The Evansville daily journal. [volume] (Evansville, Ia. [i.e. Ind.]) 1848-1862, 1855-01-06
KEPoRT-FREE SANK


We are indebted to the Auditor of State,
Mr.. Dunn, for a copy Of his Annual Report 10
the Legislature. As the question OF Banks
is the all absorbing one at the present time
we place befo, our readers that portion OF II
which speaks of the Free Banks:
FREE BANKING
The duties of the Auditor in theBankingDe-
pariment Of his office, have been peeuliarly
important. laborous, and responsible. From
about the hrst of May, last, from several re-
lative causes, heavy run commenced on
the Stale Stock Banks OF Indiana, for coin.
The scarcity and demand for Eastearn Ex-
change, which yielded sufficient profit 10
the Brokers Of our neiglIboriDg cities 10 IN
duce them 10 collect aud assert the notes OF
our banks, and to send them home insIarge
sums for redemption in coin, caused such a
drain upon their specie as TO give them great
trouble to keep all adequate supply on hand.
So inveterate was the demand for coin and
4 nothing but coin, that many Of the banks
which had provided themselves with Eastern
/ exchange, and offered it to those who pres
ehted large amounts OF there paper, were
told in reply, that the notes promised TO pay
dollars, and that exchange would not be
taken instead thereof. This unprecedented,
and almost unheard of run, continued to in
crease for more than sixty days, before any
one oil those banks declined TO furnish TO The
numerous banks of brokers and bankers, who
continued to assert and send home their paper
! the heavy sums demanded by them in
specie.
A crisis then showed itself in the whole
monetary operations Of the Western country.
large number vi bankers and brokers in
Cincinnati, who had supplied themselves in
a great measure, with exchange and coin
drawn from the Indiana Banks, under their
ssorting system. were compelled TO suspend
/ business, when they could no longer use the
Indiana Banks as the FOUNTAINS Of their
existence. Indeed, several OF the Ohio banks,
in other cities than Cincinnati, felt the same
want OF place for the supply OF the precious
metals and at Cleveland, Columbus, Circle
vile, Toledo and Sandusky, banks which
had hitherto been in full confidence, were
also brought TO suspension, and their notes
I TO very severe and runious rate OF discount :.
Chicago and Illinois generally were next
the theatre OF the effects of this combined
demand Tor coin, also, resulting in the failure
of several banking houses, and deprecia.
ton of their notes. The fact that the notes
Of the Indiana banks, under the General
Banking Law, were secured by interest pay
Ing bunds Of the several States of the Union
and in many instances by the very best
securities that any State Issues, seemed to
be Of no value in the estimate put upon their
notes by the public. A general deprecia-
ton cnsuec. Those banks which continued
through all the pressure that was made upon
item, to redeem in coin, were alike discredit-
ed with those which had refused to pay TO
hra tb,
are many banks in The State, which have
rigidly complied with The demands made
upon them Tor specie at Ill times, when they
might have saved or lie much money by
refusing to pay, and surren4ering bonds.to
note holders.
Added TO The Reorganization of Fl ancial
affairs in the West, and al the same time. an
unusual stringent slate OF the money mar-
ket exhibited itself in New York, eud the
other great commercial cities in the -East-
} This tight condition of money facilities in
the East, being the point at which all heavy
transactions in State Stocks and bonds are
usually made, served materially To d"Press
i--Iiana Sinek secured paper. Tor capitalists
could not be found, who were able and will
ing to protect the paper TO ! urchasc the
State bonds which secured il, unless they
were sold at unreasonable depreciation and
loss.
The excited and unsettled condition Of
European affairs seemed, at this crisis, to be
also unfavorsb BILE to the Stock market OF New
York, and there was consequent failing off
OF foreign orders for the purchase of State
\ Stocks. The large amount of those Stocks
which by the redemption Of bank paper was
liable to be thrown upon an already depress-
, ed market, produced the conviction upon my
: mind, that if they were, by operation of law /,
n 10 be forced to sale fer what they would or
I might bring. much loss must ultimately re-
n suit TO the public by n in sufc cheney of the
Y securities to meet the issues of the banks.
: II bank has notes out to the amount Of one
hundred thousand dollars, which were issued
. upon an equal sum in State bonds, if these
bonds be forced into market at loss of
E twenty per cent, deficiency OF twenty
thousand dollars must be the result, which
sum must fall upon the note holders, if there
be no other assets or personal responsible
ty.
To avoid such a state of things, resolved,
! after due deliberation, TO exercise such power
: as was conferred upon me by law, to give as
much opportunity the emergency would
allow, for reaction in the money markets,
!, and to give opportunity to foreign capitalists.
d through their friends in this country, to make
orders from abroad. 1t l. nv belief that in
r thus acting under the law, the bill holder was
!. benefited, and the interests of the bond
I owner promoted. and, that, at no distant day
d a heavy foreign competition in our own MR.
o kets will bring our State securities back to
i their face, and to tfeir fall value. IL order
a that all persons interested in these results
should be placed upon a footing of CT, atty,
: published Circular, dated on the firt day
e OF November last. and which is in these
e words, 10 Wit;