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Indiana 2* per cent ■ 139,440 00

Virginia per cent '. • ■ ■ 95,500 00

Louisiana 6 per cent 134 500 00

Missouri G per cent 142,000 00

Georgia 6 and 7 per cent ■ 62,500 00

Kentucky 6 per cent 13.000 00

Tennessee 6 per cent ■ 12,000 00

North Carolina (> per cent- • • • • • • • 2,000 00

Gold for Bank of Warsaw 1 »,045 00



$903,994 00



The law under which these Banks were organized, permitted
Indiana Bonds depos ted as securities " to be, or be made to be, equal
to Stocks producing 5 per cent, per annum." And as a large poi-
tion of tin se sect r ties conM-ted of Indiana Stocks so estimated, and
tin ir market val e was so much below said estimate, it was deem-
ed nece*sary — to inspire public confluence in these Banks — to re-
quire them to surrender an amount of their issues, or deposit
additional Bonds to make iheir securities at the lowest market
value, to cover their circulation dollar for dollar. With this requi-
sition there was a ready compliance on the part of most of these
Banks A d it will be perceived, that now their securities at their
present market value — with but one or two exceptions — are suffi-
cient to redeem their outstanding circulation at par. This class of
Banks "have until t fie 1st dav of March, 1857, to wind up or ac-
cept the provisions" of the General Banking Law as amended and
passed March 3. 1855.

The <»nly violation of the spirit of the General Banking Law,
which has come to my knowledge, was in the case of the Savings
Bank at Connersville. This Bank assumed the right to have its
original plate of the denomination of ten dollars, so altered as to
leave therefrom the words "Auditor of State " and "Register,"
and had printed thereon, as appears by the statement of the En-
graver, 2,000 impressions. No authority was given for such alter-



151

ation and foi th< printing of such notes; and the Bank proceeded
to issue the same — unknown to me — and without having deposited
any securities for the redemption of the same, although said notes
bore upon their face the words "secured by pledge of public
stocks," which was liable to deceive the receivers thereof. It is
very evident that it was never intended by the law that such a
right should be assumed by the Banks organized under it, as it
opens a wide door for deception and fraud, and there should be
some provision with heavy penalty, to guard against such an oc-
currence in the future. It is due to this Bank to state, that when
its attention was called to this objectionable procedure, and re-
monstrated wiili against it, that the most positive and satisfactory
assurances were given that these notes would be called in. And so
far as I have learned, this pledge is being complied with, and the
Bank in every instance has continued to redeem all its notes in
sptcie upon presentation. Had not this assurance been piven, and
all the notes of the Bank presented promptly redeemed, I should
have proceeded against said Bank as directed in Sec. 47 of the
General Banking Law as amended.

Statement No. 11, gives, in detail, the condition of each of the
specie paying Free Banks which have complied with and organized
under the General Banking Law, as amended a id passed March 3,
1^55; showing the kind a d amount of securities on deposit, the
rale at which the same were taken, as certified to by the Treasurer
of State, and the circulation issued thereon. By this statement
it will be seen that the aggregate par value of the Bonds deposited
as securities for the redemption of their circulating notes, is one
million three hundred and iwenty-two thousand five hundred and
sixty-seven dollars; tije aggiegate market value of which is, one
mil. ion eighty-nine thousand nine hundred and eighty-seven dol-
lars ; while the circulation issued, amounts to but nine hundred
and eighty-eight thousand and twenty-one dollars. The whole
circulation of the specie-paying Free Banks is as follow* :

Banks remaining under the law of May 2$, 1852- • • $777,039 00
Banks organized under the amended law of March
3, 1855^ 9S8,02l 00



Total 1,705,060 00

Secured by stocks, amounting at their par value, to$2,2'26,561 00

The Free Bank experiment marks an important era in the history
of Indiana, an I the lessons therein taught will be valuable in the
future, not only to ourselves, but to the citizens of other States,
who may have in contemplation similar schemes of finance and
speculation. While the system of Free Banking, combining the
features of equality of privilege and adequate security is in itself
correct, and perhaps the best and wisest ever originated, it is yet



152

true that in the form it first appeared upon our statute books it
was most crudely and loosely framed ; and instead of affording
the people adequate and undoubted security, it opened facilities lor
swindlers and speculators to plunder community and escape detec-
tion.

