Page:A History of Banking in the United States.djvu/467

 rules for banking, the purport of which was generally that the banks should have a well-known and accessible domicile, and be open in banking hours of every business day.

Before 1857, 94 banks had been organized under the general law, with a nominal capital of more than $35 millions; and circulating notes had been issued to them for more than $9 millions. Fifty-one of them had failed, and their notes were selling in Cincinnati at from five to eighty-five discount. These banks had been built one upon another, the notes of one being used to buy the stocks with which to organize another. The operation was called "shingling." McCulloch tells of a case of a man who bought bonds with notes, deposited the bonds for circulation; with the notes bought more bonds, and repeated the process. With $10,000 capital, he got out, before 1857, $600,000 of circulation; he did no banking, but lived on the interest of his bonds.

The experience of 1854 was considered to call for a revision of the general banking law. The whole of the act of 1852 was quoted in a new act, of March 3, 1855, with certain new provisions, in effect remodeling the system. One hundred dollars in notes were to be issued only against $110 in stocks deposited. Every bank was to have a banking house, sign, etc., and do business from ten until three daily on all business days. The banks which have organized under the law of 1852 are to have until March 1, 1857, to wind up or comply with this act. Every bank under this law must have an agent at Indianapolis to redeem its notes in specie, or in exchange on New York; the former at one per cent. discount and the latter at the ruling rate.

The charter of the State Bank of Indiana was to expire in 1857. Its report of October 31, 1854, showed a suspended debt of $1.8 millions, a surplus fund of $1.1 millions, a circulation of $2.8 millions, specie $1.3 millions. During the previous year it had redeemed over $2.5 millions of circulation. The Auditor thought that the State should come to a settlement with the bank at once, whereby it would release itself from liability for the bonds issued and possibily realize a profit.

Indiana issued bonds on account of the first Bank of the State for $1,390,000, for which she obtained the net sum of $1,416,750. Of this, $880,000 were paid for stock in the bank, and $255,009 for loans to stockholders who could not pay their own subscriptions. The remainder, $281,741, constituted a sinking fund. Up to the first of November, 1858, the net gains of the bank and sinking fund were $2,356,659; to which the addition might be made of interest on a part of the fund which had been