Mises Daily Articles
The Endless Sufferings of Cairo, Illinois
Recently, the US Army Corps of Engineers decided to blow up an earthen levee on the Mississippi River to attempt to save the town of Cairo, Illinois, from flooding. In doing so, the Corps spared the town of nearly 3,000 — while flooding 200 square miles of farmland just in time to either prevent planting new crops or harvesting crops already there, and destroying as many as 100 homes. Perhaps even more difficult to comprehend than this disregard for private property (several farmers and the State of Missouri had waged a legal war to stop the detonation, and apparently had lost) is the fact that this choice had to be made in the first place.
Why was this town, surrounded by levees to keep the Mississippi and Ohio Rivers out, in need of state intervention to be saved? The history of Cairo is not only fascinating, but it tells the tale of abundant state intervention and its long-term intended and unintended effects.
Cairo is the southernmost town in the state of Illinois, and, as mentioned, sits above the confluence of the Mississippi and Ohio Rivers. The first visitors to Cairo — missionaries and explorers who visited the area from 1660–1700 — were quick to note the mud and difficulty in being able to go ashore, as well as the unremarkable nature of the location (taken also to mean that the Native American peoples had chosen not to permanently reside there, I assume). The first permanent settlement was by a Frenchman, Sieur Charles Juchereau de St Denis, and his crew, who were supported by King Louis XIV and charged with establishing a tannery and killing as many buffalo as possible along the Ohio River in Illinois in 1702. They were successful in that they collected thousands of skins for shipment back to France. However, the local Cherokee (and other tribes), who relied on the buffalo for survival, attacked the settlement the next year, killing most of the men and taking the skins. Lewis and Clark were the next to arrive, in 1803, as part of their famous state-sponsored expedition. This is important, because John G. Comegys of Baltimore, who purchased 1,800 acres that would become Cairo (and who came up with the name) was a personal friend of Meriwether Lewis. Comegys was well aware of the benefits and risks involved with such a land development:
The junction of the two rivers had long been looked upon as a geographic point of very great importance. Its commercial features, great as they were, were regarded as fully equaled by the advantages it possessed for a military post or center.
But while the geographic position fully justified all that was said of it, its topographical features were largely the reverse; so much so, indeed, that the local disadvantages seemed to outweigh the advantages of the geographical position.
The reasons for and against occupying the site were no doubt often considered. They were so equally balanced that nothing was done.
While the exact reasons for Comegys's land purchase of present-day Cairo will probably never be fully understood, his relationship with Meriwether Lewis may very well have played a role. It's also interesting to note that Cairo's use as a military post plays a role as well — one equal, in fact, to its "commercial features."
So the land was purchased, and a charter was obtained from the Territorial Legislature for the establishment of the Bank of Cairo and the incorporation of the city. The sale of lots funded some improvements, and the remainder of the funds made up the capital of the Bank of Cairo. However, John Comegys died soon after (in either 1819 or 1820, depending on the source). Executors of his estate made a third payment for the land, and then, upon entering into default, and having no one willing to make the payments of the amount due, the land reverted to the United States. Nonetheless, the seeds of settlement had been sown for Cairo, Illinois.
The next attempt at settlement was made by Darius B. Holbrook, from Boston, who started the Cairo City and Canal Company in 1837. The sale of bonds helped fund improvements to the area, including a levee system, dry dock, shipyards, and a store located on a boat. The population was around 1,000 by 1840, when the London investment firm holding the bonds failed. Within two years, the population was around 200, and in 1845 a census revealed the population of Cairo to be 113.
Cairo may very well have begun to slowly fade away at this time had it not been for the Illinois Central Railroad. The railroad was constructed after the Land Grant Act of 1850 was signed into law by President Fillmore, and it was given land in exchange for transporting government property at a reduced rate.
Subsidized railroad development in the United States was full of cronyism and illogical decision making designed to get more money from the government (i.e., inefficiencies). Legislators who voted in favor of the subsidy typically demanded that the railroad run through their legislative district, even if this added considerably to the cost with little or no return on investment. In addition, without private investors' money directly on the line, the railroads were often built quickly and poorly.
Contrast this with the development of privately funded railroads such as the line built by James J. Hill, who paid cash to native peoples, farmers, and ranchers for the right of way to build his railroad. (The government's solution to removing Native Americans to make way for subsidized railroads was much more brutal than paying for use of land under agreed-upon terms.) The railroad was constructed carefully in order to maximize the economy of the private funds, without any help from the government, and thus took years longer to complete. This approach does not guarantee success, but at least market signals were present when construction took place.
The subsidized Illinois Central Railroad rolled into Cairo in 1856, connecting Cairo to Galena, Illinois, in the northwest part of the state. This, along with increased steamboat traffic on the rivers, spurred rapid growth in Cairo. The population of Cairo, which was incorporated in 1858, grew to 2,000, and the town became the county seat of Alexander County.
The Civil War affected Cairo, with both Union and Confederate militaries believing in the strategic importance of the city. The Union army constructed Fort Defiance south of Cairo at the banks of the rivers, and Camp Smith was built a short distance away. The city became well-armed (with help from the Illinois Central Railroad), and General Grant even established a headquarters for himself in Cairo.
Soldiers reported dismal conditions in Cairo. A humid climate, with an area prone to flooding (even though levees had been built), resulted in rat- and mosquito-borne diseases and sloppy, dirty living conditions. In addition, local businesses that sprang up to meet the needs of the army were, at times, known to conduct unscrupulous business practices. The military wasn't directly paying the bills (the US Treasury was), and so these fraudulent people would even simply rob the Union Army.