Within the first two years of its operation nearly one hundred
Banks were organized in the State, with an aggregate circulation
of over nine and a half millions of dollars. A large proportion of
the capitalists who selected Indiana as the theater of their trans-
actions, were citizens of other States, who detected in the loose
meshes of the law the opportunities of speculation and the loop-
holes of escape. Their sagacity was manifested in the selection of
their points for business — points almost inaccessible to the broker,
where neither commercial, mercantile or mechanical pursuits ex-
isted, to require their assistance. To what extent the mania of
Free Banking would have been carried but for the bursting of the
bubble in 1854, can only be imagined, but we may well suppose
that at the rate it progressed, Indiana could have furnished the com-
mercial world with currency. The decline of the system was quite
as rapid as its rise. In little more than two years from the issue of
the first Free Bank note, more than one-half of the circulation was
returned and cancelled, leaving at the commencement of my
official term a balance of $4,5S1,S33 still outstanding, while the
par value of the securities placed in my hands was $4,941,515.
So far as the Banks were owned by citizens of the State a credit-
able exertion was made to protect the bill holder from loss, and
most of the institutions thus held, sustained themselves with honor,
and are still solvent and specie-paying. Those still remaining
under the law of 1S52, having securities sufficient at the lowest
market value to redeem their circulation at par in any emergency;
while those which have complied with and have organized under
the law as amended in 1855, have had retained, as will be seen by
the accompanying table, 10 per cent, off the market value of their
securities, thus placing the specie paying Free Banks of Indiana
upon the most safe and reliable basis. Those hell by foreign capi-
talists were generally abandoned to their fate, the holders of its
notes being compelled to exchange them for depreciated bonds, or
accept & pro rata of the proceeds when sold. In no case as applied
to foreign bankers was the principle of individual liability resorted
to by the bill holder, and the value of that feature therefore cannot
be estimated.

The amended act of 1855, while it discourages the operations of
speculators and swindlers, affords the public ample guaranty of
security. With a strict and vigilant execution of the law there
can be no recurrence of the calamity of I854-'5 The present
Banks are believed to be solvent and shown to be fully able to
redeem all their circulation at par, and are known to be in the
hands of men of honor and responsibility.



153

The operations under the amended act will be found in the ac-
companying exhibit. Further legislation may be necessary in re-
gard to some of the details of the system, but nothing more is
required to insure its safety and security.

The new State Bank is authorised to issue twelve millions of dol-
lars ; and as the Free Banks are restricted to six, the public have
in this feature a guaranty of safety against any excessive issue,
quite as effectual as any other restrictions that can be placed upon
the Banker. Thus a total issue of eighteen millions of dollars is
provided for — a sum sufficient for the commercial transactions of
the State.

The interests of community and the rights of our own people
would seem also to require that the privilege of Free Banking
should be extended only to ciiizens of the State. Such a restriction
would give character to the circulation at home, and prevent an-
other invasion of straw capitalists, whose only vocation is to
plunder the public.

GENERAL REMARKS.

By an examination of the general statement of receipts and ex-
penditures at the commencement of this report, it will be seen that
the balance reported to be on hand at the close of the fiscal year
ending October 31st, 1S56, is $624,735 03

There is due to the following funds the amounts named below:

To the Wabash and Erie Canal Fund, $286,803 12

To the Swamp Land Fund, 228,965 44

To the Common School Fund, 92,881 S8

To the Township Library Fund, 14,264 20

To various other Trust Funds, about 31,799 41

Total, $654,714 11

Deduct balance on hand, 624,735 03

$29,1179 08

In reference to the amount reported to be due to the Wabash
and Erie Canal, it may be stated that it is not a balance really due
from the State to the Trustees of the Canal, but is the amount
which the receipts of the canal exceed the expenditures.

In stating the balances due the various funds, in his general re-
marks in the report of 1851, page 88, the Auditor by mistake
represented the amount due the Swamp Land Fund 1o be $298,-
831 63, when the Books show the balance to be $398,831 63.
This mistake • f course made the balance in the Treasury $100,000
less than it was reported to be.

The probable amount which will be needed for the expenditures
for the ensuing two years may be estimated as follows, viz:



154

Estimate for Ordinary Expenditures for 1S57.

