State Bank of Illinois
In 1819, the Illinois General Assembly incorporated the first State Bank of Illinois. This bank was to be headquartered at Kaskaskia, then the state capital, and have a capital stock of $4,000,000. None of the capital stock was subscribed, and in 1821, the General Assembly repealed its charter and incorporated a second State Bank of Illinois. This bank was headquartered at Vandalia, then the state capital, with a capital stock of $500,000. The bank established branches at Edwardsville, Brownsville, Shawneetown, and Palmyra. Initially popular, the bank proved a failure, and after 1825, the General Assembly enacted numerous laws winding up its affairs before finally closing the main bank and its branches in 1831. In 1835, the Illinois General Assembly established a third State Bank in Illinois. The directors and headquarters of the bank were in Springfield, but the state established branches in Alton, Chicago, Galena, Jacksonville, and Vandalia. In 1836, the bank opened branches in Belleville, Danville, Mt. Carmel, and Quincy. The legitimacy of federal and state banks was a divisive political issue in national politics. Following the Panic of 1837, the bank suspended specie payments when it was unable to redeem its bank notes with gold or silver. This decision and the over-extension of the state on internal improvements heightened Democratic hostility toward the bank in Illinois. In 1839, the Democrats in control of the General Assembly found the bank’s management seriously lacking, suspended any new business, and closed the Springfield branch. In 1843, the legislature forced the bank to liquidate all of its assets within five years.
“An Act to Incorporate the Subscribers to the State Bank of Illinois,” 22 March 1819, Laws of Illinois (1819), 151-57; “An Act establishing the State Bank of Illinois,” [February 1821], Laws Illinois (1821), 80-93; “An Act Amending An Act, Supplemental to An Act Establishing the State Bank of Illinois, Approved Jan. 23, 1829, and for Finally Closing the Affairs of the State Bank of Illinois and Branches,” 15 February 1831, Laws of Illinois (1831), 182-85; Charles H. Garnett, “State Banks of Issue in Illinois” (essay, University of Illinois, 1898), 8-21; An Act to Incorporate the Subscribers to the Bank of the State of Illinois; Theodore Calvin Pease, The Frontier State: 1818-1848 (Chicago: A. C. McClurg, 1919), 304, 307; Robert P. Howard, Illinois: A History of the Prairie State (Grand Rapids, MI: William B. Eerdmans, 1972), 203-206; “History of City Banks Over 100 Years,” Illinois State Journal (Springfield), 2 April 1859; William Gerald Shade, Banks or No Banks: The Money Issue in Western Politics, 1832-1865 (Detroit: Wayne State University Press, 1972), 31-33, 75-79, 90-94; Robert V. Remini, Andrew Jackson and the Bank War (New York: W. W. Norton, 1967).