250 - THIS CLEVELAND OF OURS they would head out boldly into the lake from the beach at the river mouth until they struck the submerged bar paralleling the shore, then follow it until they were past the mouth, turn in to the shore again and continue their journey. An early Clevelander has recorded that the Cuyahoga bar sometimes made so complete a barrier across the river that it could be crossed almost dry-shod by pedestrians wearing low shoes. The village got along well enough in its infancy, despite its dependence on the traffic-bearing river. Little warehouses and private docks sprang up along its bank. The flats were the heart of the community's business life. But the enterprising men who owned those warehouses and docks yearned for untrammeled union with the lake and the outer world. Cleveland's growth was throttled by that sand bar. Thus in 1816 a group of leading citizens, all interested in shipping, as shipbuilders, owners or merchants, attempted a solution. It was mostly the same group which, eight years before, had undertaken to raise by national lottery, money to clear the Cuyahoga and Tuscarawas rivers for batteau traffic to the Ohio River. Now they decided that if they could not bring the lake to their wharves in the inner harbor, they would go to the lake. They incorporated the Cleveland Pier Company, to erect on the outer shore a pier for the accommodation of lake vessels. Accordingly such a structure was built, chiefly through the efforts of Alfred Kelley, who afterward labored so heroically for the Ohio Canal. But it was a flimsy structure, built without piles, mere crib work filled with stone, and in one season the waves and ice demolished it. After that the Federal government was appealed to for help. In 1825 an appropriation of $5,000 was obtained, and another pier was built at the mouth of the river. But this work likewise was so damaged in one winter that it was almost useless the next season. A sandbar formed again at the river mouth. Thereupon government engineers tackled the problem in earnest, and devised a plan which has been used since for all the other Lake Erie rivers with similar characteristics. It was to change the river mouth into an THE CANAL ERA - 251 artificial channel and help the river clear its way with its own current. This Cuyahoga—which means "crooked"—was a more curious spectacle then than it is now. It had meandered extensively over the lower valley, and one of its old channels remained as a vermiform appendix extending uselessly toward the west from the living stream, ending in a blocked outlet near the eastern end of the present Edgewater Park. It formed a long, narrow and mosquito-infested pool which the settlers called "Sunfish Pond," the most stagnant part of the general waste of marsh land which composed the lower flats. That old river bed, dredged and docked, is now a useful auxiliary harbor for freighters and a center of creative wealth, also infinitely more healthful than it was in those early malarial days, when it drove hundreds of Clevelanders to Newburgh to escape the "shaking fever." Between the vermiform appendix and the lake was a tall knoll, something like an Indian mound, but apparently a natural elevation, formed by the stream cutting first on one side and then on the other. Just east of the knoll was the actual river mouth, entering the lake at a sharp westerly angle with the shore. To the right of the mouth was a long sand spit. Captain Q. W. Maurice, government engineer, immortalized himself by proposing to close the mouth of the existing channel, just as the river itself had closed the mouth of its old channel, and turn the stream straight out into the lake in a line projected from the northerly curve of its last kink. This meant building a dam across the channel near the mouth, and cutting through the sand spit. It meant, further, building two parallel piers as artificial banks for the new channel, about 200 feet apart, and continuing them out into deep water. The theory was that with the river debouching into the lake through such an exit, where its speed would not be retarded, it would carry its sand and silt with it instead of depositing them to form impeding bars, and thus keep its channel clean. Another appropriation was obtained from the govern- 252 - THIS CLEVELAND OF OURS ment, this time for $10,000. The dam and one pier were built. The stream was turned into its new course at the time of the spring rise. And the theory worked. The job was completed so that vessels of six to eight feet draught could pass through. By 1833 there was a depth of eleven feet, maintained by nature with a little human dredging from time to time. Big schooners entered the river. Slips were built for them at River Street, below St. Clair. A beacon light was placed on the end of the west pier, supplementing the tall