial disaster, but the different factions in the General Assembly could not agree on which line should be completed first.
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state funding was approved. The commission laid out a short six-mile (9.7 km) canal that would become the starting point of the Wabash and Erie Canal. Funding immediately became an issue in the legislature where the lowest cost estimate was $ 991,000.
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against the bill. After the scope of the financial disaster became apparent to the state, the Whig party gradually began to collapse in Indiana, leading to a period of Democratic control of the General Assembly that lasted until the middle of the
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The bill created a Board of Improvement and a Board of Funds Commissioners to oversee the projects. Two thirds of the funds were spent on the canals, with the Central Canal getting the most money. Jesse L. Williams was named chief engineer.
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The rail line from Madison to Indianapolis was built much more cheaply than the canals; $ 1.3 million was appropriated. It was however, considerably over budget due to the increased costs of having to build a grade out of the low lying
221:. Bonds were issued through the bank who then sold them to creditors in London to fund the early stages of the project, but it soon became apparent that it would take far more funds than could be obtained by the bank bonds alone.
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in the Bank of Indiana also made substantial profits, and the investments served as the start of a modern economy for the state. The act is often considered the greatest legislative debacle in the history of the state.
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who burrowed through the walls, causing hundreds of thousands of dollars in damages for which there was no money to repair. At the height of the operation, over ten thousand workers were employed on the canal projects.
400:(230 km) of canal had been built for $ 8 million, and $ 1.5 million spent on 70 miles (110 km) of railroad and turnpike. The state was left with a $ 15 million debt, and only a trickle of tax revenue.
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Over $ 2 million had already been borrowed, and the new bill proposed borrowing another $ 10 million. This was added to the $ 3 million already procured through land sales. Seeing the success of canals in the
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Despite the dire immediate effects on the state's finances, the project ultimately fed a 400% increase in state land values, and provided numerous other direct and indirect benefits to Indiana. The
312:. Most of the money from the project was gathered by mortgaging nine million acres (36,000 km) of state owned land through agents of the Bank of Indiana to creditors in London and New York.
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trail that crossed the southern part of the state. After statehood several plans had been made to improve the transportation situation, like the creation of small local roads, the larger
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were finished taxes could perhaps be abolished because tolls would pay all the state's needs. Because of this, no provisions had been made to pay interest on the massive debt.
136:, which was partially funded by the act, became the longest canal in North America and remained in operation until rendered obsolete by the railroads in the 1880s.
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When the state of Indiana was formed in 1816, it was still a virtual wilderness, and settlement was limited to the southern periphery where easy access to the
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Again the southern part of the state objected, instead favoring a canal in the Whitewater Valley, then the most populated part of the state. Governor
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bear the burden of paying for it, so their representatives opposed the idea altogether. They successfully barred the creation of a canal.
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at a cost of $ 1,150,000, with another 75 miles (121 km) still requiring pavement when the project ran out of money.
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granted funds to the project to connect it to Lafayette. To fund the project, and in response to the closure of the
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the proposed canal route. Slowly enough funds were collected and construction began on the route in 1831.
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was instantly profitable and went on to expand and connect to several other cities.
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93:. It added $ 10 million to spending and funded several projects, including
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The bill also funded, but to a much lesser degree, a railroad connecting
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was a major supporter of the bill and it passed by the overwhelmingly
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For canals, the project called for the creation of a canal from
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some parts of them have remained in use until modern times.
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1963 Indiana State Fairgrounds Coliseum gas explosion
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Biographical and Historical Sketches of Early Indiana
