CHAPTER XVIII MONEY AND BANKING. Sullivan county has no banking institutions within its boundaries during the pioneer history. Yet the residents of the county were not without banking facilities, though to get them it was necessary to go to Terre Haute on the north or Vincennes on the south. The absence of a bank in any considerable center of trade would in this modern age be felt as a serious drawback. It is almost a daily occurrence for the merchant and business man of Sullivan county to buy the credit of his local bank for the purpose of transacting business with distant centers. Instead of using his individual credit to pay for goods in the wholesale markets of Chicago or St. Louis, he uses the official paper and name of the local bank, which is a recognized medium for such transactions. Any other method of doing business would result in delays and losses that would not be tolerated in this commercial age. It was very different in the early years of Sullivan county. The business of the community was then primitive and simple; now it is complex. What constituted the business activities of the county during the years following its first settlement? It is possible to answer this question without omitting any important interest. The supply and demand which comprehended the trade and industry of the time were limited to the articles that are needed by society in a frontier condition. The demand was for things to eat; clothing and shelter; and the implements that were used in the field, in the house and in the mills. The local production of things included under these heads was almost sufficient to satisfy the demand. The farmer grew his wheat and corn, from which his bread was made: raised the hogs from which came his supply of pork or obtained a considerable portion of his meat from the wild game in the woods. The forest supplied material for building and furniture. The flax, and in early days, the cotton, raised in the fields, was converted by housewifely diligence and skill into garments for all members of the family. When the simple economy of the pioneers is considered, it is surprising that the amount of trade was as large as it was. Like many Robinson Crusoes, the settlers lived by consuming only what nature and their own efforts produced. Nevertheless, there was some degree of classification of industry. The individual pounded or ground his corn with his own crude implements only until the first mill was built. The flour mill was the most important institution in the new country, and with its establishment came the miller, who depended on the patronage of His neighbors to supply him with the means of subsistence. Though so much was grown and wrought on the farm, there was still necessity for a central place where the rarer articles of common use might be kept for sale. The stock in trade of the early merchant was limited in variety, yet the trade in staples was sufficient to make many a fortune for men who engaged in such trade during the early years. This limited business was carried on mainly upon the principles of barter and exchange and credit. The merchant had more accounts then, comparatively, than now. And when settlement was made, instead of satisfying the account with a check or cash, the debtor very usually disposed of his wheat or corn, or live stock, through the merchant, and accounts were squared with very little money being used in the transaction. It was of course necessary that "a balance of trade" should be maintained-that the goods imported for use in the county should be balanced by goods of equal value exported from the county, or the difference had to be made good by cash payment. But for a number of years the balance was kept very even. The amount of grain and peltries and lumber, etc., sent down the river to the world markets, measured very exactly the amount of goods that would be brought back in return. Capital came in slowly and was very quickly absorbed. The result of all this was that very little money-meaning by that silver and gold and its substitutes-circulated in Sullivan county. The wealth of the country was held in the forests, in the fields and granaries, and in the stores. There was no surplus, no large amount of coin kept on hand to meet the exigencies of daily commerce; hence there was little need for a bank as a place of safe deposit. And since the few merchants, who did the business for the community, had individual credit at the large trade centers, there was little need for an institution that would furnish exchange and credit to distant cities. Money being unknown, banks had no cause to exist. Says W. H. Smith in his "History of Indiana": "In the early settlement of the territory, such a thing as money was practically unknown, peltries being used as the only currency. All values were based upon what the article would bring in coon skins, muskrat skins and other furs. Such a state of affairs could only exist in a sparsely settled country, where manufactures were unknown, and where the only trading done was for the actual necessities of life. In those early days the settlers raised on their little farms about all they needed to sustain life, and their purchases were limited to salt, iron, dye-stuffs and a few articles of that character. For those they exchanged wheat, corn, hogs and peltries." As population increased and the social and industrial organization became more complex, came a demand for currency that would represent values, and could be subject to the flexible uses of exchange without the more cumbersome and primitive methods hitherto in vogue. The gold and silver medium could not be obtained. A paper currency was sought instead. Originally intended, on its face value, to represent actual wealth. Practice soon produced a wide variance between the shadow and the substance, and instead of