brick lighthouse that had been erected in 1829 on the hill, at Main and Water streets, standing 157 feet above the water, its white light visible for twenty-one miles. Cleveland was now in reality a Great Lakes port as well as the principal terminus of the Ohio Canal. As a local publication observed at the time : "Few places in the western country are so advantageously situated for commerce, or boast greater population and business. Cleveland has a position of extraordinary advantage, and it only requires a moderate capital and the usual enterprise of American character to advance its destiny to an equality with the most flourishing cities of the west." Even government engineers, however, had not yet conquered the lake. Those piers, like predecessors, were not pinned to bed-clay by stout piling. They were only timber frames resting on the lake bottom, weighted with stone. The waves battered them and the currents undermined them. They needed frequent repairs. In ten years they were in bad condition. One of them had to be rebuilt entirely. In the panic year of 1837 the town fell back upon the old river bed, reopening it to the lake, partly from necessity, partly to provide employment for idle men. The need of an outer harbor was realized, and the city went so far as to make a survey in order to plan a breakwater. Seven years later the records tell of a big protest meeting in the courthouse which condemned the Federal government for its failure to heed the needs of the growing port. As year after year passed, the citizens became convinced that if they wanted anything done they would have to do it themselves. And THE CANAL ERA - 253 inasmuch as they could not afford to build the desired outer harbor, they proceeded more energetically with the development of the inner harbor. Private enterprise had long been engaged in this activity —too much engaged in many cases. Private docks have a way of encroaching on a public stream. Owners build out farther and farther, until they are checked by public authority and permanent shore lines are fixed and enforced. This evil grows with traffic and prosperity. Moreover, channels have a way of filling up. The city awoke in 1854 to the discovery that the wharves and boats lining the river banks for some distance from its mouth so narrowed the channel that vessels could scarcely get through, and from the filling of the river bed and growth of outer sand bars those of deepest draft were always running aground. The artificial channel at the river mouth had to be dredged yearly. The inner harbor was enlarged somewhat by dredging the old river bed, and through the efforts of public-spirited vessel owners and the Board of Trade there was occasional dredging of the main channel and the river mouth. But increasing congestion and lack of funds were plainly choking the growth of the thriving young city, losing for it much of its natural traffic, especially in grain. The Federal government was occupied more and more with the twin problems of slavery and preservation of the Union. Congress lost what small interest it had formerly shown in the economic fortunes of the little town on the distant Cuyahoga. During the Civil war all internal improvements not demanded by military necessity were naturally postponed. Thus it was not until the return of peace that this vital need could be faced. A very big job had to be done. The inner harbor was outgrown. A greater outer harbor of refuge had to be built, to shelter the vast shipping that was developing and to protect and improve the city's greatest asset—its waterfront. Cleveland, formerly facing on the river, now began to face on the lake. The magnificent breakwater behind which it could rest secure was still far in the future. CHAPTER IV LAND RUSH AND BOOM The immediate result of canalization was a great land rush. The way was opened to the Middle West. Northern Ohio gained the same advantage that hitherto had been enjoyed by Southern Ohio. The latter region had filled up first because the middle Atlantic states had access by way of the Ohio River. The Erie Canal, finished in 1825 and in full operation the following year, gave New England and New York access by way of Lake Erie, and all three Ohio canals siphoned settlers from the more southern pioneering routes to the north and northwest. The Welland Canal, opened only two years later, offered another route. From all these inlets a great stream of immigrants poured into the Great Lakes region and the Mississippi Valley. The life of the lake ports was quickened. They were receiving and distributing points for the immigration. In the process, naturally many of the newcomers settled down in Cleveland and other villages along the southern shore of Lake Erie. The demand for passage bred a lake fleet. People came by sailing vessel and steamship. The latter