Delaware County, Indiana - Chapter 11: Banks and Banking, 1924

Chapter 11: Banks and Banking

An interesting sidelight on the situation with respect to the banking facilities of the pioneers and the topsy-turvy state of the country's monetary system "in the good old days" is disclosed in a review of the newspapers of the '30s and '40s, or even later, for until the national bank law of 1863 brought some order out of the chaos money values were a mighty uncertain quantity. It long was customary for the local newspapers, for the information and guidance of their readers, to publish weekly schedules of the rating of the so-called banks over the country. For example: In 1844 the Muncietown Democrat, Joseph S. Buckles then the editor, was carrying weekly a "Bank Note and Exchange List,'' which the editor announced was "corrected weekly from our city exchanges." In this list were given the quotations on the scrip of the banks of all the neighboring states as well as of New York and the leading Eastern states. New York city banks were quoted at par, with New York country banks at 1 discount; Pennsylvania country banks, 3 to 5 discount. One bank at Cincinnati was quoted at par, but of the other two one was at 75 and the other at 90 discount. Whitewater canal scrip was at a discount of 75. The bank of Dayton was at par. Kentucky banks were quoted at par to 14 premium; Michigan banks from 2 to 5 discount; Illinois, State bank notes at 30 discount, and Illinois and Michigan canal scrip, 60 discount.

The quotations for Indiana were: State banks and branches, par; New Albany Insurance Company, 5 discount; State scrip, 5s old, 2 discount; 50s old, 2; 5s new, 5 discount; Whitewater Valley canal scrip, 36 discount; Charleston Savings Institution, 60 discount; King & Woodburn's checks, 75 discount; Wood's Exchange Bank of Indianapolis, no sale. It was not until more than ten years later, in 1856, that the establishment of a Muncie branch of the Bank of the State of Indiana, brought about here something like a proper system in local exchange, but there still existed considerable confusion in monetary relations and "wildcat"? currency continued to float around over the country until the national bank law created a general system of exchange.

The present generation can have no proper conception of the confusing conditions faced by the pioneers of Delaware county with respect to their current medium of exchange. When Indiana was admitted to the Union in 1816 the Second United States Bank had just been chartered to succeed the First United States Bank whose charter had expired in 1811 and monetary conditions were in a state of well nigh hopeless confusion. 'Wildcat" banks had sprung up everywhere, offering a medium of local exchange, and the man who accepted the money thus issued was lucky if his money retained its value over night. As Logan Esarey, instructor in Western history in Indiana University, in his "History of Indiana" (1915) says: "A 'wildcat' bank was a very simple affair. In order to start a bank, the banker had only to have a supply of notes engraved and then open his bank in some convenient place. These banks, as a rule, received no deposits. They were open one day in the week or preferably two half days. The banker used every means to get his notes in circulation, frequently selling or loaning them at half their face value. If busihess prospered he would remain and redeem his notes; if not, he packed his grip with the remaining notes and sought a more favorable field."

The confusion arising out of such a situation may be better imagined than described. Asa matter of fact, the pioneers much preferred to carry on their simple commercial transactions in terms of coon skins, beeswax and the like, barter being the common form of exchange rather than currency.

In order to bring something like a state of order out of this seemingly inextricable confusion the territorial assembly, sitting at Corydon in 1814, granted charters to two banking institutions, the Farmers and Mechanics Bank at Madison and the Bank of Vincennes, the first with an authorized capital of $750,000 and the latter with the same capitalization, raised later to $1,500,000. At first the notes of the Bank of Madison were received at the land office at Brookville in payment for land. In order to create a stabilized local currency, it is pointed out by the historian above quoted, this bank "proceeded to make itself useful at once by redeeming the shin-plasters issued by the local merchants. It was the custom of the merchants to keep on hand a large amount of paper money, printed by themselves, in denominations of 614, 1214, 25 and 50 cents. There being no coin in circulation, the store keepers handed this out in change. This the bank redeemed in the currency of the Commonwealth Bank of Kentucky, when presented in amounts of $1 or more." It is further stated that the Madison bank held the enviable reputation of having furnished land office money to the settlers in exchange for other money not receivable at the land office without cost to the settlers, the receiver of the land office keeping his money on deposit with the bank.

