Very large exemptions were made and the idea of the income from the property taxed rather than its capital value was often emphasized. From these same territorial beginnings, it would have been possible to develop quite naturally a property tax somewhat similar to the English local rates, where the income from the property is the test of its value and the basis for the apportionment. But the principles established by this territorial legislation were adopted and so extended by the government of the new Territory of Illinois, as to result in the particular form of the general property tax now found in the state.

The influence of the French settlements upon the system of taxation adopted was insignificant. They neither developed a system of their own during the years of their isolation before they became subject to the control of the Northwest Territory, nor did they take an active part in the formation of the system which is found in existence in 1809. Doubtless they could not have made their efforts effective, had they tried, outnumbered as they were in the political division in which they were situated.

A form of the general property tax, then, was the system adopted by the Northwest Territory when the interests of the far western settlements were too slight to be of consequence and when the actual application to them was not seriously attempted. This system was continued by the Territory of Indiana, whose attempts to administer it in Illinois met with difficulties and, in certain instances, with the positive refusal of the county authorities in the Illinois region to coöperate. It was adopted by the territorial government of Illinois because the American element in the population had, by this time, become strong enough to disregard the early French settlers in the Illinois country.

CHAPTER II.

ECONOMIC CHARACTERISTICS AND THE FINANCIAL PROBLEM.

It is important in taking up the study of the general property tax in Illinois during the early period of its history, 1809-1838, to inquire about the demands made upon the government at this time and about the possibilities of the system of taxation in force as a source of revenue to meet these demands. From one point of view, at this early stage, the two things were really one; for, as will appear, the demands made upon the government at this time were limited almost entirely by the possibility of obtaining revenue to meet them-that is, the fiscal problem was, primarily, what could be afforded rather than what should be done.

The years under discussion make up the period of the state's childhood. Even in 1840 Illinois was still a frontier community, containing only five hundred thousand inhabitants. During these years everything which must be done to make a wilderness a place of habitation for man remained yet to be done for Illinois. There were no public buildings and few school houses; the state owned no public works; there were few roads or other artificial means of communication; courts had to be established and jails erected. In short, Illinois was without a "capital account"; it had no "plant". The state lived, so to speak, in an unfurnished house. It was necessary not only to pay running expenses but to buy the furniture. In addition various unusual calls were made upon the young government. For example, the dearth of a circulating medium very early served as the basis for an appeal to the government to loan its credit as security for the issue of bank notes. Thus the financial difficulty was not only that of operating a government but also of providing the machinery and plant with which to work.

The Sphere of State Activity.

On the other hand the problem of deciding upon the sphere of the activity of the government was somewhat simplified by the delegation to private companies and to individuals of many of the functions which are usually considered governmental. Thus, many of the early turnpikes were built as private enterprises, the promoters seeking through tolls to obtain their return from those using the roads.1 Bridges were often constructed on the same plan.2 Ferries were operated by individuals under legislative acts which usually sought to make the enterprises attractive by granting monopolies for a given distance up and down the streams. Schools were almost entirely maintained through private initiative during this period. The dependent poor, instead of being cared for in county institutions, were usually farmed out to persons who could use their labor. The penitentiary even was, for a time, turned over to private individuals for management in order to save money.3 Among the many devices resorted to for lessening demands which would normally be met by taxation was the lottery. A number of such schemes were projected to meet the expenses of some of the internal improvement projects. There was a custom of locating the county seat at that town within a county which would offer the largest donation of land or of money to be used toward the expenses of erecting county buildings. The location of the state capital itself was determined primarily on this principle. Part of the plot of

5

1The governmental activity in these cases usually extended far enough to fix the maximum rates of toll which might be charged.

2Sometimes individuals would advance the money for a bridge with the understanding that the county would reimburse them after a specified time.

3 Auditor's Report, 1839, p. 12.

4Laws 1819, pp. 257, 310; L. 1838-9, p. 56.

