Indiana. General Assembly.

Documentary journal of Indiana 1856, part 1 (Volume 1856, pt.1) online

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Surplus Revenue Fund — Receipts and expenditures 17

" " Loan account IS

Explanatory remarks, lg

Congressional Township Fund, 18

Common School Fund derived from Sinking Fund, 19

Indianapolis Fund, 19

Treasury Fund, 19

Fund from estates without heirs, 20

Hospital for Insane, CO

Deaf and Dumb Asylum, 20

Asylum for the Blind, 21

State Debt, explanation of, 22

Bonds surrendered, o->

Five per cent. State Stock issued, 22

Two and a half per cent. State Stock issued, 23

Canal Stocks issued, 03

Coupons surrendered, 2D

Interest paid on State Debt, 24

Interest and Exchange, 04

Amount of State Stock redeemed, 24

Expenses of Agency, 25

General remarks oh financial condition of State, 2.">

Domestic Debt, 26

Interest paid on Treasury Notes, 27



Common School Fund, of what composed, 27

Receipts and expenditures for 1856 28

Balance due Oct. 31, 1956 2^

Wabash and Erie Canal— Receipts and Expenditures, 29, 30, 31

Wabash and Erie Canal Scrip, East and West, 31

Swamp Lauds, 32

Agricultural Products, 32

Free Banking, 33, 37

General remarks, 37

Balance due from the Treasury, 37

Estimate for ordinary expenditures for 1857, 38

Estimate for expenditures other than ordinary. 38

Remarks relative to Sheriffs fees for taking convicts to State Prison, 38

Estimates for ordinary expenditures for 1858, 39

Estimates for expenditures other than ordinary, 40

Estimates of receipts and expenditures for 1S57, 40, 41

Estimates of receipts and expenditures for 1858, 41

Estimated amount applicable to State Debt in 1858 41

Settlement with Stite Treasurer, 42

Value of Taxables in 1856, compared with 1S55, 42

.Number of Polls in 1855 and 185(5, 43

Remarks on increase and decrease of property and polls, 43

Estimate of value of property under a new appraisement, 44

Increase of taxables from 1844 to 1856, 44

Amount of State Taxes on Duplicates for 1S56, 44

Appendix, 47

Doc. No. 4.] [Part 1.









1 D. J.— 18.

Office of the State Bank of Indiana,
Indianapolis, January 13, 1856.

Hon. Ballard Smith,

Speaker of the House of Representatives :

Sir: — Herewith please receive the Annual Report of the State
Bank of Indiana, to be laid before the House of Represantatives.

A similar report, together with one from each Branch of this
Bank, has been heretofore handed the State Printer.

Very respectfully,

E. DUMONT, President.


Office of the State Bank of Indiana,
Indianapolis, December 30, 1856.

To His Excellency Joseph A. Wright:

Sir: — In behalf of the Board of Directors, I herewith submit
the annual report of the condition of the State Bank of Indiana,
and of each branch thereof, on the 31st day of October^ 1856.

Compared with the statement of the Bank at the time of my last
report, a year since, the following changes are presented in the
leading items, an examination of which will show that the general
uniformity which has heretofore characterized the management of
this institution, and which has exercised so beneficial an influence
on the general prosperity of the State, has continued to its closing
year of active business.

The amount of notes and bills discounted is four millions six
hundred and ninety thousand six hundred and thirty-five dollars,
($4,690,635), corresponding with the amount of loans, at the same
date last year, with the increase of $11,855.

The amount of circulation is three millions three hundred and
eighty-one thousand eight hundred and six dollars, ($3,381,806),
being an increase of $46,080.

The amount of gold and silver is one million one hundred and
nineteen thousand four hundred and sixty-nine dollars, (1,119,469),
being a decrease of $103,731, which decrease is, however, nearly
balanced by the increase of eastern means, which are seven hun-
dred and ninety-eight thousand seven hundred and thirty-five
dollars, ($798,735).

The amount of surplus fund is one million two hundred and
sixty-five thousand two hundred and three dollars, (1,265,203),
being an increase of $36,902.

The following dividends of profit on the capital stock of the
State and individuals, in the several branches, have been made in
the year 1856 :


To the branch at Lawrenceburgh ■ • • 22| per cent.

To the branches at Indianapolis. Evansville, and

South Bend 21 per cent.

To the branches at Richmond and Fort Wayne • • • • 20 per cent.

To the branches at Terre Haute and Michigan City, 19 per cent.

To the branches at Madison and New Albany 18 per cent.

To the branch at Vincennes- • • 16 per cent.

.To the branch at Bedford 13 per cent.

To the branch at Lafayette II per cent.

