The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1883-08-13
THE FINANCIAL SITUATION.

Indiana Banking Company was enough to
have created widespread disaster had not our
business men, our banks, our manufacturers
and capitalists been in the soundest condi-
ton. That these two banks, with deposits of
about $4OOO,0OO, closed their doors with
scarcely ripple beyond the curbstone in
front of their houses, is a marvellous testi-
mony of the solidity of the city's business.
1t is remarkable fact that their suspension
created greater excitement abroad than here
Editorial comments were made all over the
country, INDUCING speculations as to the
probable effect upon this city and the country
| in general, and every metropolitan paper was
anxious to secure all the particulars. Con-
trary to what was reasonably expected, there
apparently has been no house, aside from
the two banks at all affected, and, with these
two exceptions, business moves on uninter
ruptedly. indianapolis is enjoying period
of solid prosperity never surpassed in her
history. During the past three years she has
improved in a more substantial and thrifty
manner than ever before. Our manufacto
ries, new and old, are all busy and all enjoy
ing wider patronage than ever. There has
been but very little speculation of any
| kind, and none of magnitude. The
| rumors that million was lost
here through Chicago margins is by no
| means true. While large sums doubtless
| left this city to keep up margins at Chicago,
| it is altogether safe to say that quarter of a
million would be an extravagant estima tie.
OF this amount very large per cent was lost
by citizens of other parts of the State who
dealt through indianapolis Everybody in
position to know is free to declare that losses
| in speculations had but little or nothing to
do with the embarrassment of the First
National Bank of this city.
Without going into details, it is enough
here 10 point out few of the reasons why
the suspension occurred. The First Nation
al Bank was top heavy, in the first place.
It's capital was but $40O. 900 while its deposits
were over s., 100000 Evidently the greatest
care should have been exercised in making
| to meet any probable emergency. The
character of very large per cent. of this
| vast sum was such as to render it source of
danger, being made up of quite a number of
by county officials throughout the State
At this season OF the year there is
always a heavy drain upon banks for
money to move the wheat crop, while at the
same time the banks are carrying merchants
until they realize from their fall trade. 1t is
season when the very ablest management
is required to meet the demands of trade,
and anything like risks are dangerous. The
wheat is now being threshed, and much
of it goes directly to the country towns
along the railroads. so that not only are city
banks drawn upon for something like $100,
900 day, but the country banks are likewise
drained. The First National Bank had its
money in such shape that it could not meet
this double drain. This was appar-
ent for some days, or weeks, before the COL
lapse. While its collaterals were good
they were so disposed as not to be available
at the critical moment and the result was
inevitable. In addition to these reasons was
another that had almost as much to do with
the disaster. 1t has been the habit of Indi-
annapolis banks to pay higher rates of interest
on deposits than are paid elsewhere, and as a
result money accumulated here that by
! RIGHT should have p0ne elsewhere IT 10 a
difficult and dangerous thing to pay high
rate of interest on large deposits on demand
The large reserve kept to meet exigencies
eats up the profits, and if it be not kept, fail
ure is imminent, as resulted in this instance.
These the facts, as nearly as they can
be obtained. The Indiana Banking Com
pany went down, it is alleged, because it had
very large interest in the First National
There was no preconcerted squeeze" and
little or no inconvenience from withdrawals
to keep up margins.
AS 10 other banking houses, the assurance
is given that they are in irst-class condition.
! While they have been called upon for large
sums, such as is always the case at this season
of the year, they profess to be able to hold
their own, and have rendered assurance
! doubly sure by calling in from abroad vast
sums TO meet any run likely to result. Thus
] run, and there seems to be no probability Of
any. The only persons who have called for