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Indiana University 
1814 for a new bank; at the session of 1815 the Green River 
country asked for more banks thruout that region. Immigra- 
tion was coming to Kentucky rapidly, and there was not 
enough hard money to develop the state, especially the newer 
settlements. Much of the hard money came from the older 
eastern states in exchange for livestock. But the merchants 
of the East, particularly of Philadelphia, supplied Kentucky 
business men with enough commodities to keep the balance of 
trade in their favor. Naturally this situation left Kentuck- 
ians constantly indebted to people outside the state.^^ 
The people believed that good times would come only with 
more paper money, and the annual pressure on the legislature 
for more banks bore abundant fruit in the session of 1817- 
1818. In January, 1818, the legislature created forty new 
institutions designated as independent banks; in February it 
added six more.^^ These banks might issue their notes to 
bearer on demand payable in any one of three kinds of money : 
specie, notes of the Bank of Kentucky, or notes of the United 
States Bank. Few restrictions were placed on these inde- 
pendent banks. The aggregate capital of the forty-six banks 
was $8,420,000. The amount any individual bank could have 
as capital varied from $1,000,000 in Lexington and Louis- 
ville to a minimum of $100,000 in each of the twenty-one 
towns such and Greenville, Shepherdsville, Mt. Sterling, and 
Morgantown. To show how insistent the newer communities 
were for banking privileges at that time, it may be noted that 
a number of towns granted a bank, such as Bowling Green, 
Bardstown, Richmond, and Shelbyville had fewer than one 
thousand persons; while in some places, such as Barbourville 
and Greenville, there v/ere fewer than one hundred. These 
banks were chartered to do business until December 31, 1837. 
They were authorized to issue notes amounting to three 
times their capitalization less indebtedness, which totaled 
$26,000,000, and they proceeded to issue them freely.^o The 
first of the independent banks was opened for business May 
John C. Doolan, “The Old Court — New Court Controversy”, in The Green Bag, XI, 
178 (1899). 
Kentucky Acts of 1S18, 375, 491 ; also see Kentucky Gazette, February 7, 1818, for 
full text of the law creating- the new hanks. The best file of this, the oldest and most 
reliable paper in early Kentucky, may be found in the Lexington Public Library. 
^9 Good accounts of the founding and operations of the forty-six banks may be found 
in Collins, History of Kentucky, I, 28; Doolan, in The Green Bag, XI, 179 (1899) ; 
Durrett, op. cit., 17 ; Shaler, Kentucky a Pioneer Commomvealth, 176, 177 ; Sumner, 
Andreiv Jackson, 155; Kerr (ed.). History of Kentucky, II, 596-599. 