This is deemed an appropriate time to survey the operations of
the Bank, from its organization up to this time.

The charter was approved on the 2Sth day of January, 1**34.
The first section provides that the Bank shall be known as the
State Bank of Indiana, and shall continue until the 1st day of
January, 1859. By the charter, the State was to own one half of
the stock, and she was to raise the means with which that part of
the stock was to be paid for, as per the 103d section of the charter,
by a loan of money. That money was to be borrowed, to the
amount of say $1,390,000, by issuing the bonds of the State, drawing
an interest of five per cent, per annum, redeemable at the option
of the State after twenty and within thirty years from the date of
their issue. These bonds were issued in the years 1834, '35 and
'36, and wfll consequently fall due absolutely in 1864, '65 and '66.
A board of sinking fund commissioners were provided for by the
charter, as a body independent of the Bank, and they, as such,
were charged with the payment of the semi-annual interest ac-
cruing on these bonds, and ultimately with the payment of the
principal of the bonds. By the 113th section of the charter it is
provided: "There shall be created a fund to be called the sinking
fund, which shall consist of all unapplied balances of the loan or
loans procured on the part of the State for its stock in the State
Bank, or for the purpose of being loaned to stockholders, to enable
them to meet their stock instalments in the Bank; the semi-annual
payments of interest on the Slate loans to stockholders, and the
sums that shall be received in payment of said loans: the dividends
that shall be declared and paid by the State Bank on the State
stock, and the dividends accruing on such portions of stock belong-
ing to the other stockholders as shall have been paid for by the
loan on the part of the Slate, and which shall not have been repaid
by such stockholders." And by the 1 14th section it is provided:
"The principal and interest of said sinking fund shall be reserved
and set apart for the purpose of liquidating and paying off the
loan or loa?is, and the interest thereon, that shall be negotiated on
the part of the State for the payment of its stock in the State
Bank, and the second and third instalment on the shares of the
other stockholders in said Bank, and shall not be expended for any
other purpose, until said loan or loans, and the interest thereon,
and incidental expenses shall have been fully paid; and after the


payment of said loan or loans, the interest and expenses, the
residue of said fund shall be a permanent fund, and appropriated
to the cause of common school education, in such manner as the
General Assembly shall hereafter direct." In pursuance of the
provisions of said sections, the Bank has, semi-annually, ever since
her organization, paid over to the commissioners of the sinking
fund the dividends accruing to the State on her stock as soon as
declared, and the commissioners of the sinking fund have, on their
part, promptly and punctually appropriated these dividends to the
payment of the interest on the outstanding bank bonds, (as the
bonds of the State issued for bank capital are usually called), and
as the dividends usually largely exceeded the interest on the bonds,
the excess was thrown into the sinking fund, and loaned by the
sinking fund commissioners to the people of the State, and appro-
priated as provided by law. In this manner the sinking fund has
accumulated, until it amounts, with its own accumulations, Nov.
3, 1856, exclusive of the bank stock, to the sum of $1,955,461 59.
Notwithstanding the Bank has no interest in or control over this
sinking fund, and has at no time had (as has been by some errone-
ously supposed), save the duty of paying over the dividend every
six months to the sinking fund commissioners, yet it is no more
than justice to herself to refer to it, as it shows that the money
that was borrowed by the State, and entrusted in the shape
of bank stock to her keeping, has paid its own interest and accu-
mulated a fund of $1,955,461 59, whilst the principal, in the shape
of bank stock, remains untouched, and when converted into money
will, it is not doubted, more than pay the outstanding bonds, leav-
ing the above amount and its accumulations to be appropriated to
educational purposes. It is quite true that the faith of the State
is, by the sections of the charter referred to, pledged that no ap-
propriation of said fund shall be made by the Legislature until the
bank bonds are all paid off; but that fact need cast no cloud upon
the pleasing refle"tion arising from the fact that the bank stock is
between it and danger, that is to say, the bank stock, when con-
verted into money, will be sufficient to pay off the bonds, and
leave the sinking fund, exclusive of that, undiminished. It will be a
noble legacy to bequeath to the rising generation, if the faith of the
State remain inviolate, and it ultimately go to the purposes of edu-
cation, to which it was originally dedicated, notwithstanding it
must remain untouched for any other purpose whatever till the
bonds are paid. It must till then stand as security for the bonds,
however well grounded the hope is that the security will not have
to pay the debt; lor so it is written in the charter, so it is written
in the bond.

