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INDIANA UNIVERSITY STUDIES 



to demand it. The head office was to be at Indianapohs, but 

 there was no parent bank. The branches were on an equahty, and 

 the Indianapohs branch was not to enjoy any prestige nor exert 

 any undue influence over the other branches. This charter 

 forbade the Bank's dealing at all in real estate. The provision 

 worked to the advantage of the Bank, for the people had more 

 faith in a bank that did not deal in real estate, as a result of their 

 experience with the Second Bank of the United States, which had 

 acquired a bad reputation because of its unsatisfactory dealings in 

 real estate. It was to be a strictly specie-paying iDstitution, and 

 if at any time, it refused to redeem its notes in specie it was to for- 

 feit its charter, a provision which was later disregarded in a critical 

 period of its hfe.i^ This provision in its charter put it in a class with 

 the best banks in our history, and clearly set it off from the 

 ''wildcat" brood then springing up in all the surrounding states. 



The rate of discount was fixed at six per cent, and each share 

 was to pay into the educational fund twelve and one-half cents 

 annually in lieu of a state tax. This exemption from taxation 

 was taken away by the amendment of 1841, and the Bank was 

 made subject to the usual levies. A provision that must have 

 dampened the ardor of several members made all state officers 

 ineligible to any position in the Bank. It was to issue no notes 

 under five dollars; but this limitation was removed in 1841, and 

 the Bank was thereafter allowed to issue notes as low as one dollar. 

 Under the amendment the Bank had to pay to the state one per 

 cent on all small notes issued. There was mutual responsibility, 

 but notes were to be redeemed by the branch issuing them. A 

 complex scheme of management w^as worked out for the Bank. 

 The president was elected by the legislature for a term of five years 

 at a salary of from one thousand to one thousand five hundred 

 dollars. For the State Bank the legislature chose four directors, 

 and each branch one. These constituted what was known as the 

 Bank Board. This Board had full power over the branches, and 

 could make examination, personally, or require a report of any 

 branch without a day's notice. The Bank Board in its turn made 

 an annual report to the legislature. The Bank Board appointed 

 three directors yearly for each branch, and the stockholders chose 

 from seven to ten more. These branch boards elected presidents 

 and cashiers for the branches. None of these officers could hold 

 state offices while on the bank boards; nor could any stockholder 

 give his stock as security for a loan; nor could a president, cashier, 

 or director, endorse for anyone or for each other. The duties of 



" See below, page 258. 