type of craft, novel and crude but efficient even then, handled most of the traffic. In 1820 the fare from Buffalo to Cleveland had been ten dollars, with few passengers. By 1836 it was reduced to five dollars, and only half that much for steerage, with the boats crowded on every westward trip. Often so many settlers landed that the towns could not shelter them. The state canals helped to distribute these immigrants, carrying crowds in both directions. Along with the freight boats, of sixty to eighty tons burden, there were passenger packets carrying forty to sixty persons, connecting at all the principal towns with other canal boats, lake boats or stage - 254 - THE CANAL ERA - 255 coaches. The packets, towed by three horses, driven tandem by a boy on the rear horse, were considered comfortable and even luxurious. They made three or four miles an hour. The celebrated packet line between Cleveland and Portsmouth prided itself on carrying passengers from Lake Erie to the Ohio River in eighty hours, with a boat leaving in each direction every day. It was halcyon travel; there were no storms on the canal. Canal packets were not only popular but fashionable. When the rough scars of construction healed there was lovely scenery for those who liked that sort of thing. And the speed, while slow, was steady. There was excitement, of a sedate sort, at junctions and terminals and in passing through locks. One could fish while traveling. Such transportation must have been genuinely restful. What a rest cure it would have made for the present generation ! This rush of settlers for cheap land and fresh opportunity naturally meant population for Cleveland. In the first five years after the canal era began, from 1825 to 1830, the city more than doubled in numbers. By 1834, when the Ohio canal was completed, it had grown to more than three thousand. The next year it was 5,080, having more than doubled in two years. A gain of nine hundred per cent in ten years is good. That record has not been matched since. Similar growth came to other canal cities, and to the thirty canal counties, which gained a lead they have never lost. The whole state shared in this welcome multiplication. Villages sprang up everywhere and grew into cities. The population of Ohio in 1820 had been 581,000. By 1830 it was 938,000; by 1840, 1,519,000; by 1850, almost 2,000,000. Meanwhile population had been flowing steadily westward to the Mississippi and beyond. The Louisiana Purchase in 1803 had opened a vast new territory and provided a lure. The Lewis and Clark expedition sent to the "Oregon country" by President Jefferson the following year added romance to economic pull. The trek checked by the War of 1812 had soon been resumed with new volume. Canals plus steamships gave new easement to the population pressure westward. The outposts of the 4,000,000 Americans of 1790, 256 - THIS CLEVELAND OF OURS grown to 13,000,000 in 1830, were already approaching the Rockies, western barrier of the acreage bought from Napoleon. Robert Fulton's steamboat had quickly solved an old transportation problem of the interior and its successors were plying the Great Lakes, the Mississippi and their larger tributaries. The settled area had grown from 240,000 square miles in 1790 to 633,000 square miles in 1830, with an average of twenty persons to the square mile. Nearly all of this migration consisted of "home folks," Americans differing somewhat in ancestry but molded by centuries to similarity of blood, feature, ideals and institutions. They were as well fitted to build a new America in the West as their ancestors had been to build a New England on the eastern seaboard. Population, given energy and natural resources, makes prosperity. It was natural that this rapid increase should be accompanied by a great business expansion. Cleveland began to profit from the Ohio waterway before it was finished. The workmen, largely recruited from the Erie Canal force, passed through Cleveland and to some extent made it their headquarters. Many settled down here for business or labor. Contractors bought their supplies here. As new settlers, investors and builders thronged in, large sums were spent for local improvements in preparation for future traffic. Freight accumulated in anticipation of the opening. Cleveland's nearest big neighbor and economic rival today, Akron, was settled by canal workers and thrived on the business they brought. Meanwhile there was the example of the Erie Canal to show what such a utility could mean to a state or city. "Costly as that canal was," says Avery, "it paid by greatly enhancing the value of land along its route and lessening the price of everything else; freight rates dropped to a tenth of what they had been, and Rochester, Syracuse and Utica rapidly grew from small towns to prosperous cities, and New