representing wealth actually existing, this paper currency soon came to represent only "a promise to pay," with no security as a basis. Though such currency might be honestly issued to represent current values, it often happened that the security declined in value, so that when the "promise to pay" returned to its author, the latter found no resource to satisfy his note, which could be redeemed only at a large discount. Thus the period during the war of 1812 was one of prosperity, owing to the increase of values caused by the war and the large sums disbursed by the government. At the close of hostilities, the war values suddenly declined and the enormous issue of notes representing such confidence and prosperity became nearly worthless paper in the hands of the holders, who had 110 recourse against the issuing institutions, which were in large number swept away during the panic. State Bank. In 1814 the territorial legislature of Indiana had chartered a banking institution at Vincennes, with a capital stock of five hundred thousand dollars, and one at Madison, with a capital of seven hundred and fifty thousand dollars. The bills issued on this capital were returned during the panic, but only a small part was redeemed. In the first constitution of the state of Indiana appeared a provision that "there shall not be established or incorporated in this state any bank or banking company, or moneyed institution, for the purpose of issuing bills of credit or bills payable to order or bearer: Provided that nothing, herein contained shall be so construed as to prevent the general assembly from establishing a state bank and branches." Here was the legal sanction for the State Bank of Indiana, one of the most notable institutions in the early history of banking. The bank at Vincennes was allowed to retain its charter, but on Janaury 1, 1817, this bank was adopted as a branch of the state bank. The career of the first state bank is described by W. H. Smith in his "History of Indiana": "The bank thus enlarged and with such increased powers, at once entered upon an era of mismanagement that soon wrought widespread ruin. In 1821 its reckless management caused the general assembly to authorize legal proceedings to cancel its charter. Among other things charged and proved were, the contracting of debts to double the amount of the deposits; the issuing, with a fraudulent purpose, of more paper than the bank had means for redeeming; the declaring and paying of large dividends to the stockholders, while the bank was refusing to pay specie for its notes; and embezzling $250,000 deposited by an agent of the United States in the bank for safe keeping. The notes of the bank and its branches, except those of the bank at Madison, became wholly worthless." The failure of the first state bank occurred during a period of profound financial depression during the early '20s. For ten years or more the circulating medium in Indiana consisted largely of what were called "shinplasters," being the individual notes of local merchants and business men. and the bills of banks in other states. During this period the state sought to give aid to the financial situation by entering, upon a great plan of internal improvements, consisting of canals and railroads, that would provide a magnificent system of transportation. In the speculative era that followed, when values were advanced with little regard for actual substance, the second state bank of Indiana was founded. During the whole of its existence from 1834 to 1857, the credit of the State Bank of Indiana was not exceeded by any bank in the United States. Its notes went current from lakes to gulf, and its capital and credit were used to develop business and agricultural resources of the state. Its regular annual dividends for twenty years averaged ten to twelve percent, and at the expiration of its charter there was a surplus of one hundred percent to divide among the stockholders. The State Bank was chartered in the winter of 1833-34. It was not a central bank with numerous branches, but the institution consisted of the different branches under control of a central governing body. Thirteen branches -in all were organized, each branch having its own president and other officers. The semi-annual examinations by the state president was very searching, and kept the branches in a safe and healthy condition, with the result that only one case of fraud was ever found in all the thirteen banks. The capital of each branch was $160,000, one half of which was furnished by the state. As there were no capitalists in the state at that time, the charter provided that every stockholder who paid $18.75 on each $50 share, should receive as a loan from the state the remaining $31.25 so as to fully pay up the stock. The loan was secured by bond and mortgage on real estate, at six percent interest. The full amount of the annual dividends was then credited on the loan, and in one of the branches at least the loan was thus paid off seven years before the expiration of the charter, and the borrowing stockholder received for that period the full amount of the dividends on his shares. To pay for its half of the stock and its advances to stockholders, the state had issued and sold in London its coupon bonds at five percent, these being secured by the state stock in the banks and liens upon borrowers' stock. The state could have retired all these bonds before maturity, but although the state credit was very low in and after 1837, these bonds commanded a handsome premium and could not be reached. The state's share in the banks, bonds and mortgages and sinking fund was so well managed that not a dollar was lost and the state made a net profit of nearly $3,000,000 by its connection with the bank revenues which became the basis for the large school fund. The capital of the