Studies in American History 
57 
8 , 1818 .^^ During 1818 about half of the banks began opera- 
tions and issued their notes. Town lots bought on borrowed 
capital were favorite investments with every line of business. 
Speculation ran riot and it can easily be seen how this infla- 
tion would culminate.22 
Everyone wanted to get rich. High prices and cheap paper 
money drove out what little specie there was. Long-time 
contracts were entered into, and incurring debts seemed “the 
only way to get rich or to save one’s self from ruin”.^^ Niles, 
a fairly reliable editor and always conservative, after review- 
ing the paper money epidemic all over the country, proved 
a wise prophet when he took sorrowful notice of the many 
new banks of recent origin in Maryland, New Jersey, Ohio, 
Rhode Island, Tennessee, and Virginia, and from fifty to one 
hundred more projected elsewhere in the United States, for 
he predicted that it could mean in the end only 
* * ^ mammoth fortunes for the wise, wretched poverty for the 
foolish. Wealth to the speculating drones — misery to the productive 
poor. Lands, lots, houses, stock, farming utensils, and household furni- 
ture under custody of the Sheriff — Speculation in a coach, Honesty in 
the jail.^^ 
Not all the independent banks authorized in the state 
were put into operation, owing to hard times which 
came in 1819 . The bank at Richmond withdrew its 
stock and dissolved its charter without beginning busi- 
ness.25 But adding to the independent banks the thirteen 
branches of the Bank of Kentucky, there were fifty-nine 
state banks actually authorized to do business in 1818.^6 The 
Bank of Kentucky was in good repute when the independent 
banks began to organize, but it soon began to suffer from the 
inexperience, mismanagement, and dishonesty of the new in- 
stitutions.^^ It is interesting to note in this connection that 
between 1811 , when the First United States Bank ended, and 
1816 , when the Second Bank began, the number of banks in 
the country trebled, their issues of bank notes expanded from 
$45,000,000 to $100,000,000, and most of them were misman- 
21 Kentucky Gazette, May 8, 1818. 
^^Autobiography of Amos Kendall (New York, 1872), 202. 
22 Sumner, Andretv Jackson, 155. 
Niles’ Register, XIV, 110. 
Kentucky Gazette, June 18, 1819. 
2® Doolan, in The Green Bag, XI, 179 (1899). 
21 Zachariah Frederick Smith, History of Kentucky (Centennial edition, Louisville, 
1892), 509. 