York City began the wonderful growth that made it the sec- ond city in the world." No wonder, as he remarks, that other states should follow the same course. THE CANAL ERA - 257 When the route was opened through to Portsmouth, "the village at the mouth of the Cuyahoga quickly felt the powerful influence of the new traffic. A vertitable 'boom' began, and the impression suddenly came into the minds of Clevelanders that their village had been touched by the wand of destiny." What was the nature of the freight traffic of those pioneer days, a century ago? Business statistics were not then the art they have now become, and records are far from complete. But some illustrations can be given. Of interest to every Cleveland business man or student of economics is this illuminating passage from Orth's "History of Cleveland" : "No sooner had the canal opened from Cleveland than a brisk trade to Akron began. Merwin & Giddings sent the first boat from Cleveland, the Allen Trimble, which they brought from the Erie Canal. They also built the Pioneer at Pensacola, before the canal was completed to Akron. John Blair at once started a canal line, the 'Farmers' Line' with the Henry Clay. During the season remaining, from July to November, the equivalent in weight of about 10,000 barrels was shipped northward, mostly flour, tobacco, whisky, beef, butter and cheese, while 8,000 barrels were shipped southward from Cleveland, mostly merchandise, salt and fish. This exchange indicated the economic needs of the region. The shipping of 'mineral coal from the beds of Tallmadge to Cleveland' began the same fall, as well as the carrying of stone. The collector in Cleveland received $909.69 in tolls from July to December, 1828. The commissioners say in their report of January 6, 1829: 'A large amount of wool and clothes have been conveyed overland from Steubenville to Massillon, thence on the Ohio Canal to Cleveland, across the lake, through the Grand Canal of New York, and by way of the Hudson River and Atlantic Ocean to the cities of New York and Boston. It is understood that the owners, Messrs. Wells and Dickinson, made a considerable saving in the cost of transportation by adopting this route in preference to that of sending wagons directly to Baltimore or Philadelphia. 258 - THIS CLEVELAND OF OURS Even the oaks which have formed a part of the ancient forests of the country, thirty miles from the south shore of Lake Erie, have found their way in the shape of pipe staves to the City of New York. These facts demonstrate the great advantages of canal navigation.' A cargo of goods was shipped from New York to Dayton, Ohio, by an all-water route; the Erie Canal to Buffalo, the lake to Cleveland, the Ohio Canal to Portsmouth, the Ohio River to Cincinnati, the Miami Canal to Dayton, 1,100 miles, at $17.25 per ton, in the remarkable time of twenty days." It is told also that in 1843 the schooner Dolphin went from Cleveland down the Ohio Canal to New Orleans with a cargo of whitefish. In 1833, one year after the completion of the canal to the Ohio, it brought to Cleveland, among other things, 387,000 bushels of wheat, 75,000 bushels of corn, 49,000 bushels of coal (note that item), 98,000 barrels of flour and 23,000 barrels of pork. At the same time Cleveland shipped out by canal 28,000 barrels of salt (which no longer came from the famous "salt spring" beyond Warren), and 10,000,000 pounds of varied merhandise. The first city directory, issued in 1837, paying its respects to the traffic of the year before, said : "Owing to her peculiar and advantageous location at the termination of the Ohio Canal and at a point of Lake Erie the most commanding for commercial operations," there had been such an increase of business that "in the year property to the amount of 117,277,580 pounds arrived by way of this port, and was shipped hence for distant markets." These goods were valued at $2,444,708. Among the export items were 464,765 bushels of wheat, valued at $534,469; 167,539 barrels of flour, valued at $1,005,234; 392,281 bushels of corn, valued at $215,764; 13,495 barrels of pork worth $203,425, and 3,851 hogsheads of tobacco worth $192,550. The "mineral coal" shipped was valued at $3,492. There was as yet little use for coal. In 1837 Cleveland cleared 8,776,000 pounds of general merchandise, 1,552,000 pounds of gypsum, 63,000 barrels of THE CANAL ERA - 261 salt, 6,000 barrels of fish, 1,981,000 pounds of furniture, 1,723 feet of lumber, 2,541,000 shingles and 26 pairs of millstones. Cleveland received 549,000 bushels of wheat, 183,000 bushels of coal, 280,000 bushels of corn, 204,000 barrels of flour, 102,000 pounds of pot and pearl ashes, 1,528,000 pounds of lard, 757,000 feet of lumber, 8,000 bushels of flaxseed, 88,000 bushels of oats, 42,000 pounds of pork, 12,000 barrels of whisky, 130 casks of linseed