﻿ESAREY: STATE BAmONG IN INDIANA 



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in specie; its capital stock was not to exceed $750,000. The bank 

 agreed to lend the government $5,000 to pay the salaries of officers 

 and to advance any sum the territorial government might need 

 in anticipation of taxes. The rate of interest was not to exceed six 

 per cent on any money lent by the bank. 



The town of Madison was small at this time, having not over 

 700 or 800 inhabitants. Its trade was correspondingly limited. Its 

 merchants handled such goods as are usually kept in large country 

 stores. The bank occupied a part of the brick buileling on the 

 east side of Main Street, well up from the river. For the purpose 

 of making change, all merchants issued "shinplasters" in denomi- 

 nations of 50, 25, 123/^, and GJ4 cents. These were redeemed in 

 the bank notes of the Commonwealth Bank of Kentucky, if pre- 

 sented at the Farmers and Mechanics' Bank in sums of one elollar 

 or over. The bank furnished some aid to the farmers of Jefferson, 

 and adjoining counties, in making payments on their land.« Its 

 notes were received at the United States land offices for many 

 years; and were rated highest of all in the Northwest, except the 

 notes of the Commonwealth Bank of Kentucky, until the notes of 

 the Second Bank of the United States came into circulation. The 

 Madison Bank had a branch at Lexington, in Scott county, a town 

 almost as large as Madison, anel another at Lawrenceburg. 



The history of the Farmers and Mechanics' Bank illustrates 

 well the difficulties at this time of honest banking in the West. 

 The bank stipulated in its charter to pay specie. Its capital was 

 paid largely in specie, and its stockholders were business men of 

 wealth and integrity. It cUd a conservative business, furnishing 

 money to buyers of public lands, and to the traders with New Or- 

 leans and the East. Throughout the ¥/est the standing of banks 

 t was completely in the hanels of the receivers at the land offices, 

 j Money that was not acceptable to the receivers could not circulate 

 with money that was. By resolution of Congress, April 30, 1816, 

 j the Secretary of the Treasury was directed to collect all dues in 

 legal currency, which was interpreted as coin, notes of the Bank 

 of the United States, treasury notes, and notes of specie paying 

 , banks. This order was to take effect February 20, 1817. The 

 I Bank of the United States had gone into operation on the first of 

 jl January preceding. It was made the depository of all government 

 ji funds. After sustaining considerable loss by receiving western bank 



I • John Sering, cashier, to Secretary Crawford, June 14, 1820. "This bank continued to pay specie 

 I until it3 notes were refused at the land office, when its payment became only an accommodation to 



i brokers. Even after that we have continued to furnish our people such paper as is taken at the land 

 j office in exchange for our notes." Am. Sta. Pa., Fin., Ill, 739. 



