History will show that the Bank of the State of Indiana was capably
and conservatively run and that it navigated the perilous time period
between its opening in 1857 and 1865 without the loss of a single cent
by note holders.
The bank’s 20 branches mostly continued, to become national banks
during the course of 1864 and 1865, when the bank decided to
voluntarily wrap up its affairs slightly in advance of its original
charter expiration date.
Sounds very conservative and, well, boring, doesn’t it?
But the bank’s organization in 1855 was anything but boring. A
little history is in order to help explain what went down.
The predecessor State Bank of Indiana, which had been in business
since 1834, was starting the slow process of winding up its affairs so
that it could close in an orderly fashion when its charter expired
Jan. 1, 1859.
Three plus years seems like a long time, but loans had to be
wrapped up and circulation recalled in an orderly fashion.
Independently organized “free banks,” which had been authorized
beginning in 1852, had largely not survived the Panic of 1854, with
many failing in late 1854 and early 1855.
The State Bank had successfully ridden out the Panic of 1837, the
Mexican War and the Panic of 1854, but state ownership of a large bank
was out of favor politically and so promoters for a replacement
institution took another tack.
They hatched a scheme to get a new “Bank of the State of Indiana”
chartered by the legislature. In spite of its name, the bank was to be
owned not by the state but wholly by its stockholders.
The new bank stock promised to be quite lucrative and the
promoters offered rights to purchase stock to anyone they felt could
aid in “greasing the skids” in the legislature to procure a new charter.
By one means or another, they managed to secure enough votes to
get the bill passed over the governor’s veto on March 3, 1855.
The next task at hand was to open the subscription books at new
branch locations around the state. The promoters, of course, had to
make sure that the “right people” were allowed to subscribe for the
available stock and a number of subterfuges were employed.
The most imaginative approach was employed in Richmond, Ind.,
where a sub-commissioner’s train was held for 15 minutes so that he
could complete the task of opening the subscription books and get out
of town almost without breaking stride! The books had probably been
open for five minutes, with the “approved list” of stockholders
inserted in a matter of moments.
The promoters were long on planning but short on money and agreed
to sell 17 of the 20 branches to men associated with the old State
Bank of Indiana in 1856.
Under the able leadership of these time-proven bankers, the new
bank’s future was finally assured.
Wendell Wolka has been a paper money collector and educator for
more than 40 years. If you have questions or suggestions, you can
email him at email@example.com.