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975:
970:
965:
959:
957:
951:
950:
940:
939:
932:
925:
917:
911:
910:
904:
891:
885:
872:
863:
842:
831:
818:
815:
813:
812:
803:
789:
780:
771:
769:Eseray, p. 379
762:
760:Esarey, p. 359
753:
741:
732:
730:Eseray, p. 367
723:
705:
693:
691:Woollen, p. 82
684:
675:
666:
652:
638:
629:
620:
618:Eseray, p. 358
611:
609:Eseray, p. 357
599:
590:
581:
572:
563:
561:Kleber, p. 203
554:
544:
542:
539:
538:
537:
526:
525:
520:
515:
510:
505:
500:
494:
493:
490:Indiana portal
477:
474:
445:James Whitcomb
436:
433:
342:
339:
331:James Whitcomb
226:
223:
141:
138:
79:and signed by
64:
63:
60:
56:
55:
47:
43:
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33:
32:
29:
21:
20:
9:
6:
4:
3:
2:
1633:
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1555:
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1532:
1530:
1529:Hartford City
1527:
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1522:
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1503:
1497:
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1413:Flood of 2008
1411:
1410:
1408:
1406:
1402:
1396:
1393:
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1388:
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1385:Flood of 1937
1383:
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1356:
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1333:
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1330:Elwood Haynes
1328:
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1128:
1126:
1125:Buffalo Trace
1123:
1121:
1118:
1117:
1115:
1113:
1109:
1103:
1100:
1098:
1095:
1093:
1090:
1088:
1085:
1083:
1082:Clark's Grant
1080:
1078:
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1073:
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1065:
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1062:Pontiac's War
1060:
1058:
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979:
978:Mississippian
976:
974:
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960:
958:
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955:Early history
952:
948:
945:
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926:
924:
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918:
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905:0-405-06896-4
901:
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886:0-8131-0815-2
882:
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853:
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579:Eseray p. 353
576:
567:
558:
549:
545:
536:
533:
532:
531:
530:
524:
521:
519:
518:National Road
516:
514:
513:Michigan Road
511:
509:
506:
504:
501:
499:
496:
495:
491:
480:
473:
469:
465:
463:
457:
453:
446:
441:
432:
428:
424:
422:
418:
415:
414:Samuel Bigger
410:
407:
401:
397:
395:
394:Panic of 1837
390:
388:
384:
379:
373:
370:
364:
361:
360:David Wallace
352:
347:
338:
334:
332:
328:
324:
320:
317:
313:
311:
310:Michigan Road
307:
306:Buffalo Trace
303:
299:
294:
292:
288:
285:known as the
284:
280:
276:
272:
269:, called the
268:
264:
260:
255:
253:
247:
243:
240:
231:
222:
220:
216:
211:
210:National Road
206:
203:
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194:
190:
187:
183:
179:
173:
171:
170:Panic of 1819
167:
163:
159:
158:Michigan Road
155:
151:
150:Buffalo Trace
147:
137:
135:
130:
128:
122:
119:
114:
112:
108:
107:Panic of 1837
104:
101:, and later,
100:
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57:
54:
51:
48:
44:
41:
38:
34:
27:
22:
17:
1579:
1564:
1544:Lake Wawasee
1534:Indianapolis
1370:World War II
1355:Indiana Klan
1251:
1209:
1202:
1057:British Rule
895:
876:
867:
856:. Retrieved
851:
836:
825:
810:Dunn, p. 418
806:
801:Dunn, p. 410
783:
778:Dunn, p. 415
774:
765:
756:
751:Dunn, p. 426
739:Dunn, p. 399
735:
726:
721:Shaw, p. 139
703:Shaw, p. 138
687:
682:Dunn, p. 408
678:
673:Shaw, p. 137
669:
632:
627:Shaw, p. 135
623:
614:
597:Dunn, p. 388
593:
584:
575:
566:
557:
548:
528:
527:
470:
466:
458:
454:
450:
429:
425:
421:James Lanier
419:
411:
402:
398:
391:
374:
365:
356:
335:
314:
295:
283:Lawrenceburg
275:Wabash River
259:Indianapolis
256:
248:
244:
236:
208:In 1829 the
207:
202:James B. Ray
199:
195:
191:
182:Pennsylvania
174:
143:
131:
123:
115:
72:
67:
1554:Terre Haute
1436:Auto racing
1340:World War I
1160:War of 1812
1042:Fort Miamis
998:French Rule
983:Beaver Wars
588:Eseray, 354
378:Ohio Valley
302:Shelbyville
291:Terre Haute
1595:Categories
1565:See also:
1549:South Bend
1519:Fort Wayne
1514:Evansville
1405:Since 2000
1325:White Caps
1277:Golden Age
1102:Petit Fort
944:History of
858:2008-10-11
383:New Albany
319:Noah Noble
267:Evansville
263:Ohio River
146:Ohio River
140:Background
111:bankruptcy
87:Noah Noble
53:Noah Noble
40:Noah Noble
1539:Lafayette
1471:Governors
1461:Ghostlore
1456:Elections
1446:Disasters
1317:1900–1999
1287:Reno Gang
1272:Civil War
1198:Statehood
1190:1817–1899
1112:1800–1816
1047:Ouiatenon
1037:Vincennes
1029:1700–1799
443:Governor
435:Aftermath
406:insolvent
341:Enactment
103:railroads
95:turnpikes
1428:By topic
1292:Gas boom
973:Hopewell
849:(1909).
529:General:
476:See also
369:muskrats
316:Governor
178:New York
84:Governor
50:Governor
37:Governor
1496:Slavery
1451:Economy
1441:Battles
1170:Harmony
947:Indiana
817:Sources
298:Madison
70:Indiana
1481:People
963:Clovis
902:
883:
118:London
99:canals
59:Signed
968:Adena
541:Notes
387:Paoli
154:bison
1573:and
1524:Gary
900:ISBN
881:ISBN
392:The
323:Whig
279:Peru
180:and
81:Whig
68:The
62:1836
385:to
277:in
265:at
261:to
1597::
1569:,
792:^
744:^
708:^
696:^
655:^
641:^
602:^
329:,
129:.
97:,
936:e
929:t
922:v
908:.
889:.
861:.
353:.
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.
