The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-03-07
INDIANA BANK
TROUBLES DATE
BACK TO 1878
First Permanent Financial
Institutions Then Forced
On Suspended Payments.
BY l.. l.. DICKERSON
LIZ Iihrarinr

Bank difficulties in Indiana date
back to 1919, when the first two per-
manent institutions in the state
we're forced to establish a suspended
payment system, following with
drawal Of all government funds in
the banks.
The two banks, one at Vincennes
and the other at Madison, first were
opened in 1914 and, during the 1916
session Of the state legislature, a bill
was passed that Indiana only should
have one banking system. This was
to be known as the Indiana state
bank and branch was to be set up
in each Of the fourteen districts of
the state
The Vincennes bank was selected
as the chief institution Of this or
ganizaton and the Madison bank
was to be one Of the branches. De-
pOsitOrs in Madison bank, however
refused to acCede to this plan and
it remained an independent unit.
Struggles Began Early
The fourteen branches opened on
April 10. 1917, and deposits in the
Vincennes bank we're raised from
100000 to $1,5OO.OOO by the govern
ment.
The state was TO control the bank
and deposit of 1915, 900 was to be
made by the Governor
In the fall of 1918 the United
States banking system refused to
honor any notes Of banks in the
northwest and all banks in that
district became insolyent. Indianas
banks alone failed to close their
doors, adopting a suspended pay
ment plan.
In 1921 the government came to
the rescue of the Indiana state
bank and deposited large sums of
money. The bank, however, was
unable to meet the stipulations Of
contract drawn at the time, and
after making two payments to the
government of $4,000 and 5000,
scraped $4,000 together and de-
posted this in the branch Of the
United States bank at Louisville.
Their doors then were closed.
Hard Hit In 1873
The Madison bank then re-Opened
through deposits by Indiana farm
ers, but when the United States
bank demanded that special specie
payments be made, the institution
closed. The bank met all Obliga-
tons, however before closing, pay
ing depositors in full
In 1884, the Madison bank was re-
opened again and was made the
head of the state bank, with a char
ter for twenty-five years. The. bank
prospered until 1889 when improve
ment officials overdreW their ac-
counts and the bank became en-
dangered The state came to the
rescue.
In 1873, another great panic
struck the entire United States
when expansion stopped, due to high
money rates. More than $60,OO0,000
was drawn from banks in the United
States between June /, 1872, and
June l, 1879, to pay private mort
gage debts of the states.
Indiana was effected doubly when
the federal court ordered thirteen
insurance companies to withdraw
S703,971 from the banks and re-
pay their clients.
More than 1900 banks in the
United States were closed during
the three years from 1877 to 1879,
inclusive, and a large portion of
these were in Indiana.
The next panic started in 1892
when there became a duIlness in
business and stock prices dropped
Several banks failed during that
period until 1895, when the depres-
sion lifted.
On Oct. %, 1907, banks in Indi-
ana were forced to make a suspen-
sion of payment and adopt the use
of clearing house ce| ficates. This
was due to the withdrawal by in
terror banks on larger New York
concerns.
Only one bank failed in Indiana,
however, that being at Aurora. The
suspension lasted only three days,
all banks returning to regular sys-
TENS Oct. 81.
Following the close of the war in
1918, an unemployment era took
place and by 1921, many banks in
Indiana and elsewhere became
affected and were forced to close.
This period Of depression lasted
until 1926.
Civic Clubs VIII Elect