The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-02-10
HUGH M'CULLOCH's BANKS.
They Were Safe Because Their Notes
Were Based on Assets.
New York Press.


In the somewhat remarkable enthusiasm
for the gold standard and currency reform
displayed in Indiana, a State which has
been considered for years a hotbed of soft
money heresies-th0ugh not specially 1den-
titled with the free coinage movement-we
can trace bit of fiscal heredity probably.
The issue of greenbacks and the national
bank act destroyed in that commonwealth
far better currency system than they set
up. The system destroyed was one identi-
cal with that proposed by the monetary
commission.
Hugh McCulIochs famous State Bank of
Indiana for soundness, if not for
wealth, Rothchilds of the prairie, from
tier Bank of England. Founded when the
bullet marks of TippecanOe were not all
barked over i'm the virgin forests of that
field. neither it nor one of its numerous
branches Gt began with ten in 1884 ever
refused specie payments. This through the
crashes both of 1886 and 1851 But during
all that period the growing industries of
the State were never deprived of the adj
vances which so especially in a young coun-
try make the life of trade. The State in
vested $1000,000 to start the institution and
took out So, 800 900 in pronts in twenty years
1t is scarcely necessary to say that this
concern was not among that majority Oh
"Jackson's pets which failed to return
the government deposits removed TO their
vaults from those of the Bank of the United
State bankers who could assume charge of
the United States treasury without rear OF
ghosts.
this man, which Congress declined to use
after it had obtained it, was undoubtedly
a great cause of this unique success. But
the most marked manifestation OF that
genius was displayed in the choice OF a
fit banking method. The State Bank cur
rency of Indiana. which was never by the
fraction of a mill below par in thirty years,
was based on assets, not securities A SIM
liar success attended every state banking
system conducted in this wagon assets
and with common honesty and judgment.
The most noted outside of Indiana were
those of Massachusetts. the SUFFOLK syS-
tenn" and Louisiana. On the other hand,
the colossal swindes and failures when
have included all state banking systems IN
the general condemnation of the ignorant
a term comprising a majority of New YORK
editors-were all based on note issues
against securities" of such was the
browning infamy of Mississippi. where the
State repudiated the bonds which had set
up the bank.
Doubtless a good deal of the soft-money
heterodoxy of the State has been due to
the popular inability to understand how
the United States government could not in
crease it's note issues with safety when
the Bank of Indiana could. This brings us
to the fatal limitation of all government
credit systems-their inability to include
the least element of the all-important quail
ity of elasticity.
The fact may as we'll be admitted that
the currency legisla tion of the last thirty
wears has overlooked every requisite of
sound finance but the security of the note
holder AS soon other and equally vital
tary commissions plan, Immediately
begin to see honest-money developments in
what we have considered dishonest-money