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

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amount originally subscribed by the State $128,038 00

Stock in the State Bank from the Saliae Fund 4,924 20

Stock in ihe State Bank from the Bank Tax Fund

arising under the 15th section of Bank Charter- • • 792 07

$133,754 27

What I have already said as to the value of stock, applies equallv
to this held in trust.

Presuming that possibly you intended to embrace, by the 5th
inquiry, the Sinking Fund proper (exclusive of Bank stock, which
is under the control of the Sinking Fund Commissioners, and not
of the Bank,) I herewith exhibit to you the amount and the items
thereof as follows, to-wit, on November 3d, 1856:

Statement of Sinking Fund, irrespective of Bank stock or Bank
bonds —

Current loans $1,071,989 26

Surplus revenue loans 72,887 13

Loans on purchasing forfeited lands-. 110,505 60

■ Total $1,255,381 99

Loans on mortgage to stockholders of State Bank:

At Evansville Branch $1 4J7 4<)

At Vincennes Branch 448 75

At Bedford Branch 985 17

2,851 41

Balances due in Branches of State Bank- • . 11 741 49

1 D. J.— 25*.



Balance in hands of Messrs. Winslow, Lanier & Co.,

New York, after providing for last July interest, 868 4l

Balance on deposit in Indianapolis Branch to the

credit of E. Dumont, President, for loans 36,536 85

Bonds of the State of Indiana for internal improve-
ment taken for debt of Wabash College, under a
special act of the Legislature 10.400 00

Bonds or Stock bearing 5 per cent., of t'^e State of

Indiana, purchased by the Fund 21,000 00

Due from the State of Indiana :

For internal improvement, treasury notes
redeemed bv sinking fund under special
act of Legislature $588,360 00

For interest allowed in redeeming such

notes for the State 133,1S5 06

$721,545 06

Less the amount due the State on internal
improvement account from surplus rev-
enue 104,863 62

$616,681 44
$1,955,401 59

It will be seen that a very considerable item of the assets of the
Sinking Fund is a debt against the State for advancements made
to her use by the Sinking Fund Commissioners under acts of the
Legislature. The faith of the State is pledged that the money
with interest thereon, at the rale of six per cent, per annum shall
be returned to the Sinking Fund so soon as the Bank is wound up
and the bonds liquidated. See act of 1841, p. 47, sec. 4.

That part of the Sinking Fund loaned on mortgages has, I
think, generally been loaned with such care in regard to the suffi-
ciency of the security that there is no just ground to apprehend
loss to any considerable extent on that account. It is my opinion
that the proceeds of the Bank Stock will be sufficient to liquidate
all the outstanding bonds, and that the whole of the above sum of
$1,955,461 59, (with its accumulation in the mean time) may be
safelv looked to as a permanent school fund, to be appropriated
by the Legislature (after the liquidation of the bonds) to school
purposes, according to sec. 114 of the Bank Charter.

It is true that the faith of the State is pledged that no appropri-
ation of said fund shall be made until the bonds are all paid off,
but that fact need cast no cloud upon the pleasing reflection ari-
sing from the fact that the Bank Stock is between it and danger,
thai, is to say that the proceeds of the Bank Stock 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 ulti-
mately go to the purposes of education, notwiihstanding it must
remain untouched for any other purpose whatever until the bonds
are taken in. It must till that event stand as security for the
bonds, however well grounded the hope is that the security will
not have to pay the debt, otherwise the State is dishonored.

To that end the Sinking Fund Commissioners have been apply-
ing the means of the Sinking Fund proper, (as authorized by the
19th sec. of an a'-.t of the General Assembly, approved January
13, 1845, entitled an act to amend the several acts for loaning and
collecting the Sinking Fund and for other purposes) to the purchas-
ing of such of the Bank Bonds as were offered then at reasonable
rates, and it is still their purpose so to do. The fund, however,
will be re-imbursed by the Bank Stock on its conversion into mon-
ey, so that no dimunition in the end it is believed will result from
the temporary appropriation, and if within the two years allowed
the bank for winding up her affairs, the Sinking Fund Commissioners
shall have paid off or bought in the Bank Bonds, it will be for the
first Legislature after that is accomplished to adopt such legisla-
tion as is contemplated under the 114 section of the Charter.