This subject is merely referred to in this connection, because it
is thought proper that the representatives of the people should
know what the Bank has really earned for the ultimate purposes
of education. The condition of the sinking fund will doubtless be
fully laid before the Legislature, by the commissioners of that fund,


whose appropriate duty it is, which report will doubtless verify the
correctness of what is above stated, hence it is deemed only neces-
sary to add, that the fund not converted into bank stock or loaned
to the State, instead of being in the control of the Bank, as some
have supposed, has been by the commissioners loaned to the peo-
ple on mortgages of real estate, valued, exclusive of perishable
improvements, at double the amount of the loan. It is believed to
have been loaned with so much care as to be entirely safe.

Will the stock of the State in the Bank, on its conversion into
money within the coming two years, yield a sum sufficient to take
up the outstanding bonds, without resorting to the sinking fund
proper, is a question that presents itself.

It is understood that a considerable amount of these bonds have
already been retired by the sinking fund commissioners, but the
solution to the above inquiry is the same as if that was not the
case. The whole amount of bonds issued amount to $1,390,000.
The stock held by the State in the Bank, at par, amounts to
$1,013,754 27, which, divided into shares of fifty dollars each,
would make a fraction over twenty thousand two hundred and
seventy-five shares. It is true that what these shares are worth is
somewhat conjectural, and cannot be arrived at with mathematical
certainty, until the affairs of the Bank are closed. It is known
that they are in value considerably above par. This results from
the surplus fund that has been accumulating for the last twenty
years, under the 54th section of the Bank Charter, by which it is
provided, that the Bank shall create and keep up a surplus fund,
that shall never be less than one-sixteenth of the capital stock of
each branch. The fund has been created, and the section requiring
it complied with, by reserving from the State and from the private
stockholder, a like proposition from the dividend at the semi-annual
declaration of dividends. It amounts, October 31, 1856, to the
sum of $1,265,202 07, as will be seen from the following expose
or tabular statement. If by reason of the surplus fund the stock
in the Bank should yield 50 per cent, above par, which is regarded
by some who are thought capable of judging a very safe cumula-
tion, each share of stock would yield $75, and the twenty thou-
sand two hundred and seventy-five shares owned by the estate,
would yield the sum of $1,520,635, which exceeds the par amount
of the bonds issued by $130,630. At sixty-nine dollars to the
share the bank stock would yield a little above the par amount of
the bonds.

These results are of course only based on a hypothesis, and are
not at this time susceptible of exact mathematical demonstration.
Still it will enable others to see the theory upon which it is based,
who can in turn make their own calculations and form their own
opinions. The reason why exact accuracy is not attainable will
readily be seen. It is because, during the coming two years, the
assets of the Bank, consisting of bills, notes, judgments, real estate,
dec, &.C., must be converted into money. What loss may be sus-


tained cannot of course, at this time, be known. Independent of
the suspended debt, (which, it will be seen from the foregoing ex-
pose, is less than one-fourth the amount of the surplus fund), it is
thought that the losses on the notes and bills will be inconsider-
able. From the item which is called "suspended debt," some-
thing, perhaps one-half, may be realized. It consists of judgments,
notes, bills, balances, mostly of long standing, not considered as
worth one hundred cents to the dollar, though many of them have
from time to time been collected in full.

In banking, where the surplus principle prevails, a bank other-
wise sound is regarded in a healthy condition when the surplus
equals the suspended debt; how much more so, then, when the
surplus fund, as is the case with this Bank, is four-fold greater than
that debt. Some there are, not so wise as serpents, nor yet so
harmless as doves, whose amazing astuteness has enabled them to
discover that this surplus all belongs to the State, but has inured
«olely to the benefit of the private stockholder; but it is scarcely
necessary to say that, in this surplus fund, the State and the indi-
vidual stockholder are equally interested, as incident to their stock,
and that it has, like all other means of the Bank, been constantly
employed in the discounting of notes, the buying of bills, &c,
thus swelling the general profits of the Bank and benefiting alike
the State and the individual stockholder. It is now in bills, notes,
<fec , like the other means of the Bank, to be collected, called in,
and reduced to cash by the Bank, during the coming two years, as
all her other means. The State's part is then paid over in cash,
as stock reduced to cash.

Though, as has already been seen, the 1st section of the charter
provides that the Bank shall continue until the Jsf day of January,
1859, yet, as will be seen from the 111th section, she cannot dis-
count after the 1st of January, 1857, or do any other banking
business, except such as may be necessary to enable her to wind
up her affairs, still no period of the existence of the Bank has been
fraught with more important duties than is that part of her char-
ter life yet to come. The most important functions under the
charter are yet to be executed. She must convert her assets, con-
sisting of bills, notes, judgments, real estate, &c, into monev.
She must pay her debts. Her creditors are billholders, depositors,
stockholders, &c. Neither the State nor any other stockholders
can be paid in part or whole until the Bank has paid all her other
debts. As in the settlement of an estate, the heir is entitled to
nothing till the creditors are paid, so the stockholder in a bank has
no claim except in what may remain after the debts are paid. To
accomplish all this the charter provides that the organization of the
Bank remains intact till January 1, 1859.

