﻿ESAEEY: STATE BANK^G IN INDIANA 



243 



III 



POPULAR IDEAS OF BANKING IN 1834 



The second period in Indiana banking begins with the charter 

 of a new State Bank in 1834. ^ The agitation for a state bank 

 began as soon as the election of 1832 settled the fate of the Second 

 Bank of the United States. The State Bank of 1834 was the heir 

 in Indiana of this United States Bank whose charter expired in 

 1836. It was favored and upheld by the Clay party in the state. 

 Why the state always supported Jackson, and at the same time 

 favored the United States Bank, a high tariff, and internal improve- 

 ments is one of the unexplained facts of Indiana politics of this 

 period. The State Bank was not, however, an issue in the 

 state election of 1832. After it was ascertained that Clay was 

 defeated and that the Second Bank of the United States would 

 not be rechartered, speculation began as to what would take its 

 place. 



This question was prominent in the local politics of other states 

 besides Indiana. The Kentucky legislature endeavored to charter 

 a state bank; but the bill, after safely passing the House of Repre- 

 sentatives was defeated in the Senate, where a bill to charter a 

 Louisville bank with $2,000,000 capital took its place and became 

 a law. A like situation developed in Ohio, where local politicians 

 were able to defeat a charter for a state bank, and substitute char- 

 ters for the Franklin, and the Commercial Bank of Cincinnati, 

 each with $1,000,000 capital. So strongly, however, war Governor 

 Lucas of Ohio, in favor of a state bank that in his next message 

 to the legislature, he recommended a state bank with branches in 

 all sections of the state. ^ 



The capital invested in the Second Bank of the United States 

 had brought in big dividends and there was a rush in all the states 

 to get stock in favored banks. In almost every state we read of 

 politicians busy with legislatures, seeking bank charters, or the 

 coveted position of commissioner to sell stocks and organize banks. 

 There was much foreign capital available for investment in stocks. 

 That legislators feared these foreign capitalists is evidenced by the 

 widespread efforts to keep stock out of their hands. In the State 



1 Dewey [State Banhinj Before the Civil rl'ar, p. 43), says this was an extension of the earlier 

 charter. This is an error. The charter of the earlier bank was annulled in 1822 by the Knox county, 

 Indiana, Circuit Court. 



2 Indiana Democrat, February 13, 1833. This was published in Indianapolis and was the organ 

 of the Jackson men- It is referred to hereafter as Democrat. 