Cairo became a deposit point for freed slaves by the Union Army. Some went elsewhere, but about 3,000 established permanent residences due to the Civil War and the actions of the Union Army. This would set in motion a chain of events, spurred on by forced association and racial tension that would last for over 100 years. It is correct to say that the white residents of Cairo, at the time, believed in segregation; placing thousands of African-Americans to live there, via government intervention, would prove disastrous. Racial violence escalated to the point that, in 1909, an angry mob lynched an African-American man who was believed to have raped and murdered a 22-year-old white girl. His body was filled with bullets, burned, and chopped to pieces. In addition, Cairo was generally becoming violent; it would go on to have the highest arrest and murder rates in Illinois.
What was described as racial "war" took hold in the 1960s, as African-Americans in police custody died under suspicious conditions that were called "suicide" by the authorities. Also, several white businesses operated for whites only, resulting in boycotts. Murders were "exchanged" back and forth for years. Through the 1970s, it was noted that 150 nights were filled with gunfire, and the population of Cairo fell (more on population rise and fall later). It should also be noted that mobster groups in Cairo, operating illegal bootlegging and gambling enterprises, encountered violence as law enforcement attempted to stop these practices, and rival groups fought each other attempting to gain market share of these illegal businesses.
Compare Cairo with New Philadelphia in western Illinois. A former slave, Frank McWorter, earned enough money through work to purchase his own freedom and that of his wife and other family members. He moved from Kentucky to Pike County, Illinois, and founded New Philadelphia in 1830. African-Americans and European-Americans voluntarily settled in New Philadelphia, and although some institutions (such as cemeteries) were segregated, in accordance with the age, the town was largely integrated, including the local school. The town slowly and peacefully grew, and had about 160 residents in 1865.
Sadly, and not surprisingly, the subsidized railroad — which had caused Cairo to flourish — was the reason New Philadelphia declined. The Hannibal and Naples Railroad was built in 1870, funded through bond sales by Pike County. Rather than travel directly west through New Philadelphia, at the recommendation of surveyors, the line arched north around the city, and then arched back south to continue traveling straight west — an obvious attempt to bypass New Philadelphia. This added considerable cost to the project, especially because the diversion required more iron rails (the most expensive component), and because this meant train cars had to be pulled up an incline, thus requiring a second "helper" locomotive. Research has not uncovered any political motives or evidence of cronyism behind the altered rail path, and therefore, the blame has been placed squarely on racism at the time. But, the economics must also be considered — surely private investors, using their own money, would have never allowed such expensive added costs, simply to divert the line around the city. Only the county, through bond sales at a time when railroad enthusiasm was high, would put up with such added expenses.
As a result of the rail-line diversion, New Philadelphia slowly dwindled in population as people sought markets near subsidized railroad lines. Resourceful as they were, the residents of New Philadelphia converted some of their town back to farmland to attempt to survive, and people are believed to have lived there into the 1920s. Traces of their gravel streets can still be seen today.
As racial tension increased following intervention by the Union Army, Cairo was growing due to the presence of the subsidized railroad and increased efficiencies with barge transport on the rivers. Businesses came — some using the large pool of new labor in Cairo — and large mansions were built. In 1890, the population was 6,300, and by 1907 it peaked at 20,000.
However, the state intervention that had greatly influenced Cairo's growth — and perhaps caused it to still exist at all — would begin to unravel. In 1905, the first railroad bridge to cross the Mississippi was constructed at Thebes, a town northwest of Cairo. Almost certainly, cronyism and state support, which had helped Cairo, now worked to its disadvantage. The large rail presence in Cairo began to decline, along with ferry traffic. The levee system was not keeping water out of low-lying areas of Cairo anymore, causing many people to choose renting over purchasing property. In response to flooding, such as a large flood in 1927, the US Army Corps of Engineers was eventually given the responsibility for flood protection to the entire country — hence, the decision to blow up the levee at the beginning of the article. Therefore, Cairo benefited from this state action, socialized flood protection — at least temporarily — and continued on.
Later, Cairo was denied a state permit to put riverboat gambling nearby, while the state-influenced racial "war" mentioned above continued to drive people away. Businesses began to leave, and some buildings and homes were simply abandoned. Cairo went into serious decline. Downtown businesses such as banks, shoe and music stores, restaurants, gas stations, and auto dealerships all left. The local hospital closed in 1986 and is now overgrown with vegetation. Some downtown buildings have trees growing in them. Alexander County is now one of the poorest in Illinois. Three-fourths of sheriff's deputies were laid off in 2009, and five of their patrol cars were repossessed just days later. The department later said that it doesn't have enough money to purchase gas for their remaining patrol cars. The public school in Cairo is struggling to stay open. The site of Fort Defiance, used during the Civil War, was once a state park, and is now in decay. As mentioned at the beginning of the article, Cairo now has around 3,000 residents.
A chilling YouTube video, filmed in 2008, displays the full force of the current bust phase in Cairo, with images of destruction and desperation (along with highlighting what positives still remain), all fueled by an artificial, unsustainable, state-induced boom period over the last few hundred years.
So, what does the future hold for Cairo, now that the Corps has given it life by blowing up the levee? With low property values, some adventurous people have recently started a business. Perhaps Cairo could give away free land to anyone willing to live there, as other dying towns have done.
Unfortunately, the state is not finished intervening in Cairo. Last year, the governor of Illinois signed legislation creating the Alexander-Cairo Port District. Among other things, the district can apply for government grants and appropriations, and it can levy taxes. Some things really do never change.