The branches must still continue to elect directors and officers,
and hold their meetings; for there are duties incumbent upon them
which, if neglected, would jeopardize the most vital interest of
creditor and stockholder. The Bank is the trustee of both, and


continues such by the charter for two years yet to come. The
whole capital of the Bank is a trust fund, to be applied, first, to
the debts of the corporation, and the remainder to be returned to
the stockholder. As already said, the trust in favor of the latter
cannot be executed till all the demands against the Bank are satis-
fied. The branches must still make their monthly, semi-monthly,
quarterly, and annual reports to the State Board; for, as all the
branches are liable in case of the insolvency of any one, they have
a right to demand all the vigilance, checks, and safeguards, to the
last day that has been required heretofore, and accordingly the
charter has so provided.

The present Legislature must elect four directors on the pari of
the State, for though the term of service of a portion of the State
directors does not expire this year, the period for which any of
them were elected will expire before the meeting of another Assem-

Verv important duties will also devolve upon the State Board
during the coming two years. This body acts as a board of con-
trol over the branches, meets every three months, or oltener,
declares the amount of dividends in each branch, receives and ex-
amines the semi-monthly statements required from each, examines
the condition of the branches, semi-annually, through some of its
members, and takes such action on those reports as may be deemed
necessary. It may suspend a branch and appoint a receiver for
cause, and may do many things in restraint of the local board to
keep them within safe limits. In short, the powers and obligations
of the Bank, as restricted by the 11 1th section of the charter, are
just as inviolate after as before the 1st of January, 1857, because
they are conferred by the charter, and can neither be taken away,
abridged, or altered.

The charter of the State Bank of Indiana is somewhat anoma-
lous: it not only provides the manner in which she shall wind up
her affairs, but it appoints the receivers to receive from the Bank
what raav be due to the State on account of her stock after the
Bank has reduced her assets to cash and paid her other creditors.
These receivers are the Sinking Fund Commissioners, to whom the
charter provides the Bank shall pay the amount due the Stale on
account of her stock, and that they shall apply it to the taking up
of the outstanding bonds of the State issued for bank capital, and
that the surplus, if any, shall go into a permanent sinking fund,
which is dedicated forever to the purposes of education, but the
faith of the State is solemnly pledged that no appropriation of any
part of the sinking fund shall be made by the Legislature till the
bonds are paid. John F. Carr, Beattie McClelland, P. M. Parks,
and Joseph V. Bemusdaffer, are the present Commissioners. That
board has charge of the sinking fund proper, exists independent of
the Bank, and will continue to exist after the Bank ceases to be.

To that Board the Bank has paid the semi- annual dividends due
the State every six months since the first organization of the Bank.


and with the money thus received they have paid the interest on
the outstanding Bank Bonds, and with the amounts not required
for that purpose and its own increase, built up the Sinking Fund
heretofore referred to, to be appropriated to educational purposes
after the Bonds are paid off*.

It may so happen that the Bank may be able to convert her
means into cash faster than the creditor may present his demand,
in such case she cannot pay the stockholder, because, as already
seen, the claim of the creditor is not only paramount, but a pre-
ferred debt. Should such a state of things exist, a large amount
of capital might in the meantime remain unproductive. Would it
not be well to provide for such a contingency? Could not the
Legislature, with the consent of the Bank, provide that in such
case, the money might be invested in State Bonds of interest pay-
ing States or Bank Bonds at their market value? These Bonds
would draw interest, and could be converted at any moment into
cash, to meet the obligations of the Bank.

In that way, the means of the Bank would continue to be pro-
ductive to the last moment. The State and the private stockhol-
der would reap equally the advantages. Should it be deemed nec-
essary to guard against abuse of such privileges, it could be provi-
ded that it should not be exercised without the unanimous consent
of the Directors elected by the Legislature. It has been suggested
that inasmuch as after the 1st of January, 1859, there may be bill-
holders or creditors of the Bank who have not presented their de-
mands, and debts due the Bank still uncollected, that some legisla-
tion was necessary to meet such contingency. It is believed that
no such legislation is required, or rather, that the case is already
provided for ; that is to say, that the 6th section of the Act estab-
lishing general provisions respecting corporations, meets the sup-
posed case. It is only deemed necessary to add, that the Bank is
believed to be in a sound and healthy condition, and that on the
1st day of January, 1S59, she will expire as she has lived, faithful
to the trust confided.

All of which is respectfully submitted.

E. DUMONT, President.


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