An Ambitious But Impracticable Project

When the Second United States Bank began its war on all private banks and refused to have any dealings with banks in Tennessee, Indiana or Illinois, practically every bank in the states named "went broke." However, the Madison bank was able to pay all its obligations, gradually retired its currency and was honorably closed. Not so well did the Vincennes bank fare. The state constitution had confirmed its charter and it was adopted as a state bank with branches, fourteen in all, the parent bank to be at Vincennes. But what is a bank without money? As there was no money in the country - or comparatively very little - it was discovered that this ambitious project was impracticable and but three of the proposed branches finally were opened, at Brookville, Vevay and Corydon. Unhappily, before these banks got fairly going they were caught in the "hard times" of 1818 and 1819 and ruined. The parent bank presently went the same way, failing with more than $165,000 of United States money on deposit, a loss later made good by its stockholders, and its charter was annulled in 1822. It thus will be seen that at the time the lands here in the New Purchase were opened to settlement (1822) money as a medium of exchange hereabout was mighty scarce, little United States Bank currency being in circulation or available out here, and the "wildcat" stuff that was in circulation being an exceedingly uncertain quantity.

As Cockrum's admirable "Pioneer History of Indiana" observes, these bank failures were one of the real causes of such hard times in Indiana during that period. There was very little coin in the country at that time, the silver, with the exception of a small amount of subsidiary coin, being of foreign coinage. The old style "bits" (12% cent pieces) and what was termed by the Hoosiers of the yankee stock "fo' pence" (614, cents) were made up of Spanish dollars, principally coming up here from New Orleans or out of Mexico, these dollars being cut into quarters and sometimes into eighths when the transaction called for 1214 cents (the fi'-penny bit), or even into sixteenths. Some who wanted to get the best of the bargain would cut . the dollar into five pieces, thus making 25 cents on each dollar cut up. This became so common that in some places the county commissioners provided a die the dimension of a quarter of these Spanish dollars and when cut money was used in paying taxes the "quarters" were required to fit into these dies or else rejected. Some store keepers resorted to the same expedient to avoid being "shortchanged." On paying the blacksmith, if the account amounted to a quarter and the customer had a dollar to be "changed" in making payment, the blacksmith would lay the dollar on the anvil and with his cold chisel would cut a quarter wedge out of the piece of silver. In payment of a bill of 1214 cents, one half of this quartering wedge, or a "bit," would be taken and for 614, cents another division, or onesixteenth of the dollar would be taken. To the present generation this form of monetary juggling is hardly comprehensible. The Indian wampum string would have been preferable, it would seem, and it is not a matter of wonder that coon skins and beeswax and ginseng formed the more common medium of exchange for the pioneers.

Organization Of A New State Bank

This was the situation up to the year 1834, when a new State Bank was chartered. The agitation for a new state bank began after the election of 1832, one of the issues of which was the rechartering of the Second Bank of the United States, whose charter would expire in 1836. When it was seen that the bank would not be rechartered, a movement was started to charter another state bank in Indiana and arrangements were made to that end. Since the failure of the Madison and Vincennes banks there was no branch of the United States Bank in Indiana, Federal currency circulating hereabout through the branches at Cincinnati and Louisville or Dayton. The movement to revive the state bank was resisted in certain quarters on the ground that the failure of the First State Bank (at Vincennes) had so thoroughly disrupted the credit not only of the state but of its citizens that it would be unwise to subject the people to the possibility of another such failure, and when a bill for the creation of a state bank was introduced in the Legislature in the session of 1832 there was such violent dissent that the measure was postponed until the suc- ceeding session. Meanwhile a "campaign of education" was undertaken, the necessity of a bank was urged upon the people and early in the next session of the assembly a charter was granted to the Bank of the State of Indiana.

This bank was to be located in Indianapolis, the state to be divided into districts and the directors empowered to establish branch banks in these districts. Though the head office was to be at the state capital, there was to be no "parent" bank, all branches being on an equality. .The new bank was capitalized at $1,600,000 but in 1836 this was raised to $2,500,000, each branch to have an equal part in the capital. This bank proved its strength in the memorable panic of 1837 during which all the Eastern banks, including the old Bank of the United States, suspended specie payment and is said to have been the only bank west of the Alleghanies that did not fail during that crisis. Despite this record the state constitutional convention (1850- 51) voted against an extension of the charter of the Bank of the State of Indiana and the Legislature in the session following the proclamation of the new Constitution enacted the free banking law. The fallacy of this latter system was disclosed during the money panic of 1854 and when the Assembly met in January, 1855, Governor Wright demanded a law for the restoration of a sound currency. The Legislature passed a bill for the creation of a new state bank to be known as the Bank of the State of Indiana. The minority protested against the measure, pointing out phases of the law which they declared to be unsound, and the Governor vetoed the bill, but the Senate passed it over his veto and thus the third state bank was established.

