City of Chicago is Incorporated, Granted City Charter by the State of Illinois

On August 12, 1833, the Town of Chicago was incorporated with a population of 350. The first boundaries of the new town were Kinzie, Desplaines, Madison, and State Streets, which included an area of about three-eighths of a square mile (1 km²).

Within seven years the town had a population of over 4,000. Chicago was granted a city charter by the State of Illinois on March 4, 1837. The opening of the Illinois and Michigan Canal in 1848 allowed shipping from the Great Lakes through Chicago to the Mississippi River and the Gulf of Mexico. The first rail line to Chicago, the Galena & Chicago Union Railroad was completed the same year. Chicago would go on to become the transportation hub of the United States with its road, rail, water and later air connections. Chicago also became home to national retailers offering catalog shopping using these connections like Montgomery Ward and Sears, Roebuck and Company.

http://en.wikipedia.org/wiki/History_of_chicago