On account of Legislature, $45,000 00

On account of Judiciary, 20,000 00

On account of Prosecuting Attorneys, 3,500 00

On account of Public Printing and Binding, 10,000 00

On account of Fuel and Stationery, 3,500 00

On account of Executive Officers, including Attor-
ney Genera', 5,650 00

On account of State Hou^e, 1,000 00

On account of Governor's House, ■ • 600 00

On account of State Prison, N000 00

On account of State Library, 1,000 00

On account of Contingent Fund, 1,500 00

On account of Specific Appropriations, 3,000 00

On account of Militia. 400 00

On account of Distribution of Laws, &c, 1,200 00

On account of Miscellaneous Disbursements,- • • • ■ 2, .00 00

On account of Governor's Circle, 100 00

On account of Reports of Supreme Court. - • • 2,000 00

On account of expenses of Supreme Court, 1,000 00

$109,950 00

Besides the above denominated ordin ry, there are expenditures
denominated extraordinary, which may be estimated as follows :

On account of interest on State Debt

and Exchange, $320,000 00

On account of salary of Agent, 2,500 00

On account of incidental expenses of

Agency, 1,000 00

$323,500 00

On account of Deaf and Dumb Asy-
lum, • 20,000 00

On account of Hospit 1 for the Insane, 30,000 00

On account of Blind Asylum, 15,000 00

65,000 00

On account of interest on University

Bonds, 3,935 10

$532,385 10

It will borne in mind that the foiejioing estimates are made
without reference to the amounts overdrawn and balances unex-
pended of former appropriations. In a preceding port of this Re-
port, commencing at page 10, will be found a statement showing
the appropriations overdrawn and the balances unexpended, which
of course should be taken into account in making appropriations.



155

Some of the accounts show large amounts overdrawn, whilst oth-
er^ show large balances unexpended. The State Prison account
especially is overdrawn to an amount exceeding $4! ',000. This
was occasioned bv the expenses incident to the change in the man-
agement ot the State Prison, provided for by the several acts of
the General Assembly passed in 1855, and by improvements in the
new building and stock for future operations. The amoun e ti-
mated will, it is supposed, be sufficient to pay the expenses of
transporting convicts and the salaries of Warden and others
concerned in the management of the Prison under the new sys-
tem, unless the sheriffs succeed in changing the construction which
this office has uniformly given to the law on the subject of mileage,
The acts of 1855, page 105, regulating the fees of sheriffs, provides
that they shall be paid as follows:

•' For taking convict to the State Prison, and all expenses inci-
dent to the same, per mile for going and returning, 15 cents.

" For each additional convict, taken at the same time, per mile,
10 cents."

The construction put upon the foregoing language by this office,
is, that the Sheriff is entitled to 15 cents per mile for going arta
rtttii ning when he takes but one convict, and that for each addi-
tion;! I convict, taken by him at the same time, he is entitled to
ten cents for going to the State Prison. Some of the sheriffs
contend, and are threatening to test the question by a suit, that
tht y aie entitled to ten cents per mile for each additional convict
from the State Prison to their county seats as well as to the State
Prison. Believing that such was not the intention of the Legisla-
ture, and that it is not the natural construction of the lan-
guage, it has been the practice to pay mileage on additional con-
victs but. one way. It is reasonable and proper that the Sheriff
should himself have mileage both ways, but as the convicts are not
taken back it dues not seem so reasonable, nor does it seem to me
to be the intention of the law, that the Sheriff should be paid mile-
age for them except to the ir destination. The subject however is
respectfully commended to the consideration ol the Legislature,
with the request that the matter may be made so plain as not to
admit of two constructions.

Ordinary expenditures estimated for 1S58.

On account of Judiciary, $20,000 00

On account of Executive, 5,050 00

On account of Prosecuting Attorneys, 3,500 00

On account of Public Priming and Binding, 5,000 00

On account of Fuel and Stationery, 3,500 00

O.i account of State House, 1,000 00

On account of Governor's House, 600 00

On account of State Prison, including salary of

Warden, 8,000 00



156

On account of State Library, $1,090 00

On account of Contingent Fund, 1,500 09

On account of Militia, 400 00

On account of Miscellaneous Disbursements, 1,000 00

On account of Governor's Circle, 100 00

On account of Reports of Supreme Court, 2,000 00

On account of expenses of Supreme Court, 1,000 00



$54,250 00



Extraordinary Expenditures for 1S5S.