There was considerable scandal connected with the establishment of this bank, but as Doctor Esarey notes in his review of conditions at the time, "the new Bank of the State of Indiana gathered itself together after the storm and began to do a careful, conservative banking business. The people soon came to look upon the whole winter campaign as a war among highwaymen, in which, for the moment, the lobbyists had got the upper hand of the old bank men." The bank continued until the national bank law of 1863 (amended in 1866) put a stop to such experiments in banking, and no further changes were made in the banking laws until the law of 1874 creating the present system of state banks to supplement the national banks.

The Muncie Branch Of The State Bank

Under the operation of the national bank law the days of the Bank of the State of Indiana were numbered and under an act of the Legislature in 1865 the affairs of the bank were closed, nearly all of its branches becoming national banks. Among these was the Muncie branch of the Bank of the State of Indiana, which had been organized on July 2, 1856, under the new banking law of 1855, with a capital stock of $100,000, and which continued business as a branch bank until under the operation of the national bank law of 1868 it liquidated and was reorganized as the Muncie National Bank, which liquidated at the expiration of its charter in 1885. Upon the organization of this old Muncie branch of the Bank of the State of Indiana the directors put up a substantial two-story brick building still standing, though remodeled, at the northwest corner of Washington and Walnut streets, erected so as to combine banking house and a residence for the cashier, and for many years this old mansard-roofed structure served as a bank, occupied by the Burson Banking Company following the liquidation of the Muncie National Bank and later and for some time by the Muncie Trust Company. John Marsh was the president of the old branch bank and John W. Burson the cashier, these two, with William Petty, Volney Willson and Edwin C. Anthony, also acting as directors. Mr. Burson continued as cashier of the branch bank during its existence and then as cashier of the Muncie National Bank until his death in the fall of 1872. Mr. Marsh, a former treasurer of Preble county, Ohio, who had been engaged in banking at Cambridge City prior to his coming to Muncie, was. continued as president of the institution until his resignation in 1874. In the fall of that year he took connection with the Citizens National Bank of Muncie, which he had helped to organize, and of which he became the first cashier.

John W. Burson, Muncie's first active banker, had been associated with Marsh in banking at Cambridge City, his initial experience in banking having been gained at Eaton, over in Ohio. He was born in Pennsylvania, of Welsh stock, and in 1837 became a resident of Ohio. He became engaged in banking at Eaton in 1848 as teller in the Eaton branch of the old State Bank of Ohio and remained there until his removal to Cambridge City in 1853. Three years later he came to Muncie and here he spent the remainder of his life, one of the "mainsprings" of the town during the days of the beginning of its real commercial development. During the period of the Civil war he was a very tower of strength to the administration. It has been written of him that 'Governor Morton had no firmer friend, no truer ally, and none to whom he could look with more positive assurance of encouragement and assistance than Mr. Burson. Nothing was thought too extravagant when represented as a need of the nation's defenders; no journey was considered too tedious or too dangerous for him to undertake, and whatever sum of money was asked by 'the war Governor' of Indiana to further his plans or relieve the wants of the Indiana soldiers, it was cheerfully and unhesitatingly advanced."

Mr. Burson died on September 21, 1872. Among those present at the funeral three days later was his old friend, former Governor Morton. At the ensuing session of the General Assembly both branches adopted appropriate resolutions in his memory and the Senate chamber was draped in mourning for a period of thirty days. Further details concerning the funeral of this influential citizen have it that "business was suspended in Muncie and the entire county was in mourning. . . . Everyone united in paying homage to the memory of the distinguished dead, and over 5,000 persons joined the funeral procession." In an obituary tribute a friend said of him: "The county of Delaware and the city of Muncie owe more for their development to the efforts and exertions of the deceased than those of any ten of her other citizens. He brought a large capital into their midst, and by its judicious use and circulation stimulated and increased business in all its ramifications; and by his wise management made money accessible to every worthy citizen, rich or poor, in any and all emergencies. To him, chiefly, do we owe our extensive system of macadamized roads, as complete a system of inter-communication as has any county in the state. Indeed we can think of no enterprise among us, which had for its object the public good; no society or fraternity which had for its object the promotion of the best interests of - all, that he was not associated with; and it is only by looking about us and seeing the great number of places he has filled, made vacant by his death, that we are forced to a realization he is no more with us." Another appreciation had it that "probably at no time in the history of Muncie has the death of one of its citizens caused such profound and universal sorrow." That was more than fifty years ago. There are some still living in Delaware county who have personal recollections of John W. Burson. They will testify that this estimate still holds true.

the newspapers of that period. A precious surviving copy of the Muncie Weekly Messenger of May 24, 1856, antedating by more than a month the date of the organization of the branch bank, carries the advertisements of Wolfe & Co.'s Exchange Bank of Muncie (Adam Wolfe and George H. Baxter) and of the Delaware County Bank, T. J. Sample, president, and B. K. Elliott, cashier. Both of these banks in their advertisements were offering to "buy and sell land warrants, exchange, gold, silver and uncurrent money," and offering interest on time deposits.

