58 
Indiana University 
aged. Thus Kentucky was by no means alone in her thought- 
less and lavish chartering of banks and in laying a good foun- 
dation, as did most of the other states, for widespread ruin.^® 
In addition to the state banks mentioned, there were two 
branches of the United States Bank in Kentucky, one at Lex- 
ington, the other at Louisville. These branch banks at once 
became actively identified with the business life of the com- 
monwealth. It was thought that the United States Bank and 
its branches would aid the resumption of specie payments in 
state banks, bring about deflation quickly, and preserve and 
stabilize all our currency and exchange. But this bank was 
itself badly managed for the first four or five years. Chan- 
ning says that 
Undoubtedly the attempt to bring about deflation in so short a 
time and by means of a national flnancial institution was most unwise 
and accounted for the great unpopularity of the Second Bank in large 
portions of the country; and also did something at least to bring about 
the hard times of the next few years.'” 
There is little doubt that these branch banks in their early 
history in Kentucky did help to hasten rather than retard the 
impending ruin, and that they themselves were in a large 
measure to blame for the hatred heaped on them during and 
after the financial and political crisis which soon struck the 
state. United States Bank notes were redeemable in specie, 
and Kentuckians exchanged large quantities of state bank 
paper for them at a great discount. This helped to reduce 
the value of the state bank notes and at the same time put 
these banks more heavily in debt to the federal bank.^° As 
hard times began to appear in the East in the latter part of 
1818, the branches of the Bank of the United States in Ken- 
tucky began to demand specie and to bring pressure to bear 
on the state banks, which in turn passed it to their debtors.^^ 
In spite of the fact that the Kentucky legislature had only a 
short time before invited the United States Bank to bring 
branches into the state, that institution was soon denounced 
as a mammoth monster, a swindling institution, a mighty 
Carl Russell Fish, The Development of American Nationality (New York, 1913), 
148. 
Channing, History of the United States of America, V, 313. 
Frederick J. Turner, The Rise of the Neiv West (New York, 1906), 137: Doolan, 
in The Green Bag, XI, 179 (1899) ; Richard Hildreth, History of the United States of 
America (New York, 1877), VI, 631. 
Janies Schouler, History of the United States of America under the Constitution, 
17S3-1865 (6 vols.. New York, 1880-1894), III, 118. 