On account of Interest on State Debt,

and Exchange, $320,000 00

On account of Salary of Agent, 2,500 00

On account of incidental expenses,- • • 1,000 00



323,500 00



On account of Deaf and Dumb Asylum, $20,000 00
On account of Hospital for Insane,- • • 30/ 00 00

On account of Blind Asylum, 15,000 00

65,000 00

On account of interest on University Bonds, 3,9.5 10



$446,685 10



The ordinary expenditures of the State during the fiscal year-
ending October 31st, 1S56, as will be seen in the general statement
of expenditures, were $59,522 68, which exceeds the amount esti-
mated in 1S54 about $6,000. More than this difference will be
found in the account for printing and binding, the estimate of raj
predecessor being $5,000, and the amount of the bills rendered
and paid $12,729 91. Some of the other items are under and
some over the amount estimated.

ESTIMATES FOR 1^57.

RECEIPTS.

Amount on the duplicates of 1856, $706,546

Probable delinquency', $1 .0,000

Cost of collection, &c, 30,000

150,000



$556,546

Delinquencies which will probably be collected,- • • • 50,000

Revenue from State Bank and other scurces, • 10,000

$616,546



157



EXPENDITURES.

Estimated ordinary expenditures for

1857, $109,950

Interest on State Debt, and expenses, 323,500

Benevolent Institutions, 65,000

Interest on University Bonds, 3,935

•Deficit in Treasury, Oct. 31, 1856, say 29,979



532,364



Leaving in the Treasury, Oct. 31, 1857, $84,182

ESTIMATES FOR 1858.

Should a re-appraisement of real estate be ordered by the Leg-
islature, and should the increase be equal to expectations, the fol-
lowing will be an approximation to the receipts of 1857.

RECEIPTS.

Assessment for State purposes on the entire amount
of property in the State, say $380,000,000 at 20
cents on the $100 $760,000

Poll tax on 190,000 polls, at 50 cents each, • 95,000



Deduct one-sixth for delinquency in

collection, $142,500

Deduct also for costs of collection,- • • 30,000



$855,000



172,500



$6S2,500
Add delinquencies which will probably be collected, 55,000

Add also receipts from other sources, say • • • • 10,000



$747,500



EXPENDITURES.



Estimated ordinary expenditures for

1858, $54,250

Interest on State Debt and expenses, 323,500

Benevolent Institutions, 65,000

Interest on University Bonds, 3.935



446,635



Estimated balance for 1858, $300,865

Add estimated balance of 1857, 84,182



Total estimated balance, Oct. 31, 1S5S, $385,047



158

Thi-; balance, or whatever may be realized of it, will be appli-
cable, under the Constitution, to the payment of the principal of
the Public Debt.

Statement No. 1, in the Appendix, will exhibit in detail, the set-
tlements with the County Treasurers of the various kinds ol taxes
payable at the State Treasury at the April settlement, together
with the delinquencies returned on the various assessments. That
statement shows the state of the account-; with the Treasurers at
the close of the fiscal year. The balance reported to be due from
the County of Ripley, it is understood, will be shortly arranged.
No regular settlement sheet w r as furnished from Tippecanoe County,
in consequence of the continued absence of the Auditor, but the
Treasurer has, since the close of the year, paid over the amount he
considers due, of the various funds payable to the State T>easurer.
The Treasurer of Jasper County has paid nothing, and the amounts
due from him will be seen by the exhibit under the head of that
County. The amount of revenue paid over by ihe several Treas-
urers at the close of the fiscal year (including the amount teccived
from the Branches of the State Bank) is as follows, viz:

Revenue of 1S55 $544.(>73 '29

Delinquent Revenue of 1S55 24,*">56 75

Delinquent Revenue of 1854 and previous years • • • 4l,b95 47

Total, $611,426 51

Several thousand dollars have been received since the clo-e of
the year, from Tippecanoe and other Counties.

Statement No. 2, will show the August settlements of delinquent
taxes of 1S55, so far as settlements were made. Some settlements
have since been made, which of course are not shown in that ex-
hibit.