The bonds issued for bank capital under the 103d section of the
Charter were issued in the years 1834, 1835 and 1^36, payable at
the pleasure of the Slate after twenty and within thirty years.
They will consequently fall due adsolutely in 1S64, 1865 and 186G.
It is believed by me that the Commissioners will feel it their duty,.
if not instructed othervv se by Legislation, to buy in those bonds
as rapidly as means will allow. It. would not be good policy to
compel the Commissioners by law to. take then up regardless of
the rates that might be charged, as the holders ot the bonds would
take advantage of such an act and put them up to exorbitant
prices, which they, without some such injudicious legislation, can-
not do, as none of them fall due before 18G4. As the law now
stands the Commissioners have ample power.

" What effect would an act of the Legislature extending the time,
say two or more years of the present Charter of the Bank have
upon the interest which the State holds in said Bank I" is vour
sixth inquiry.

1 can only say that it is my opinion that the Stock would in the
mean time pay good dividends, and it may be that more money
i-.ould be made out of the suspended debt, and more made out of
the bank's real estate by suchextension.

It may be also that the Sinking Fund Commissioners could, by
having more time buy the outstanding bank bonds at better rates,,
a- they could act less hastily; whether any substantial good would
result from such extension I do not know.

You ask seventhly, "Whether 1 can suggest any mode of set-
tling with the State the interest now helc in the bank," and are
kind enough to add that you will be pleased to have any sugges-


lions upon these or other questions that may occur to me in con-
nexion with the interest of the State in the Bank.

I think the solution of the above inquiry is found in the Charter
itself and the amendments thereto. The Charter provides for the
election by the Legislature of four persons called Sinking Fund
Commissioners, that the various Branches of the Bank shall pay
over to these Commissioners semi-annually the, dividends due the
State on her stock in the Bank, that with those dividends the said
Commissioners shall pay the semi-annual interest on the out-
standing bank bonds, and loan the surplus on mortgages of real

And they are authorized by the amendment of January 13, 1815,
to so loan it, or to use it in the purchase of outstanding bonds.
These dividends have accordingly been paid by the Bank to the
Sinking Fund Commissioners semi-annually from the organiza-
tion of the Bank to this time, and appropriated by them as
above provided. Consequently the Bank owes the State nothing
on the score of dividends. The Bank has nothing to do with the
Sinking Fund, except that the Sinking Fund Commissioners make
deposits of small amounts used for current loaning with the Indi-
anapolis Branch, and for the convenience of borrowers living at a
distance, they are permitted to make payments at the nearest

Consequently there is no settlement for the State to make with
the Bank respecting the Sinking Fund, and as to her Bank Stock,
of course the State stands only a preferred Stockholder, entitled
to her share of each dividend, for the capital as made by the Di-
rectors of the Bank from time to time alter they have reedeemed
the outstanding circulation of the Bank, and paid the individual de-
posits and other debts, which must be done before the claims of
any of the Stockholders, either State or individuals, can be deem-
ed to be due and payable.

The bank stock is not sinking fund, but becomes such on its con-
version into money in the final wind up. and that is a matter that
the bank must settle with the State, and the charter provides how-
it shall be done. It provides that after the 1st of January, 1S57,
the bank shall wind up its affairs, convert its assets into money,
pay its debts, and, after that is done, the amount due the State on
account of her stock shall be paid to the sinking fund commis-
sioners, and that they shall apply it to the taking up of the out-
standing bonds of the State, and the surplus, if any, shall go into
a permanent sinking fund, to be dedicated forever to the purposes
of education, and the faith of the State is solemnly pledged that
no appropriation whatever, of any part of the sinking fund, shall
be made until the bonds are paid.

If therefore, sir, by the inquiry, you desire my opinion as to the
persons who should be delegated by the State to see that this stock
is faithfully converted and fully paid over, I have simply to say
that the charter imposes that duty on the sinking fund commis-


sioners. They are a permanent board, existing independent of the
bank, and unless abolished after January 1st, 1^59, will continue
to exist after the bank ee ses to be. At this time the board
consists of John F. Carr, P. M. Parks, Beattie McClelland, and
Joseph V. Bemusdaffer. This board are elected by the Legislature
to protect the interests of the State, have no interest in the bank,
and are prohibited from being indebted to it in any way. I have
found the present board faithful guardians of the State's interest,
in all respects intelligent and competent; but as the term of office
of each one of them will expire before the meeting of another
Legislature, it will be the duty of the approaching Legislature to
elect four sinking fund commissioners. Whether the old ones are
re-elected or their places be suppled by new men, I doubt not the
interest of the State, will be faithfully cared for.

