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INDIANA UNIYERSITY STUDIES 



The law required the parent Bank to redeem its paper in specie. 

 This it attempted to do in a novel way. The report of 1820 shows 

 that the branches had issued notes to the amount of $167,158, 

 while the parent Bank had only $13,000 in notes outstanding. 

 These were of large denominations, few under $75, and hence not 

 in circulation. 4 6 Over half the circulation was issued through the 

 Brookville branch, and exchanged for specie and eastern bank 

 paper bought in by the settlers. For this reason, every settler 

 became the inevitable enemy of the Bank. The United States land 

 offices ruled the western banks. There was published, weekly, a 

 list of banks whose notes were accepted by the agent. The one 

 printed in the Western Sun for October 7, 1820, by the receiver of the 

 land office, J. C. S. Harrison, is a fair example: ''All Boston Banks, 

 5 New York Banks, 8 Philadelphia Banks, 8 Baltimore Banks, 

 the Columbia bank at Washington, D. C, the Union Bank of 

 Georgetown, 8 other District of Columbia Banks, the Farmers and 

 Mechanics' Bank of Madison, Ind., and the Vincennes Bank — notes 

 over $75." The newspapers circulated among a very small number 

 of readers, so that many a prospective settler saw his resources 

 divided in the middle by the note shaver when he went to buy land. 

 The Vincennes Bank was a repository for United States money, and 

 the receiver of public moneys was usually an officer of the bank."" 

 As soon as the specie was collected it was deposited in the Bank and 

 used again to shave branch bank notes. 



The state election of 1820 was contested on the bank and cur- 

 rency questions. 48 Shall the Bank be made to redeem its own 

 notes? Shall "shavings" go on? Few friends of the Bank were 

 returned to the legislature. Over one third of the members were 

 new. When the session convened November 27, 1820, the 

 question of the Bank was taken up. In the meantime, a letter 

 appeared in the Western Sun stating that the parent Bank was on 

 the brink of ruin. Its liabihties were given at $230,000, with re- 

 sources of $105,000. The letter was represented as coming from 

 Cory don, but no one knew the author. All the editor would say 

 was that his information was most reliable. It was known that the 

 government deposits were in specie and would have to be paid first. 



The letter at first caused surprise, and then fear. Since people 

 did not then keep money in bank, as now, there was not a run on 

 the bank; but they felt uneasy lest the notes of the bank and its 



" The notes in circulation at the time were as follows: Vincennes Bank, S13,000; Corydon Bank, 

 $49,000; Vevay Bank, $30,000; Brookville Bank, ?85,000; total, $177,000 — Western Sun, Dec. 23, 1820. 



" Am. Sta. Pa., Fin., V., 138. The president of the Vincennes Bank was receiver of public money. 

 The same was true at Edwardsville, Illinois, and other places. 



" Western Sun, December 16. 1820. 