oil, 1,018,000 pounds of pig iron. Of these, looking forward, we might say that the coal and pig iron were the most important. The former came from around Tallmadge and Massillon, the latter from the "bog iron" deposits in Summit County. Years followed in which canal shipments to Cleveland rose as high as 3,000,000 bushels of wheat, 1,500,000 bushels of corn, 4,000,000 bushels of coal, 750,000 barrels of flour and 50,000 barrels of pork, and salt exports rose to 110,000 barrels. Small and curiously limited in variety this traffic seems today, but the village was on its way to becoming the business metropolis of the state. It will be seen from these items that the canal served equally to benefit the farmers of the interior, hitherto lacking facilities for bulk traffic, and the cities in the beginning of transition from rural shopping centers to hives of productive industry. Meanwhile, observe what the village was beginning to amount to not merely as a canal port, but as a lake port : "During the year 1836 there entered the port of Cleveland 911 vessels and 990 steamboats, with an aggregate tonnage of 401,800 tons. Of these 108 vessels were foreign. Cleveland and Cincinnati, respective heads of the two big state canals, were soon business rivals, despite Cincinnati's big start in population. From 1833 to 1860 Cleveland received by canal forty times as much wheat as Cincinnati and shipped more than twice as much merchandise. But Cincinnati greatly surpassed Cleveland in her whisky traffic. The general benefits to our city have been stated as follows by John A. Album, an authority on Ohio canals. "Cleveland was the most favorably located of all the cities 262 - THIS CLEVELAND OF OURS on the canal system, with the possible exception of Cincinnati, which was at the southern terminus of the Miami and Erie Canal and an important trans-shipment city with reference to Ohio River navigation. Cleveland, on the other hand, was the most important city upon the Ohio Canal, which extended for over 500 miles through the state; the terminus of the Ohio Canal, at a point in the Cuyahoga River only a few feet from the site of the Superior Avenue viaduct, was exceedingly advantageous in connection with lake transportation and transportation facilities by the Erie Canal to New York City. No little of Cleveland's growth in population from 1830 to 1850 was due to the facilities afforded Cleveland as an important transportation terminal connected with the canal system. Cleveland derived considerable revenue as a place for the interchange of products of the farm, the mine and the factory. Further than this, the accessibility of Cleveland to the agricultural and mining districts of Ohio, as well as to the manufacturing sections of other states, made a favorable city in which both products for manufacture and products for home consumption could be had at reasonable prices as compared with other localities. "Whatever the future may be as to the Ohio Canal, we may rest assured that Cleveland owes much of its beginnings and much of its strength to the various influences of this old canal system, which laid the foundations of her commercial and industrial supremacy." The relation of canal development to real estate should not be ignored. It was particularly in this branch of business that inflation was carried to dangerous extremes—a situation not unknown in later and supposedly wiser years. The inrush of people and money brought a demand for land and raised prices. It may be more than a mere coincidence that Alfred Kelley, the "Father of the Ohio. Canal," should have been one of the first real estate owners to capitalize the new opportunity. Early in 1833 he opened an allotment west of Water Street. Immediately afterward James S. Clarke, Edmund Clarke and Richard Hilliard allotted all the flat land in the first bend of the river, called "Cleveland Center," laid THE CANAL ERA - 263 out Columbus Street to the river and, as a recent historian says, "offered town lots at immoderately high prices." The next year Leonard Case began running lines and planting stakes southeastwardly from the old city plat, along present Broadway. The boom was on. Allotments sprung up on all sides. As Avery observes, "the fever of land speculation followed close upon the heels of the cholera." What otherwise would have been a devastating plague leaving a lasting blight upon the community seems to have been borne heroically and passed by lightly, in the wave of growth and prosperity. The boom had really begun on the West Side earlier than this, when the Buffalo Company bought the Carter farm in Brooklyn, in 1831. There was to be a fine, big city built there, with warehouses and factories in the flats along the river and homes and stores on the bluffs. In 1834 and 1835 it is said that water frontage lots on the old river