This scrip was used to help fund one of Illinois’ earliest and most significant infrastructure projects, the Illinois and Michigan Canal, which joins the Chicago and Illinois Rivers and ultimately connects the Great Lakes to the Mississippi River.
Construction on the canal began in 1836. When construction capital dried up during the Panic of 1837, canal commissioners issued scrip to pay their debts. This scrip, issued by the State Bank of Illinois, functioned as checks drawn on the credit of the Illinois and Michigan Canal. It was often used to pay contractors, who in turn used it to pay laborers.
Canal scrip was honored at face value when used to purchase land along the canal. When traded for goods and services, however, scrip was worth less than par value. By 1842, the State Bank of Illinois had gone under, and the value of canal scrip on the open market fell to 15 cents on the dollar.