﻿ESAEEY : STATE BAXKTNG IN INDIANA 



221 



II 



THE FIRST STATE BANK OF INDIANA 



There was very little money, either specie or paper, in circulation 

 in Indiana before the territory was admitted to the Union in 1816. ^ 

 The period just preceding the admission of Indiana to statehood 

 was the most flourishing period in our history for 'Svild-cat" banks. 

 The charter of the First United States Bank expired in 1811, and 

 the Second United States Bank was not chartered until 1816. 

 During this era the '^wildcat" banks were unhampered. So great 

 was the prejudice of the western Democrats against a national 

 bank that they would rather endure all the evils of a private bank 

 system than see a national currency circulated by one strong bank. 

 This prejudice is accounted for if we recall that the Second United 

 States Bank, when it went into business at the beginning of the 

 year 1817, broke 165 of the 446 state and private banks then in 

 existence; and that of $90,000,000 of their notes in circulation it 

 stopped $30,000,000.- The whole debtor class — a large majority 

 of the pioneers — favored the private banks, because it was much 

 easier to borrow money frxim them.'^ Paper money, at this time, 

 ranged in value all the way from the notes Massachusetts banks, 

 worth twenty per cent more than the treasury notes of the United 

 States, to the counterfeits that deluged the country. 



A western ''bank" in these early days was a very simple affair. 

 Any man inclined to start a ''bank" had a supply of notes engraved 

 and then opened a ''bank" in some convenient town. Since these 

 "banks" rarely received deposits, their only function was to dis- 



' On this subject, Nathaniel Ev.ing, President of the "\'incennes Bank, wrote the Secretary of the 

 Treasury, January 9, 1819: "The situation of the farmers here [Vincennesl is distressing. They 

 cannot get one dollar for their produce. They have plenty of produce but can get no monej-. Our 

 banking capital, here in the West, is all tied up in city improvements, and there is none to move our 

 produce." American State Papers, Finance, III, 734. 



' W. Jonos, President of the Second Bank of U. S., to Secretary Crawford, October 31, 1817: "It 

 is the earnest desire of the Board of Directors of the Bank that you dispense with the employment 

 of State Banks, northn'est of the Ohio river. The Bank's branches in that section will be opened 

 soon; the state of the currency there and the heavy collections from land sales require greater cir- 

 cumspection and control by this bank. A gentleman of unquestioned veracity has assured me that 

 he saw good paper money sold by the receiver at the land office for a premium and the depreciated 

 paper deposited for the government. Let me suggest that land sales be limited to specie." Am. 

 Sta. Pa., Fin., IV, 820. See also the joint protest of the senators and representatives of Ohio, Ken 

 tucky, and Indiana, April 18, 1818, against "the tyranny of the United States Bank." Am. Sta. 

 Pa., Fin., V, 66. Also the letter of J. D. Hay to Senator Taylor {ibid., 65), and the letter of Langdon 

 Cheeves dhid, IV, 874). 



'There was due from land buyers at Jeffersonville, January 1, 1815, S242,176i at Vincennes, 

 S122,723. On January 1, 1819, there was due at Jeffersonville, $1,021,834; at Vincennes, $1,390,909. 

 Am. Sta. Pa., Fin., Ill, 782. 