thirteen branches was a little over two millions, but the aggregate of the loans sometimes amounted to ten or fifteen millions in a year. There was one president, cashier and board of directors for the whole state, this central body having absolute control over the branches with power to put any branch in liquidation, which was exercised but once, with only a temporary suspension. The general board was composed of splendid men and able financiers, and through their management the bank had a career such as few banks of the country surpassed. The State Rank of Illinois, chartered in the same year, disastrously failed in 1837. The Indiana Bank suspended specie payment in 1837, as did every other bank in the country except the Chemical of New York, but it always furnished its customers with New York exchange at one percent premium for its own or other bankable notes, and also never failed to supply the home demand for coin, which was then silver. The State Bank of Indiana, being a monopoly, there was a great demand as its charter was expiring for a free bank act. Such banks were authorized by the new constitution. The agitation for a new bank law also resulted in a bill providing for the establishment of the "Bank of the State of Indiana." as the title was then made to read. The bill was vetoed and passed over the governor's veto, and became a law in 1855. The state could not be a stockholder in the new institution. There were to be twenty branches, each with $100,000 capital. It was a good franchise, but those who had procured it did not intend to operate a bank, and it passed under the control of the former managers of the old State Bank and other citizens, with Hugh McCulloch as president. The new bank began business in 1857, and started out under the most favorable auspices, but the panic of 1857 tested its integrity to the utmost. Only one bank in the east, and in the west the Bank of Kentucky and the Bank of Indiana alone escaped the necessity of suspending specie payment. The Indiana bank's notes commanded a premium, but the result of that was a drain on the bank's specie from the notes coming from other states. To have declined to redeem notes in specie on demand would have caused the forfeiture of the charter, which was too valuable to sacrifice. The branches made a gallant struggle, and had nearly exhausted their cash resources when on the fifth week of the panic there was a change for the better in the financial outlook, gold declined in the east, and the Indiana notes ceased to come home for redemption. The charter was safe. The effects of the panic were overcome in from two to three months, and the business of the branches was prosperous until the war broke out. Then ensued a great depression and a renewed demand for gold. Under the direction of Mr. McCulloch, the branches proposed to weather the storm, drew in their circulation as much as possible, arranged with depositors that deposits in gold should be paid in gold and in bank notes with notes. The issue of legal tender notes in 1862 made them a substitute for coin. and the question arose, could the bank save its charter by redeeming with legal tender notes instead of gold. A test case was hurried through the circuit court and supreme court of the state. The decision of the courts was that legal tender notes was lawful money in the terms of the bank's charter. The Bank of the State of Indiana successfully passed through ail financial storms, and when Mr. McCulloch resigned in 1863 to become comptroller of the currency it had upwards of three million dollars in gold coin in its vaults. With the passage of the National Banking Act, all notes of state and private banks were taxed ten percent, which was practically prohibitive and caused nearly all these banks to surrender their charters and either go out of existence or take out national charters. The Civil war made enormous demands upon the national treasury, and the government within a few months after the beginning of the war was seriously embarrassed by the difficulties of providing funds from the regular sources. Permission to duly empowered organizations upon certain conditions to put into circulation bills furnished them by the government, their redemption in specie to be guaranteed and regulated by the government, was the means of making the national debt an available capital for banking purposes that was proposed by Secretary Chase, and out of which grew the National Banking Act. In order to give the national currency thus created preference over other forms of credit currency, it was proposed to tax the issues of state banks to such an extent that these institutions could not profitably issue notes. Naturally the state banks opposed the measure. But the necessity of securing "one sound, uniform circulation of equal value throughout the country upon the foundation of national credit combined with private capital, forced Congress to act, and a bill passed the senate February 12, 1863, and the house eight days later, and the National Currency act received the signature of the president, February 25, 1863. While the practical results of the act did not realize expectations during the war, the national banking system eventually remedied the great financial bills from which the country suffered under the miscellaneous and loose methods of state banking. In Sullivan county, during the period which has been discussed, there were no banks. In Terre Haute a branch of the State Bank had been established in 1834, and its bills and facilities were without doubt employed in the transaction of business in Sullivan county. Vincennes was also a banking center for this county. Sullivan Banks. The history of the oldest banking institution of Sullivan county involves the names of some of its oldest citizens and business men. The Crowders, the