The Messenger also was publishing a weekly bank note list, ''corrected weekly by B. K. Elliott, cashier of the Delaware County Bank." The list as of the week mentioned quoted Indiana State Bank and branches at par; solvent stock banks, par; depreciated stock banks, 20 to 30 discount; Jones' checks, 25 discount; Watson checks, 25 discount; Franklin Insurance Co., 25 discount. The merchants had to keep close watch of currency variations, as the following sample advertisement in the Times as of as late a date as in January, 1861, will show: "Bank notes of solvent banks of Pennsylvania, Virginia, Maryland, Delaware, New Jersey and other Eastern states are now taken at par for dry goods, boots and shoes, hats and caps and groceries at Little's cheap cash store." These were "the good old days."

Further Development Of Local Banks

The development of the banking interests of Muncie and of Delaware county has kept pace through the years with the general development of other local interests, until now there are six banking institutions in Muncie and eight in the smaller towns of the county, these latter serving a continually growing neighborhood need, in their respective localities. The aggregate resources of the Muncie banks reach in excess of $18,000,000 and the resources of the banks in the smaller towns will swell this aggregate to a figure right around $20,000,000. The assessed valuation of the stock of these banks reaches near $2,000,000. These banks are as follows:

Delaware County National Bank of Muncie - President, William E. Hitchcock ; vice presidents, C. M. Kimbrough and Kar! A. Oesterle; cashier, Charles H. Church. .

Merchants Trust and Savings Company of Muncie - President, Frederick D. Rose; first vice president, F. B. Bernard; secretary, H. M. Koontz; treasurer, Dale Shreeve.

Fine Exhibition Of Community Confidence

The old Citizens Bank of Muncie above referred to as having been organized in the fall (November 16) of 1874 was nationalized in the spring of the next year and on March 15, 1875, began doing business as the Citizens National Bank, with George W. Spilker as president and John Marsh as cashier, the latter continuing in this office until his death in 1887. Spilker remained as president for eleven years and then, in 1886, opened a private bank at 107 East Main street, operating the same under the name of Geo. W. Spilker & Co., which later became the Farmers Bank and later the Farmers National Bank, Spilker continuing as president, with Edward Olcott as cashier. In the meantime, during the "hard times" panic of 1893 the Citizens National Bank was compelled to undergo a temporary suspension. A. L. Kerwood, then president of the bank, assured the depositors that the assets of the bank were ample to take care of the liabilities and nearly fifty of the citizens of Muncie, representing collective responsibility of $3,000,000, signed a guaranty of deposits in the Citizens National, the Farmers National, the Delaware County National and the Merchants National banks, thus allaying fears that otherwise might have led to a serious banking embarrassment in the city during that time of financial stress. It is a matter of record that the controller of the treasury, on hearing of the action of Muncie people in thus guaranteeing their banks, said: "That is patriotic, unselfish and good citizenship. That is the kind of stuff men should be made of. If the intelligent and patriotic citizens in all sections of the country, who know that their banks are safe and honestly conducted, would band together in that fashion, it would improve the credit of the country and put a stop to bank failures in most instances." And it was thus that Muncie came through the crisis of 1893 in good shape.

