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INDIANA UNIVEESITY STUDIES 



closely allied ventures of the state, their affairs were kept separate 

 as far as possible. The Improvement officials kept their funds in 

 the Bank and frequently overdrew their accounts. When the 

 state failed in its payments, in 1839, the Bank was involved by 

 one of these overdrafts to the amount of $650,000, which seriously 

 crippled it. In 1836 the Fund Commissioners of the state had 

 been authorized to sell bonds and procure for the Bank $1,000,000 

 more of capital. On the advice of Dr. Coe, Mr. Samuel Merrill 

 delivered these bonds to a firm of brokers in New York, in which 

 Dr. Coe was interested, and all were lost but $20,000. There was a 

 great demand at the time for loans and, depending on the extra 

 capital, the Bank had discounted heavily. The failure to secure 

 the extra capital, coupled with the failure of the state, came near 

 breaking the Bank, and caused several branches to stop discounting 

 for the time and call in all their loans. The state came to its aid 

 in 1840 and issued bank scrip to the amount of $722,640, which 

 it gave the Bank to pay the overdraft. 



The second trial of the Bank's strength came in the Panic of 

 1837. Its deposits had risen rapidly. The United States deposit 

 was $1,062,238 in 1835, and the next year it rose to $2,267,489. 

 In 1837, however, the United States deposit dropped sharply to 

 $576,277 and disappeared entirely by 1840. President Jackson's 

 Specie Circular, of July 6, 1836, also helped to weaken the Bank at 

 this period by forcing the government land offices to refuse all kinds 

 of bank notes. Its ''quick" liabilities Nov. 26, 1836, were: pubhc 

 deposits, $2,276,357; individual deposits, $431,703; notes in cir- 

 culation, $1,927,050; capital stock, $1,585,481; assets, specie, not 

 given but about $1,000,000; discounts $3,176,613; currency, 

 $1,204,737. 



It was well that the three j^ears of experience had taught the 

 people the value of the Bank. The stages which reached Indian- 

 apohs on Thursday evening. May 20, 1837, from Lawrenceburg 

 and Madison, brought the news that all the eastern banks, includ- 

 ing the old Bank of the United States, had suspended specie pay- 

 meht. The news was as sudden as it was unexpected. The situ- 

 ation was grave. If the Bank suspended specie payment it would 

 forfeit its charter. If it did not suspend, it would be broken and 

 thus ruin the business of the state. The Bank Board was fortu- 

 nately in session, and, in spite of the law immediately ordered all 

 branches to stop paying specie. The most dangerous creditor of 

 the bank was the National Government, which had $1,500,000 in 

 specie on deposit. Mr. Lanier was posted off at once with $80,000 



» IndimQ Journal, May 20, 1837. 



