Chicago’s prosperity flourished as the country continued to enlarge. Western expansion reached the Hawaiian Islands. New Western states and territories increased the size of the nation. The Illinois and Michigan Canal and the railroads enabled this development. Discovery of gold in California, Oregon and other parts of the West fueled the passion to migrate west.
By 1856, Chicago reached a peak of prosperity, and the future looked bright. Income from new buildings and public improvements reached a new height of $6,423,518 that year. Eleven hundred new building projects were planned for the city. Chicago’s railroad companies earned $16,768,000. Lumber receipts rose to 460 million board feet. Wheat was selling at $2.00 a bushel.
Investors, businesses, farmers and individuals speculated on this prosperity and took chances in order to become wealthy. Investors participated heavily in commodities, stock and housing markets on the New York Stock Exchange. Banks extended credit for domestic goods, foreign imports and stock market transactions. Railroads and other companies borrowed money to expand.
In prosperous times, like 1856, the Treasury System (1846-1921) of the government acted like a regulatory body whether it was intended to be or not. The system provided for the retention of government funds in the U.S. Treasury and sub-treasuries in selected cities throughout the nation. In accordance with the Act of August 1846, all payments by the government were made in specie (gold or silver) or Treasury notes. Likewise, payments to the government were made in specie or Treasury notes. The Treasury remained independent of national banks and financial institutions. In successful times, revenue surpluses collected in the treasury. This caused a drop of hard money in circulation, limited credit and controlled trade and production.
Could this 1856 prosperity continue?
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