Any number of examples of this practice might be given. Some sixty-seven cases of this sort were noted during these years. The acts usually prescribed a minimum grant of twenty acres.

"The town of Springfield was chosen as the capital because of the donations pledged to the state treasury. The act passed February 25,

land on which the first state prison was built was sold to raise money to build the walls and workshops. By such methods the government was able to some extent to share in the increment of value which accrued to the land at the place where public buildings were erected and public business transacted. The utilization of the fee system for compensating many of the public officials made possible a smaller tax levy than would otherwise have been necessary. When salaries were paid, they were extremely small.'

Taxable Capacity of the People.

To a certain extent it is true that, as the demand for the increase of governmental functions grew, the means for meeting this demand also increased. In 1810, when the territory of Illinois had a population of only twelve thous and people, not so many school-houses, courts and roads were needed as thirty years later when the population was nearly half a million. The increase in population was indeed remarkable in itself, and it may be thought that it should have served as an entirely adequate basis for increased taxation. During the first decade, from 1810 to 1820, the population quadrupled; during each of the two following decades it trebled.8 But it must be remembered, that it was entirely rural even at the end of the period under discussion. The settlers were largely land-hungry immigrants who had pushed west because of economic press

9

1837, locating the seat of the government, fixed the amount of the minimum donation at fifty thousand dollars and two acres of land. L. 1836-7, p. 321. In Vandalia, the former capital, public buildings were erected mainly from the proceeds from the sale of four sections of land which had been given to the 'state by the federal government for that purpose, although some donations were received from citizens. John Moses, Illinois, Historical and Statistical (Chicago, 1895), I, 327; J. N. Reynolds, My Own Times (Chicago, 1879), p. 137.

L. 1815-16, pp. 73-76; L. 1816-17, pp. 52-54; L. 1817-18, pp. 98-100. 8Twelfth Census; Population, part 1, p. xxiii.

In 1832, Chicago was an unincorporated village with about 250 inhabitants and in 1837 had a population of only 8000. See Illinois in 1837, A Sketch (Philadelphia, 1837), p. 119.

ure behind them and with the thought of economic betterment foremost in their minds. The little money they had was usually exchanged at once for land which was capable of yielding only a small immediate return because of the difficulty of securing a market for their products. In 1825 the correspondent of Niles Register wrote: "At present, wheat is hardly worth twenty-five cents per bushel, and corn and oats will not fetch more than eight or ten."10 This was, in large part due to the lack of transportation facilities. As someone has put it, the West, during this period, was "a good place to make a poor living". In 1824 General Coles received a request for information concerning the system of poor relief in Illinois." He replied that he was unable to furnish it, because of "the fact that Illinois has no poor; at least so few that I have not been able to learn anything about them." But if there was little danger of starvation, there was also little probability of securing any fortune except the potential one depending upon the rise in land values. Because of this absence of immediate returns the actual taxable capacity of the people was very small indeed.12

To this must be added a pronounced indisposition on the part of the people to submit to taxation. It was a part of the spirit of the frontier. The settlers seemed to think there was something ignoble about paying taxes. An example of this spirit is seen in the speedy repeal of two laws passed at the legislative session of 1825, levying slight

10Niles Register, XXIX, 165, Nov. 12, 1825.

11Ill. Hist. Coll., IV, 51.

12The situation was very well summarized by Governor Edwards in his inaugural address in 1826, when he said:

con

"In a new state, progressively settling as ours is; without manufactures; furnishing but few articles for exportation; consuming a siderable proportion of those produced by the labor of others; and obliged to employ the most of its active capital in the building of houses, opening of farms, and other improvements which yield no immediate profit; a scanty circulation of money; and consequent difficulty of paying high taxes; are results so probable in themselves, and so fully verified by our own experience that they cannot be overlooked. . ." S. J., 5 G. A., I Sess., p. 47, 1826.