bed were higher than they were thirty years later. A ship canal was cut through from the river to that old channel. "Ohio City" was to have its own canal terminal, like Cleveland City. The rivalry in marketing real estate became so keen that the West Side city was incorporated, in 1836, two days ahead of Moses Cleaveland's city. It was natural to sell all the land they could, because land was their most plentiful commodity, and it was natural to get all they could for it while the getting was good. Most of the sellers, too, doubtless thought they were giving full value, just as those who bought thought they were getting it. Wherein crowd psychology was just what it has been several times since. In that orgy of speculation, youthful Cleveland seems to have curiously foreshadowed certain features of the recent Florida boom. Thus, "in the flush times of 1836-37 land contracts on long time became a sort of circulating medium, on both sides of the river, daily passing from hand to hand, by endorsement; the speculation accruing to each successive holder being realized in cash, or in promises to pay." One promoter predicted a continuous city reaching from the Niagara River to the Cuyahoga. It was as a part of that subdivision fever that the his- 264 - THIS CLEVELAND OF OURS tonic "bridge war" occurred. A company headed by James S. Clarke, having allotted the flat land in the first big bend of the Cuyahoga, proceeded in 1837 to open a pretentious allotment on the other side of the river, in Ohio City. The promoters naturally wanted to carry Columbus Street southwest across the river to join their two properties. Operating on a big scale for those times, they built a bridge 200 feet long, 33 feet wide and 24 feet above the water, roofed and enclosed against the weather in the antique fashion, with a draw nearly 50 feet wide to let vessels pass through. The cost of the structure, without the grading, was $15,000. It was built chiefly of timber, with stone abutments at the ends on the river banks, and solid masonry piers in the middle, with the draw between them. It had been chartered by the state as a toll bridge, but with a grand gesture and a clever bid for publicity and good will, the company presented it to the city to be free forever for the use of the public. The Cleveland public was naturally pleased by this generosity. It provided easier access to the west and south and a better route to Brooklyn, Elyria and more distant points. The rival city was not pleased. It had grown up near the mouth of the river. The new thoroughfare threatened to by-pass so much of the Cleveland and southwestern traffic that Ohio City would be isolated. Its merchants and real estate owners vigorously objected. A public meeting declared the new viaduct a public nuisance. The river had been crossed by an old float bridge at Main Street, half of it belonging to each town. The Cleveland City Council ordered its half removed, to divert traffic to the new bridge and teach the West Siders a lesson. The latter retaliated by exploding a big charge of powder under the western abutment and damaging one corner of it. Trenches were dug across the street at both ends, so that the bridge was almost impassable. A pitched battle occurred. The Cleveland champions placed a cannon to rake the bridge from end to end, but some daring Ohio City champions surged across. The cannon was spiked with a file. There was gun fire and several men were wounded. The draw was cut away. Finally the sheriff took THE CANAL ERA - 267 control and landed the most truculent warriors in jail, and later the courts settled the case. The bridge was repaired and used, with an armed guard protecting it for some time. It was a good example of the lengths to which good citizens will go in seeking to control public traffic for private business ends. The need of that bridge was shown by the fact that in ten years it had grown too small. The two cities squabbled then about a plan and site, and the county settled the row, as it has done since in similar cases, by building the new bridge itself. The land business grew active wherever those canals brought their life-giving traffic. In 1826 the real estate of the 37 canal counties in the state was estimated as worth $25,000,000. Before the Civil war opened it was worth $350,000,000. Cities well situated on the waterways, like Cleveland, Akron, Dayton, Columbus and Cincinnati, grew in size and wealth far more rapidly than their rivals lacking such advantages, becoming terminals and points of transfer for the products of farms, mines and factories near and far. It was not merely a transportation benefit, either. All along the canals sprung up hundreds of flour mills and other small manufacturing plants, using canal water and power. The land rush grew out of the land system of the Federal government. That