Some, with wrong conceptions of the mechanism of the bank,
and who seem not to understand that the sinking fund board, in so
far as it is an element in the structure of the bank, was provided
for solely to guard the State's interest, standing antagonistic to
all schemes that would wrong the State, and that it represents the
State only, and that the more familiar it is with the affairs of the
bank the better can it perform its duty, have suggested that it was
desirable that the bank should make settlement with persons that
had not been connected with her.

It is undoubtedly true that those who represent the State should
have no interest in common with the private stockholder, and the
charter has provided accordingly; so tfu't whether the old com-
missioners or a new set be elected the bank will have to settle and
pay over to persons having no community of interest with the
private stockholder.

It has occurred to me that I may have misapprehended the drift
of your seventh inquiry. That instead of desiring my opinion as
to the person with whom the bank should account (a thing settled
by the charter as 1 have attempted to show), you desire an expres-
sion of opinion as to the mode of making payment. On the sup-
position that the charter piivileges of the bank must end January
1st, 1859, the answer is that the payment should be made in cash
on or before that time. It is true that there are those who favor
an extension of the charter, and say that it can be done legally.
They say that the State can sell her stock to the bank, to be con-
verted into private stock; that the present stockholders of the
bank can pay the State in cash the value of the stock for the privi-
lege ot converting it into private stock, and continuing the bank-
ing business under the old charter without any other alteration,
the stock not to become their's until they pay for it, and they to
pay fur it in cash, or its equivalent in bank bonds, on or before the
1st of January, lb5'J. On these grave questions it is not meet that
I enter into any discussion or volunteer any opinion, but I will say
that 1 am not in favor of the State getting rid of her interest iu
the bank, in any way, on credit to this bank or any other.


It is my belief that the stock has cash in it, and perhaps to the
amount of from seventy to eighty dollars or upwards to the share,
and that the State, if she puts it beyond her contr 1, should first
have its value in her pocket, or bonds relumed equivalent thereto.
The State can derive no benefit from a sale of the stock, for she
will not be able to sell it for more than it will yield ; hence, unless
it be desirable to sell it with a view of extending the charter of the
bank, I see no better way than for the bank to go on and wind up as
contemplated by the charter, and, after paying her debts, pay the
proceeds of the stock, as it is converted into cash, to the sinking
fund commissioners, in cask, and that the latter apply the same to
the taking up of the outstanding bank bonds as fast as they can
be purchased at their value.

I know nothing respecting the wishes of the private stockholders
of this bank, respecting an extension of its charter privileges, but
I can say that my aid can be had in no scheme that would benefit
them at the expense of the State. Having but recently come into
the institution, I have relied upon former reports and the books as
I find them, for my data, and upon their correctness for my con-
clusions. If in any merely speculative opinion that I hove ex-
pressed I have fallen into error, when the better judgment of your
excellency is applied to all that I have wtitten that which is fal-
lacious or unsound will, I trust, prove harmless.
I have the honor to be,

Your obedient servant,




Dr. Elijah Netoland:

Dear Sir — In making your examination of the Office of Agent
of State, I especially call your attention to the following ques-
tions :

1st. What disposition is made of cancelled certificates of stock?

*2d. What is the number of blank certificates on hand?

3d. What is the amount and numbers of the surrendered bonds,
under the acts of 1846 and 1847, on hand at the Agency of the
State ?

4th. After a full examination of the condition of the Office, and
the manner in which the books are kept, you will make a report
to me, making such suggestions as you may think necessary lor the
future security of the State.

Yours, most respectfully,


To his Excellency, Joseph A. Wright,

Governor of the State of Indiana:

Sir — Agreeably to your instructions, a copy of which is filed
herewith, I proceeded to this city to examine into the condi-
tion of the Office of the Agent of State, and the manner in which
the books of said Office are kept.


Upon arriving here, I called upon Messrs. J. F. D. Lanier and
Washington C. Depauvv, and respectfully requested their assistance
in making said examination. I very much regret that the private
engagements of Mr. Lanier were such that he could not devote
the time, necessary to assist me in the examination. Mr. Depauw
kindly assisted me, and to his labors I am greatly indebted.

I called upon John M. Lord, Esq., the State Agent, and informed
him of the nature and objects of my visit, who promptly and
cheerfully put all the books and papers of the Office at my dispo-
sal, and afforded me every assistance necessary for the proposed

The result of this investigation is herewith respectfully sub-
mitted :


Of the " cancelled certificates of stock."

