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INDIANA UNIVERSITY STUDIES 



at the time, the bank '^squatted." This test not only confirmed 

 the Governor in his suspicion but started a run on the free banks 

 of the state that never ceased. It was charged at the time that 

 State Bank men furnished the Governor with all the bills he wanted 

 on the free banks. 



On January 7, 1855, a convention of Indiana bankers met at 

 Indianapohs for the purpose of classifying the different bank bills, 

 but little could be done. The notes of a few banks were labeled 

 '^gilt edge" and nothing said of all the rest.^^ 



The drain of coin continued. In February, 1856, a banking 

 house was opened by Dunlevy, Haire & Co., in the Blake Block, 

 Indianapohs, for the sole purpose of presenting bills to Indiana 

 bankers and getting coin. The firm is said to have sent $2,000,000 

 in coin to the ''gougers" of the ''hog" city — Cincinnati — during 

 its first three months of operation. The good and the bad, the 

 honest and the dishonest, were treated alike. Some banks had 

 provided eastern exchange, but the demand was for coin. After 

 this run had continued sixty days or more, Ohio, Indiana, and 

 Illinois banks began to go down. The bonds on which the circula- 

 tion of Indiana free banks rested declined on the markets from 

 twenty to forty per cent. The auditor tried to stem this foohsh 

 run by sending out a circular stating that no preference would be 

 shown for protested bills, and that bonds would not be sold till 

 sixty days notice had been given in Nevv York, London, and Paris. 

 He offered to exchange bonds for free bank notes, dollar for dollar, 

 if currency was tendered in $1,000 lots. Nothing would stop the 

 panic. 



During this bank-run the State Bank paid out over $2,500,000 

 in specie without lowering her specie deposit. Business could not 

 be carried on under such conditions. One instance must suffice 

 as an example of the violent fluctuations of the period. The cir- 

 culation of the free banks in May, 1854, was $9,000,000. By De- 

 cember 15, $3,454,279 of circulation had been withdrawn. People 

 lost all confidence in free banks, but still the auditor felt that a 

 few amendments to the law would make it a good banking system. 



In the midst of this panic in the money market the legislature 

 met, January 4, 1855. Governor Wright again took up the cudgels 

 for a sound currency. He repeated his statement of two years 

 before that the free bank law was a failure, and that the past events 

 had shown clearly that the restrictions provided in that law were 



1' Berry R. Sulgrove, History of Indianapolis, p. 143. 

 « Ibid., p. 222. 

 ■-nbid., p. 222. 



1* Sen. Jour., 1855, p. 17, the governor's message. Doc. Jour , 1855, p. 82. 