government had no desire to play the landlord and exact rents from tenants. Neither had it the same desire as its citizens had to profit from sales. Having acquired the great Northwest Territory—a hodge-podge of old charter grants to states—by gift from the state claimants, and having bought cheaply the, greater mid-west section known as "Louisiana" reaching from the Mississippi to the Rockies, the government could afford to let it go cheaply. It adopted and continues the wise policy of building up the country and extending its frontiers by encouraging settlement through cheap lands. It started asking a minimum of two dollars an acre, and then lowered instead of raising that minimum. By the homestead plan adopted later, quarter-sections of 160 acres were granted to settlers for about 268 - THIS CLEVELAND OF OURS $26. An economist has figured that this cost represented an annual rent of one cent per acre, thereby approximating the "no rent" ideal. No wonder there was a land boom ! We now approach the anti-climax of that boom—the great "Panic of 1837." In a "shoal of time" where we are peculiarly interested in panics, from recent experience of the same sort, it seems worth while to look into this debacle of nearly a century ago with a little more care than local historians have usually done. What caused it? What, if anything, did Clevelanders learn from it then? What can we learn from it now? It may be said at once that the depressions of 1837 and 1929 have little in common. The former seems to have had no connection with industry. Machine production and industrial capitalization had not yet become menacing problems. The population was still overwhelmingly rural. There was no such disastrous farm problem as there is now. The crash came from two big causes curiously intertwined—land speculation and bad banking. Though Cleveland real estate men played their part energetically in the general land inflation, and to some extent shared in the financial errors and sins, the causes were national rather than local. Everybody was doing it, and nobody knew any better. The foremost evil was the crazy land inflation; the immediate cause was financial. Political parties could never agree about a banking system. The charter of the national bank established by Alexander Hamilton expired in 1811. In 1816 another bank was chartered for twenty years with a capital of $35,000,000. It had the custody of the government revenues, but the secretary of the treasury could parcel them out among other custodians. That eventually made trouble. President Jackson vehemently disliked that Bank of the United States. Henry Clay, seeking to save it, tried to renew its charter in 1832, though it ran till 1836. The bill passed and was vetoed by Jackson. The Whigs made an issue of it in the next presidential election, and Jackson beat them. Not being able to abolish the bank immediately, he ordered the THE CANAL ERA - 269 secretary of the treasury to deposit all its funds elsewhere. Thus the institution became powerless and profitless. After the expiration of its charter in 1836 it became a state bank and went into bankruptcy. Meanwhile the waves of inflation rose high, and Federal finances rode on their crest. Railroads were about to join steamships as carriers of land-seekers and stimulants for land values. Government sales in the speculative year of 1819 had made a record of $3,274,000, and the Federal treasury felt rich. Now they had jumped to $4,000,000 in 1833, $5,000,000 in 1834, $15,000,000 in 1835, enough to pay for the whole Louisiana Purchase, and the enormous sum of $25,000,000 in the great year of 1836. In 1835 President Jackson announced proudly that the public debt was paid off. The government, for the first—and last—time did not owe a dollar. There was a surplus in the treasury. Calhoun proposed that after the year 1836 all revenue above $5,000,000 should be divided among the states as a loan, and Congress agreed. Uncle Sam didn't need any more money. He wag sitting on top of the world. Uncle himself had done considerable speculating, of a sort, in the extensive appropriations made from the Federal treasury for public works in the various states, especially highways and canals. The states had done far more, pledging their credit for public improvements. Some of them were building railroads. There was plenty of foreign capital, especially English. Everybody was rich, or soon would be. Values soared. Real estate in New York City was valued at $104,000,000 in 1832 and $253,000,000 in 1836. Mobile's assessed value jumped from $1,000,000 to $27,000,000. When President Jackson's secretary of the treasury, in 1833, started emptying the Bank of the United States, there were no repositories available except state banks. Their charters had been granted carelessly or corruptly. There was no