Statement No. 3, will show the number of acres of land, the
value of lands, improvements, town lots and buildings, railroad
stock, corporation stock, personal property, the total value of ail
taxables, and the number of polls returned for taxation for 1856,
in ali the Counties of the State, except Grant, Hamilton, Lake,
Laporte, Posey, Starke, Tippecanoe, and Vigo, from which no re-
turns have been received. Taking the Counties not returned as
they were last year, and the taxables of 1856. compared with
those of 1855, will show the following result:

Value of all taxables for 1S56 $306,797,819

Va'ue of all taxables for 1855 301,85^.474



Increase $4,939,345



159

Number of polls in 1855 178,877

Number of polls in 1856 174,802

Decrease ■ ■ 5,925

This shows an increase of nearly $5,000,000 in the total value
of taxables over the year previous, which is less than might reason-
ably he expected. There having been no re-valuation of real es-
tate since 1850, there is of course no increase in the real estate
except that which arises from sales of lands which are immediately
added to the tax list. The principal increase to be anticipated
would be on personal properly and improvements on real estate
and town lots which ought to show a larger increase than that in-
dicated by the above figures. The decrease, however, of nearly
6,000 in .he number of polls cannot be accounted for on any other
hypothesis but by assuming thai the assessment cannot have been
carefully and fully made. That there should be an increase
instead of a decrease in the number of polls, cannot be doubted in
view of the unquestionably rapid increase of our population. The
vote given at the recent Presidential Election in Indiana was
235,435, being an excess on the polls returned of 60,633, and show-
ing a diminution in the polls as compared with the votes, of more
than one-fourth. This would seem to be inconsistent with the idea
of a laithful assessment of the polls. The most rational way prob-
ably, in which to account for so small a return of polls, is b\ pre-
suming that in many townships the assessors make but little effort
to ascertain and return the polls of those who have no property
that is taxable.

The art presciibing the powers and duties of the Auditor ot
State requires him, among other things, to exhibit to the G neral
Assembly "a complete statement of the revenues, taxables, funds,
resources, and property of the State." In order to discharge this
duty properly, the information must be furnished by the County
authorities. The 81st Sec. Chapter G, of the Revised Statutes of
1852, requires each County Audita- "to make out and cause to be
transmit! ed to the Audit< r of State, on or before the first day of
November, in each year, a complete abstract of all the property
listed in each township, the valuation thereof, the number of polls,
the amount of each kind of tax, and the aggregate thereof, in the
County, and certify the same, as also the rate of each kind ol tax
assessed." Whilst it is but just to state that many of the County
Auditors were prompt in the transmission of the information desig-
nated in the section quoted, it is at the same time proper to say
that many others failed to report at the proper time, and eight ot
them, as will be seen by the abstracts, failed to report at all. Cir-
cu'nr after circular was sent from this office, calling upon delinquent
Auditors for I e required information, the delay in receiving which
necessarily postponed the completion of this Report, and the entire
failure in sume instances renders it impracticable to present a



160

complete exhibit. It is doubted whether anything short of a pen-
alty for delinquency will ensure the prompt compliance with the
provisions of the law. I have felt it my duty, however, to report
the foregoing facts, leaving the question of the remedy with the
Legislature.

That the Legislature will authorize and require a new valuation of
the real property of the State, is taken for granted. Considering the
rapid appreciation of property during the last seven years, (in which
time no appraisement has been made,) it is believed that a fair as-
sessment will give as the value of all taxables little if any short
of $400,000,000. Since the last assessment of real estate, some
towns and cities have doubled their value, and in many parts of
the country, especially in the vicinity of Railroads, lands have
also increased nearly one hundred per cent., whilst all over the
State a gradual and steady advance has been realized.

The following table will show the total amount of taxable
property for the last twelve years, and the increase of each year,
viz:

TOTAL TAXABLE. INCREASE.

1844, $116,237,965

1845, - 118,870,251 $2,632,286

1846, 122,265,686 3,395.435

1847, 124,610,441 2,344,755

1848, 128.960,986 4.350,545

1849, 133,419,056 5,458,070

1S50, 138,262,0S5 4,S43,029

1851, 210,973,643 72,711,558

1852, 218,563,809 7,590,166

1853, 266,097,614 47,533,805

1854, 290,418,148 24,320,534

1855, 301,858,474 11,430,320

1856, 306,797,819 4,939,345

Increase in twelve years, $191,550,0u2

Statement No. 4 will show the amount of taxes charged on the
duplicate for 1S55 for State and all other purposes, in the several
counties of the State, with the exception of Dekalb, Grant, Ham-
ilton, Lake, Laporte, Ohio, Perry, Tippecanoe, and Warrick, from
which no returns have been received. Estimating these counties



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