Hokes, the Duttons and Crawleys are family names that have at various times been associated with the oldest bank, and Jacob F. Hoke and William H. Crowder, Sr., have been identified with the Sullivan State Bank since the original institution was established as the Sullivan County Bank. Mr. Crowder was president of the bank from 1875 until 1897. In the latter year, the Farmers State Bank of Sullivan and the Sullivan County Bank haying been consolidated, Mr. Hoke, who had owned a controlling interest in the State Bank since 1892, became president of the new institution. Mr. Hoke shares with Mr. Crowder the honor of being the oldest bankers of Sullivan county, and while Mr. Hoke is president of the bank, the elder Mr. Crowder is a director and W. H. Crowder, Jr., is cashier of the Sullivan State Bank. The charter for the first national bank in this county was granted in January, 1872, and on the 9th of that month the bank was organized at Sullivan by the election of five directors, who chose as their executive officers, Mr. H. J. Barnard president, and Medford B. Wilson cashier. In April, 1874, Mr. Wilson on leaving Sullivan sold his stock to Thomas K. Sherman, who became cashier in his stead. The three-story bank building on Washington street was built in 1873. The First National Bank of Sullivan went into voluntary liquidation January 8, 1878. After the liquidation of the First National, the Farmers National was established and was operated under national charter until 1884, when it became the Farmers State Bank, and continued thus until merged in the Sullivan State Bank. The Sullivan County Loan and Trust Company filed articles of incorporation, July 28, 1903, the directors for the first year being C. L. Davis, A. E. Hazelrigg, C. J. Sherman, J. K. Smock, J. R. Riggs, C. H. Edwards, W. C. Jamison. The capital stock of this institution was placed at $100,000. The People's State Bank of Sullivan was organized in the fall of 1906, the principal stockholders being George R. Dutton, formerly cashier of the Sullivan State Bank, and Joshua Beasley, of the abstract firm of Beasley and Brown. The first directors, elected in October, 1906, were John T. Hays, William Powell, Joseph T. Akin, Joshua Beasley and George R. Dutton. The National Bank of Sullivan was organized in 1900, and has a capital of $100,000. Charles L. Davis is president of this bank. Carlisle. Carlisle had no banking facilities until 1892. In that year E. W. Akin, Sr., Joseph T. and Charles T. Akin, all members of the well-known old family of that name, organized the People's Bank of Carlisle. A private bank, it has filled a large want in the business community and has received the hearty support of all citizens, whose confidence in the integrity and reliability of the owners is complete. Originally the bank had a capital of $25,000, but on the reorganization in 1902 this was raised to $35,000, and in 1907 again increased to $50,000. Edgar W. Akin, Sr., has been president since the foundation of the bank, and his son, E. W. Akin, Jr., is cashier. During the past decade banks have been organized in other centers of the county, though previous to that time it was customary for one or more of the business men of the town to manage a small private banking business. At Shelburn is the First National Bank, organized in 1904. The Hymera State Bank was organized in 1906, R. L. Ladd being president. At Farmersburg two private banks were organized about 1902, and in 1905 one of them became the Citizens State Bank, with W. S. Baldridge president. The Dugger State Bank was organized in 1904, Joseph Moss and William R. Dugger being those chiefly interested. Building and Loan Associations. The first organization of a building and loan association in Sullivan county was effected at Sullivan in February, 1883. Its capital stock of $200,000 was divided into shares of $200 each. The directors for the first year were: W. H. Crowder, Joseph P. Stratton, Murray Briggs, M. B. Wilson, W. G. Young. The executive officers were Murray Briggs, president: William H. Crowder, vice president; James Burks, secretary; Pat. McEneny, treasurer. Two years after the organization it was reported that the stockholders had paid $26.40 on each share, the present value of the individual shares being estimated at $34.83, and that an aggregate sum of $10,000 had been loaned. At the end of six years, about $80 had been paid on each share, and the value of the shares had risen to about $125 apiece. In the latter part of January, 1889, a building, savings and loan association was formed on a new plan, known as the Bedford plan of issuing stock in different series. Nine directors were to be elected each year, those chosen for the first being W. H. Crowder, B. F. Knotts, I. H. Kalley, C. J. Sherman. R. H. Crowder, A. B. Williams, William Willis, A. J. Stewart, Sol T. Wolfe. About two years later, in September, 1891, it was voted that borrowers in the old association could have their mortgages cancalled by paying thirty dollars on each share, and that those who had stock which had not been used as a basis for borrowing could surrender the same and receive $162 a share. The report of the new association, three years after its organization, stated that 1,336 shares had been issued, loans had been made on 454, and the present capital was represented in first-mortgage notes of face value $45,400. Through the means afforded by the association, 49 persons had purchased homes, 42 had built new dwellings; and of the loans for these purposes, 72 had been made in Sullivan and 19 in the surrounding towns and country. A building and loan association at Farmersburg was incorporated in February, 1893, with a capital stock of $100,000. The first directors were: W. S. Baldridge, William Lash, R. H. Van Cleve, T. W. Kennedy, W. Foote, S. W. Brown, George Heap.