regulation of them, either state or national. As one historian remarks, "the democratic feeling was that the privilege of forming banking corporations should be open to all citizens, and it soon became so." The incorporators might 270 - THIS CLEVELAND OF OURS put up capital, but it was seldom required. Deposits and other assets bore very little relation to their currency issues. They printed banknotes very freely, and the eastern banks sent their paper west, in large volume, to buy government land, which everybody knew could soon be turned over at a big profit. There were "wildcat banks" everywhere. Now, the leaders of the party in power at Washington were "hard money men." They could tolerate the flood of paper no longer. Out of a clear sky, in 1836, the administration ordered all land agents to accept in payment for public lands nothing but gold or silver. Then President Jackson vanished from the scene and the storm broke on Van Buren. That famous "specie circular" stopped the boom right where it was. A flood of worthless paper rolled back east. The banks gasped and went out of business. There was no more buying—only selling. Prices tobogganed. Business of all kinds slowed up. Hard money went into hiding. Obligations could not be met. Many states lost their bonds, which had been sold or put up as collateral by their trusted depositories. Many of them had to—or thought they had to—repudiate their obligations, which made matters much worse for everybody. The Federal government itself was in a precarious position. "A little more than a year after Congress had authorized the distribution of its surplus revenues among the states, Van Buren was forced to call it into special session to provide some relief for the government itself." Never in our history has the necessity of a sound financial system been better exemplified. It was a hard lesson, but possibly worth while. It may be, as Johnston suggests, that Jackson's way of "simply smashing things" was as good as any. The chaotic banking structure needed smashing, and there would have been little chance of financial reform in a Congress as much addicted to land-jobbing as the rest of the population. President Van Buren sat tight, let nature take her course, and eventually reformed the worst of the Federal banking evils through the "sub-treasury" plan. State banking evils were much longer in process of correction. THE CANAL ERA - 271 In the general chastisement Cleveland received its full share. The panic is said to have "brought to ruin nearly every business establishment in the Western Reserve." Allotments went dead. Lots could not be sold at any price. The city's business was prostrated. There was much suffering. Yet the essential vitality of the two rival communities at the mouth of the Cuyahoga was such that they soon recovered and started forward again. And so thoroughly had the lesson been learned by them and the nation at large that they were not overwhelmed by another business panic for—twenty years. It seems as if we must have one of these business fevers, followed by subnormal temperature, at least once in every generation. CHAPTER V "THE CITY OF CLEVELAND" In March, 1836, the village became the City of Cleveland by incorporation under a special act of the state legislature. The smaller village on the west side of the river incorporated about the same time, as the City of Ohio. It was generally designated, however, as Ohio City, and the parent community's title was shortened to the simple Cleveland. They became one eighteen years later. Immediately there was action on the banks of the Cuyahoga. The first city council, which met the month after incorporation, in the fine new courthouse on the public square, had many notable accomplishments to its credit. It promptly accepted the famous Columbus Street bridge as a gift from the real estate interests that had built it. To finance varied enterprises, it authorized a loan of $150,000. It decreed that there should be 128 cubic feet in a cord of wood, and established a public stand for the sale of that fuel on the public square. It organized a new fire department, exempting all its members from poll tax. It granted a license for the city's first theater. It ordered the street commissioner to operate a ferry boat across the river. It licensed and regulated the liquor traffic and ordered the marshal to get after the bootleggers. Or rather, in the more dignified language of that day, it instructed him to "prosecute every person retailing ardent spirits contrary to the provisions of the ordinance regulating licenses." In the same spirit it provided a bigger and better town pump near the courthouse. The next year the mayor was voted a salary of $500 a year and each member of the council one dollar for every session he attended. A committee was appointed to consider - 272 -