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INDIANA UNIVERSITY STUDIES 



they were paying for their stock with their own money. The general 

 law of Pennsylvania provided that no one should subscribe for 

 more than two shares on the first day, four on the second day, and six 

 on the third. A Maryland law limited subscribers to twenty shares 

 at one subscription. In all the states, effort was made to distribute 

 the stock as widely as possible, but in almost every case the law was 

 evaded. It has already been noted that Indiana borrowed money 

 in 1834 to lend to her citizens to enable them to buy stock. The 

 same provision was retained in the law of 1855, but the commissioners 

 having the subscriptions in charge manipulated the books so that 

 only a few favorites were allowed to subscribe all the stock. 



Another common practice at this time was for the state to 

 subscribe a part, or all, of the stock. Scarcely a bank was chartered 

 by the United States, or by any state, without a provision that 

 the government issuing the charter should take a part or the whole 

 of its capital stock. This was not due to a scarcity of capital, for 

 there was plenty of money seeking investment in banking. It was 

 primarily due to a belief that such investments were profitable; 

 and when banks were well managed this was so. Pennsylvania, 

 in 1813, had an annual income from her bank stock of $200,000. 

 Many other states had large incomes from this source. The State 

 Bank of Indiana could have paid the ordinary expenses of the state 

 from its profits during the period from 1834 to 1857. As another 

 reason for this investment, it was believed that if the state wished 

 to borrow money, it could do it more readily from a bank that was 

 partly under state control. Again, it gave the state some control 

 over the bank's affairs and this was considered salutary. Lastly, 

 it was valuable to the legislator individually; it suited his 

 vanity to be connected with banks, handle bank stock, and elect 

 bank presidents. 



