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IXDIAXA rXTYERSTTY STUDIES 



Bank of Indiana chartered in 1834, no foreigner could be a director, 

 and hence not a president of the bank or of any of its branches. 

 If enough stock was subscribed by citizens of the state, no one else 

 could be a subscriber. To aid the cit izens. ihe sta te arranged to 

 lend them money to make subscriptions. In the charter of the 

 Bank ot the State of Indiana, granted in 1855, it was enacted that 

 foreigners could not vote their stock in stockholders' meetings; 

 all directors had to be citizens of the state; and if a director moved 

 from the state his office was vacated. In the same charter it was 

 provided that if citizens should subscribe all the stock, others could 

 not subscribe.^ The Free Banking Act of 1852 made no such dis- 

 criminations. 



There was also a fear that the control of banks would drift 

 into the hands of the few, so that there was scarcely a charter that 

 did not specif}' restrictions on the amount of subscriptions by 

 individuals and especially by foreign subscribers. Each of our 

 state bank charters cUscriminated against the large holder, — first 

 by cutting down his subscriptions if there was an oversubscription, 

 and secondly, by refusing to let him vote in stockholders' meetings 

 in proportion to his stock. In the charter of 1834, the holder of 

 four shares had four votes, but above that number the holder had 

 one vote for every two shares up to thirty shares; from thirty to 

 ninety shares one vote for every four shares; from ninety up to 

 one-hundred and fifty, one vote for every six shares; above one 

 hundred and fifty, one vote for every ten shares; and it was further 

 provided that no stockholder should have more than one hundred 

 votes. In the charter of 1855, one vote for each share was per- 

 mitted up to fifty shares; from fifty to one hundred shares one 

 vote for every five shares; and above one hundred shares one vote 

 for every ten shares. This form of restriction was placed in the 

 charter of the First Bank of the United States by Hamilton and 

 copied in nearly all later charters, both state and national. 



Experience had taught the people that the chief difficulty with 

 banks was that they tried to do business on insufficient capital. 

 There was little specie in the country, and what there was could 

 not easily be got hold of for banking capital. Not over one twentieth 

 of the capital of the First Bank of the United States was paid in 

 specie. That bank began business when $400,000 of its ten millions 

 of capital stock was paid in. The same plan was followed in the 

 Second Bank of the United States. Even the United States govern- 

 ment borrowed from the First Bank the money to pay its own 



' Laws of Indiana, 1834, ch. vii. 

 * Ibid., ch. iii. 



