The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1837-12-28
'.'s.-'F-'F INDIANA.
Eriraet of Coz. Mobiles Message.

The disordered cOOditltion oil the Wohicu
affairs Of tho cosntry so sensibly felt in the
east during last spring, induced the banks OF
the city Of New York, in May last, to resort
as a measure Of precaution, to a temporary
suspension of specie payments. That step
was followed by general and almost stimuli
taneous suspension throughout the Union.
The intelligence arrived at the seal of Govern
ment during the session OF the State board.
After giving that anxious deliberaiion due to
the magnitude Of the interests involved, they
determined to recommend an immediate sus-
pension to the branches. The latter were in
safe and prosperous condition, as shown by
the exhibit of their resources and liabilities
made at the time. They had. however, in
their possession more than million Of dollars
in notes and credits Of the suspending banks.
Under these circumstances continued re-
demption of their paper amidst the universal
suspension of neighboring banks, would have
led, mavoidabiy, to an almost entire abstrac-
ton Of the specie basis Of our circulating me-
dunn. The fatal tendency Of the latter would
have been seen, not merely in Gripping and
prostrating the bank, but in the severe and
lasting injuries thereby resulting to the State.
The members of the State board, would
therefore have been faithless to their trust if
they had neglected to adopt measures design
ed to prevent the capital which the State had
furnished for the benefit of her citizens from
being Withdrawn to supply the vaults offoreign
banks the doors Of which were closed against
every similar demand we might make upon
them.
The establishment Of the State Bank OF In
diana was rather matter Of necessity than
choice, and that necessity grew out OF the
discontinuance Of the National Bank. The
late Chief Magistrate having determined To
refuse to that institution renewal of her
charter, zealously recommended the State
bank as possessed Of the ability to furnish a
more sound and uniform carrency The local
banks instantaneously multiplied, and with
the withdrawal Of the paper Of the Bank of
the United States, it was evident that the notes
of the local banks would supply its place.
We were therefore under the obligation to
furnish our citizens with substitute to place
them on an equal footing with those of other
States, and to avoid the necessity Of supplying
our deficient circulation by the paper of banks
of which we could know but little. With
these facts and views before them; with the
general consent of all parties, and the marked
appreciation of the people, the State bank with
its branches was established by the Legisla-
ture. In order more eilectually to identify it
with the public interest and welfare the State
became the owner of half the stock, reserved
to herself ample supervisory powers over It,
and retained the right Of selecting some OF the
more important of its officers.
TO pay her half Of the stock and to furnish
individuals with a part of the means of paying
their subscription in specie, the State borrow
ed in all the sum of 8 100000, at five per
cent, payable in from twenty to thirty years.
She receives on this sum an average interest
Of nine per cent, leaving clear annual profit
Of $55,600, which is again loaned out at nine
per cent, on the principle of compound in
terest. Long before the expiration Of her
charter, there will remain in the hands of the
Commissioners Of the Sinking Fund, after the
extinction of the yearly interest on the bank
loan, sum sufficient to pay off the entire
principal, leaving the whole OF the STOCK or
the State as our profits. In accordance with
provision of the charter. this is to he used
as fund for the support of free schools. Our
bank is therefore emphatically State insti-
tuition, closely identified with the interests OF
the State and her citizens, and as long as she
continues to discharge her legitimate duties
with the fidelity and success SO honorably
characteristic Of her past history, she will re-
tain the undivided support and merited conf
dence Of the people.
The necessity of sustaining the sound bank
ing institutions of the States is apparent and
generally admitted. The suspension Of specie
payments worked forfeiture of the charters
of the banks in several Of the States. The
Legislature on being convened to advise with
regard to the subject have uniformly adopted
In cfoto IN
our own, the Legislature have not deemed it
proper to annex the penalty Of forfeiture 10
suspension of payment. Our banks are made
liable for twelve per cent. when they fail to
redeem their notes, and may be Withdrawn
and wound up at the discretion Of the State
board. The wisdom of not exacting forfeit
ture is now fully attested 1t has enabled our
banks quietly and efficiently 10 discharge their
accustomed duties, and aid in warding of from
our trading agricultural and manufacturing in
terests, the threatened disasters Of the crisis
If the State had reserved to herself the au-
thorty to resume the charter on such con-
tingency, and had with rigid and infexible
regard to her rights exerted it, the step would
have Slapped the foundations of our credit,
and inflicted blow on our interests which
would have required years of uninterrupted
prosperity 10 repair.
On viewing the amount of interest the State
possesses in the stock Of the bank, the nature
of the objects lis establishment was designed
to subserve, the beneficial influence it has ex
erted on every branch Of enterprise, and the
immense gain that will ultimately accrue to the
people, you will find in the range of your du-
ties, no subject more worthy Of your attention.
The safety of the bank is found in the pru
dent management of her ample means, and
secured by the personal responsibility of her