The public-spirited guaranty on the part of the leaders in the commercial and industrial life of Muncie that averted what otherwise might have been a disastrous bank "run" set out that in consideration that the depositors would not unnecessarily withdraw their deposits from the banks "we, the undersigned, hereby guarantee that said depositors, each and every one of them, shall be paid said deposits and each of them in full." This guaranty, dated August 4, 1893, was duly recorded in the county recorder's office and was signed by the following persons, who thus attested their faith in the financial stability of the city's banking institutions: James Boyce, A. F. Patterson, Thomas H. Kirby, J. A. Heinsohn, Emmet M. Smith, George W. Spilker, Carl A. Spilker, Hardin Roads, W. M. Marsh, Fred Klopfer, C. M. Kimbrough, F. B. Nickey, Arthur W. Brady, W. W. Shirk, Charles Gass, George Kirby, William Abbott, R. M. Ball, Milton Hamilton, Lewis Rees, Thomas Port, Joseph Hinton, J. H. Wysor, George L. Lennon, J. H. Smith, George F. McCulloch, A. L. Johnson, Andrew Braun, Joseph Hummel, Frank A. Brown, J. C. Greisheimer, C. H. Church, Edward Olcott, Branch Bros., Ephraim Smell, John M. Kirby, Asbury L. Kerwood, J. A. Meeks, G. W. H. Kemper, T. F. Rose, J. R. Sprankle, Jacob Voght, George Stafford, Henry Overmier, F. Leon, L. L. Turner and C. M. Turner.

After a suspension of three months, during which time Arthur W. Brady was acting as receiver, the Citizens National Bank reopened its doors, Dr. G. W. H. Kemper serving the new organization as president and Charles M. Turner succeeding W. M. Marsh as cashier. In October, 1895, this bank and the Farmers National became consolidated under the name of the Union National Bank, with C. M. Turner, president; Carl A. Spilker, vice president; Edward Olcott, cashier, and J. C. Abbott, assistant cashier. In the following January Carl A. Spilker became president of the new bank, and in 1900 was succeeded by the late Theodore F. Rose. In the meantime, in 1893, right in the midst of the bank flurry, the Merchants National Bank of Muncie was organized, with the late Hardin Roads as president, Fred Klopfer as vice president and F. A. Brown as cashier. This latter bank in 1914 erected its present substantial bank building at the corner of Jackson and Mulberry streets and in January, 1920, merged with the Union National Bank, continuing the old federal charter (No. 2234) of the Citizens National Bank and the Union National Bank and it still operates as the Merchants National Bank, the oldest continuously incorporated bank in the county.

The Delaware County National Bank of Muncie has been operating under its original name longer than any other bank in the county. This bank was organized as a state bank on April 14, 1887, starting with the natural gas "boom" here, and in 1892 it was reorganized and nationalized, with Emmet M. Smith as president and Charles H. Church, the present cashier of the bank, as cashier. It has always maintained its present location in the Willard building, corner of Walnut and Main streets. :

The first trust company in Delaware county was the Muncie Trust Company, organized on February 12, 1900, and which occupied the historic old building still standing at the northwest corner of Walnut and Washington streets, built by the old Branch Bank. J. M. Maring was president of this first trust company, B. C. Bowman vice president and H. M. Koontz secretary. In January, 1913, this institution moved to 110 East Main street and remained there until on January 1, 1920, when it became merged with the Merchants Trust and Savings Company, which had been organized just one year before, and has since occupied the room in which the latter began business, at the southwest corner of Jackson and Walnut streets.

ganized by Charles A. Ramsey about 1905, which went out of business in the next year, some of its interests being taken over by the Peoples National Bank, which had been organized in 1904 and which was first located at the northeast corner of Main and Mulberry streets, later removing to 109-111 South Walnut street. The initial officers of the Peoples National Bank were Edward Tuhey, president; C. H. Ellis, cashier. In 1908 this bank gave up its charter and became a trust company, with H. M. Winans as president, C. H. Ellis as vice president and A. H. Kruse as secretary, and has since operated as the Peoples Trust Company, with banking quarters in the Wysor block.

The Farmers Savings Bank of Muncie, a state bank, was organized in December, 1916, but did not open for business until in the following April, its first officers being W. J. Clark, president; Porter W. Cooper, cashier. Three years later the latter was succeeded by A. G. Snell and he a year later by the present cashier, John W. Harker. This bank is located at the northeast corner of Main and Mulberry streets, in the building occupied in turn by the old Merchants National Bank and the old Peoples National Bank.

Among the earlier banks of Muncie was the old Bank of Muncie, established as a private banking institution in 1871 by A. J. Claypool, of Connersville, with whom Austin B. and Marcus S. Claypool presently became associated. This bank, which became widely known as the Claypool bank, occupied a room in the "Senate" block at the southeast corner of Jackson and Walnut streets and continued in operation until in 1884. Another private bank was that of George W. Spilker & Co., established in 1886, at 107 East Main street, and which became the Farmers Bank, above referred to. Besides these banking institutions, Muncie has profited also by the organization here of several well established building and loan associations, which have been useful factors in the building up of the town and in stimulating the saving habits of their customers.