1st. The stock certificates when cancelled, are defaced and
marked " Cancelled," and are carefully replaced in the book from
which they were taken, and are kept for reference.

2d. The number of blank certificates on hand is as follows, viz:

Indiana 5 per cents, fourteen hundred and fifty — all of letter
" C."

Indiana 2-J- per cents, seven hundred and ninety-six — from
number 2656, to 3451, inclusive.

The number of the last certificates ot the 5 per cents, issued
prior to November 1, 1855, was 2060, which will be found in the
annnal report of Agent of 31st October last. There has been is-
sued from the 1st day of November, to the 11th of this instant,
upon which day the Office was closed for transfers, to enable the
Agent to make up the January dividend certificates, letter C, num-
bered 2061, to 2228, inclusive.

Of the '2h per cents, as above stated, certificates have been is-
sued from 2641, to 2655. inclusive.

3d. Amount and number of surrendered bonds on hand, is as fol-

Wabash and Erie Canal Loan, one bond, No. 90, six

per cent, bond issued under act of Jan. 0. IS32- • $1,000 00

Five per cent. Bonds, issued under act of January 27, 18^6.

Numbers 2156, 2157, 2158, 2159, 2160, 2161, 2162.
2163,2164, 2165, 2166, 2167, 2168, 2169,2170,
2171,2172, 2173, 2174, 2176, 2177, 2178, 2179,
2180,2181, 21S2, 2183, 2184, 2185, 2186, 2187.
21S8, 2189, 2190, 2191. 2192, 2193, 2194, 2195,
2196, 2197, 2198, 2199, 2200, 2201, 2202, 2203,
2204,2205, 2206, 2207, 2208, 2209, 2210, 2211,


2-212, '2213, 2214, 2215, 2216, 2217, 221*, 2219,
2220, 2221, 2222, 2223, 2224, 2225, 2226, 2227,
222S, 222!), 2230, 2231, 2232, 2233, 2234, 2235,
2236.2237, 2238, 2239, 2240, 2241, 2242,2243,
2244,2245, 2246, 22 l7, 2248, 2249, 2250,2251,
2252, 2253, 3254, 2255, 2256, 2257, making $101,000 00

Under the same act,

Numbers 1963, 1964, 1965, 2017, 20 IS, 2019, 2020,
2021.2022, 2023, 2024, 2025, 2026, 2027, 2028,
2029,2030, 2031, 2032, 2033, 2034, 2035, 2036,
2037. 2038, 2039, 2040, 2041, 2042, 2043, 2044,
2045,2046, 2047, 2048, 2040, 2050, 2051, 2072,
2073, 2074, 2075, 2076. 2077, 2078, 2079, 2080,
20> 1,2082, 2083, 2084, 2085, 2086, 2106,2107,
2108,2110, 2111, 2119, 2113, 2114, 2115, 2116.
3117,2118, 2119, 2120, 2121, 2122, 2123. 2124,
-125,2126, 2127, 2I2S, 2129, 2130, 2131, 2132,
2133,2134, 3135, 2136, 2137, 2138, 2139,2140,
2141,2142, 2143, 2144, 2145, 2146, 2147, 214S,
21 -.9, 2150, 2151, 2152, 2153, 2154, 2155.

Making $101,000 00

Wabash and Erie Canal, under act of February 1, 1834.

Numbers 194, 195, 196, 197, 19S, 199, 200, making $7,000 00

Internal Improvement Loans, under act January 27, 1836. — Five

per cent. Bonds.

Numbers 1308, 1309, 1310, 1311, 1312, 1313, 1314,
1315, 1316, 1317, 1318, 1319, 1320, 1321, 1322,
1323, 1324, 1325, 1326, 1329, 1330, 1331, 1332,
1333, 1334, 1335, 1336, 1337, 133S, 1339, 1340,
1341, 1342, 1343, 1344, 1345, 1346, 134T, 1348,
1319,1350, 1351, 1352, 13 >3, 1354, 1355, 1356,
1357, 135S. 1359, 1360, 1361, 1362, i3b3, 1364,
1365, 136.i, 1367, 1368, 1369, 1370, 1371, 1372,
1372, 1374, 1375, 1376, 1377, 1378, 1379. 13S0,
1381, 13t>2, 1283, 1397, 1398, 1399, 1400, mak-
ing $78,000 00

Numbers 4417, 3S56, 168, 1"2, 173, 1196,1159-. 7,000 00
One sterling bond, 225, No. 2405 1,000 00



Wabash and Erie Canal bonds surrendered, now on

hands 210 bonds $210,000 00

Internal Improvement bonds, S6 86,000 00

Total, 296 bonds $206,000 00

Mr. Lord exhibited to me the receipts of W. R. Nofsinger, Esq.,
Treasurer of State, for 189 bonds heretofore delivered, making a
total of 485 bonds surrendered during the time that Mr. Lord has
been in office.

