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natural expansion of the currency must result. At one time 

 it would rob the creditor, at another time, the debtor. Under the 

 present system, he thought, there could never be a sound currency. 

 The speculator came to Indianapolis with a bundle of bonds under 

 one arm and a roll of bank notes under the other. He deposited 

 his bonds, that had cost him from fifteen to fifty cents on the dollar, 

 and got for them Indiana currency, dollar for dollar, recommended 

 by the state. Presumably he went to some obscure place and put 

 them in circulation, but in reality he took them to Xew York. 

 The Constitutional Convention and the legislature of 1851 had, 

 in fact, imdted the bondholders to bring their bonds to Indianapolis 

 and cash them at par, and, perhaps, for a few years draw interest 

 on both the bonds deposited and the currency received. 



Early in the session of 1853 ^h. Humphreys, sitting for Greene 

 and Owen counties, introduced a bill in the Senate prohibiting the 

 state auditor from accepting any more applications for banks. 

 This bill received a favorable committee report, but was tabled by 

 a vote of 23 to 20.^2 Later, a motion to amend the law, by repealing 

 the whole statute of 1852, found only eleven supporters among the 

 forty-six senators present. An amendment by John H. Sulhvan 

 of Jefferson county to place more restrictions on banking was lost. 

 The Senate was about equally divided on the matter, but no action 

 was taken. 



The auditor's report^^ of July 1, 1854, shows that thirty-one 

 new banks had been organized, making a total of forty-six. The 

 capital stock was 86,148,837, with a circulation of 85,219,100, and 

 specie on hand to the amount of 8807,393.08. By December 15, 

 1854, the number of banks had risen to eighty-nine, with a nominal 

 capital of 830,400,000 and with a total circulation of 89,299,574, 

 Auditor Dunn might well begin his report by saying his duties had 

 become "peculiarly important and laborious." 



The natural result followed hard on this unnatural expansion 

 of the currency. About May 1, 1854, a flurry in the money market 

 started the trouble. The Crimean War in Europe changed the 

 demand for American securities to a demand for American coin. 

 Coin was at a premium, and brokers began to drain the Indiana 

 banks to get coin for the eastern markets. Governor Wright had 

 sus]3ected the integrity of these banks from the first and, in 1854, 

 had sent John S. Tarkington to a bank at Newport in VermilHon 

 County to see if it would redeem its paper. As it was expressed 



»' Sen. Jour., 1S53, p. 136. 

 i»5en. Jour., 1853, p. 151. 

 " Doc. Jour., 1855, p. 313. 



