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INDIANA UNIVERSITY STUDIES 



prised the eastern members by making a proposal, with which 

 Gallatin concurred, in favor of immediate resumption of specie 

 payment. He succeeded in his mission and set August 13, 1838? 

 as the day on which the banks were to begin again the payment of 

 specie. But the banks still feared the specie would all be gath- 

 ered in the East, and on November 19, 1839, the State Bank again 

 closed its specie vaults, not to reopen them until ordered to do 

 so by the legislature, June 15, 1842. The Bank never defaulted 

 again. No other state in the Union passed through this period 

 with its currency so little deranged. 



There was much criticism of the Bank during this period of 

 suspension. The Bank notes were at a discount of about five per 

 cent outside the state. This was an especial hardship on mer- 

 chants. One of the most lucrative fields of the Bank's activity 

 was the purchase and sale of exchange. Bills on New Orleans 

 were bought from shippers in the fall and winter. When these 

 were about to mature, Lanier would go to New Orleans and cash 

 them, using the proceeds in buying exchange on New York and 

 other eastern cities. These bills were sold to Indiana merchants 

 buying in the East and thus the Bank turned its money at least 

 three times a year. The discount on these bills, due largely to 

 depreciated currency, was from eight to fifteen per cent on each 

 transaction. During the Panic, the Bank made ten to fifteen per 

 cent clear profits. It took advantage of its freedom from specie 

 payment and expanded its note circulation from thirty to forty 

 per cent. 



In the meantime the Bank Board had established branches in 

 other cities. The Eleventh was located in Ft. Wayne, November 

 25, 1835.2 9 It was in this bank that one of Indiana's most dis- 

 tinguished sons, Hugh McCullough, received his training. At the 

 February meeting of 1838 the Bank Board voted to open three 

 more branches. The opening, however, was to be deferred till 

 specie payment was resumed. The Twelfth was situated at South 

 Bend and opened November 3, 1838, with T. W. Bray, president, 

 and Horatio Chapin, cashier. The legislature authorized a Thir- 

 teenth, which was located at Michigan City, and a Fourteenth 

 which was to be at Logansport. A Fifteenth was later voted to 

 be opened at Rushville and a Sixteenth at Crawfordsville, but 



Lanier, Life of Lanier, p. 17. 



29 Documentary Journal of the Legislature, 1835, p. 8. In this are regularly printed the reports of 

 the various state officers. It is the best documentary source of the state's history. Hereafter 

 referred to as Doc, Jour. These Journals are not always paged. None are indexed and only a few 

 have tables of contents. 



«» Doc. Jour., 1838, Bank Report. 