The Bonds now on hand will, as I am informed, be shortly trans-
mitted to the office of Treasurer of State.

4th. — Examination of the Office, Books, eye.

The office is kept at No. 27, Wall street, on the 2d story of the
building, and has a fire proof vault, also an iron safe, which are be-
lieved to be all that is necessary for the security of the books and

The books are neatly and accurately kept. The several stock
ledgers were examined and compared with the registers of bonds
surrendered, and the same were found to agree. The balances
on the ledger were taken, and found to correspond with the
amounts severally stated in the annual report of the Agent, of Oct.
31st, viz:

Indiana 5 per cent, stock issued $5,301,500 00

Indiana 2$ per cent, stock issued 2,030,973 50

The undersigned made the examination of the books and office,
as lull and complete, as the time which they were enabled to de-
vote to it would permit, and they take great pleasure in bearing
teslimony to Mr. Lord's efficiency and capability, and that he inter-
ests of the State are secure under his management of the office.

5th. — Suggestions for the future security of the State.

The undersigned would respectfully recommend that for the fu-
ture, that the Agent shall make monthly reports, instead of quar-
terly reports as heietofore.

They cannot close this report in justice to the great interests
involved, without urging the paramount importance of an effectual
guard against an over issue of stock. That an over issue has not
occurred, is true; yet, that there is no sufficient guard or security
against it, is equally true. The misfortune of the State of Indiana
on this subject should not be forgotten, but should teach a lesson
of prudence.

The undersigned are of opinion that the most effectual check
that could be imposed, would be to constitute a registry of, and
countersigning, all certificates of stock, before an issue or transfer
should have any validity.

This registry should be either an individual or house in this city,
of the highest standing and respectability, entirely separate and
apart from, and independent of the agency ; in whom the financial
community would have entire confidence. This check would be
effectual to prevent either error or fraud.

The small expense of a registry should not for a moment pre-
vent its creation, when its great importance is considered. We
therefore recommend its adoption at as early a period as practica-

Mr. Lord, the State Agent, fully concurs with us in the above
suggestions, for the future security of the State's interests, and
will, hereafter, in pursuance of your recommendations, make
monthly reports.

With sentiments of gieat respect, we are

Truly yours,


New York, December 20, 1855.

Banking Office of Winslow, Lanier & Co.,
New York, January 11, 1855.

His Excellency Joseph A. Wright;

Governor of State of Indiana :

Dear Sir: — You will allow us to express to you our gratifica-
tion at the sentiments of your late message. Your views are
sound and creditable, and will do much good.

We are also gratified to see the finances of the State in so sound
and healthful a condition.

Your suggestions as to the creation of a " sinking fund" will
meet universal approval. We trust the Legislature will carry
them out. You will much oblige us by forwarding to our address
and at our expense, say thirty copies, in pamphlet form, of your
message. We wish to send them to Europe.

We would respectfully suggest that there should be some guards
more than now exist on the agency of your State or transfer
books in this city.

The stock might be greatlv injured by dishonesty or by mistakes.
At times the agent hus of course to entrust the transaction of
business to others, leaving the blank certificates all signed, ready to
be filled up with names and amounts.


You must readily perceive how a dirhonest or ignorant clerk
could do great harm. All this can be prevented by proper checks,
in requiring all certificates to be registered by some separate and
distinct person, or house here, before the certificates are valid and

In making these suggestions, vve would say that they do not
arise from any question or doubt entertained by us towards the
present agent, Mr. Lord, and his clerk ; we have every confidence
in both. The agency, so far as we know or believe, is well and
faithfully conducted, to the satisfaction of every one here. But
the events of the past year show that much precaution is necessary
in all such cases, in the form of counter or independent checks.
The compensation allowed the agent is not sufficient to enable him
to keep as safely as should be the papers of the agency.

Your most obedient and humble servants,


New York, January 30, 1S55.

Governor Wright:

Dear Sir — You will please excuse me in making a lew remarks

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