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INDIAXA UNIVERSITY STUDIES 



notes as cash the directors of the Bank of the United States or- 

 dered its cashiers to recieve nothing as cash except its own notes 

 and specie; and announced that all agreements between it and 

 state banks would terminate June 30, 1818. » 



Writing of this order, March 30, 1819, the cashier of the Farm- 

 ers and Mechanics' Bank said: ^'We have been caused much 

 trouble and our customers and people much loss by the Bank of 

 the United States not receiving our paper as payment. We are 

 even with all the branches ot that bank and can give full evidence 

 of our solvency."! 0 Without warning and without any fault of its 

 own the notes of the Farmers and Mechanics' Bank were thus 

 thrown out of circulation and rendered of no value except as a 

 means by which brokers could get specie out of the vaults of the 

 bank. Most of this specie found its way directly into the vaults 

 of the Bank of the United States. 



Under these circumstances there were only two things to do, 

 either call in all the circulation of the bank or stop specie payment. 

 The latter alternative was chosen by practically all the western 

 banks. The Farmers and Mechanics' Bank did not suspend till 

 the fall of 1818, and was not then compelled to. But it was found 

 impossible to keep its notes in circulation. They were returned 

 for specie as soon as issued. In this situation the bank simply 

 stopped the issuing of its notes, rather than suspend specie pay- 

 ment. The Vincennes Bank did the same thing. The crushing 

 business depression of this period followed on the heels of these 

 acts of the Bank of the United States. 



The withdrawal of the deposits from the banks of the state 

 and the refusal to accept the notes of Indiana banks brought a 

 storm of protest from the state. The loss of revenue from the 

 sale of the public lands was embarrassing the national treasury 

 also. The western states were, moreover, beginning to have a 

 political importance not to be trifled with. The votes of the eight 

 senators from the four states, Ohio, Illinois, Indiana, and Kentucky, 

 were often a determining factor in the United States Senate, and 

 in the approaching struggle, for a nomination to the presidency 

 their influences might control the Congressional Caucus. There- 

 fore when William Hendricks, who represented Indiana in the 

 House, and together with Governor Jennings controlled its politics, 



» A7n. Sta. Pa., Fin., V.. 69. 

 "Am. Sta. Pa., Fin., IV, 725. 

 John Paul, President, to Secretary Crawford, Am. Sta. Pa., Fin., IV, 746; Sering to Crawford, 

 ibid., 739. 



1' Taylcr to Crawford, March 31, 1818. Aju. Sta. Pa., Fin., V, 65. 



