Formation of The Bank
On February 13 the seven member board of directors met to begin organizing the bank. The board of directors included James Lanier, who would personally benefit from the bank the greatest. They elected James M. Ray as cashier. The state created a charter for the new bank similar to the one used by the national bank. There were some modifications to make the bank better fit the needs of Indiana including limiting the bank to thirteen branches, and promising to allow no other bank to be established in the state. The directors choose to establish branches in Indianapolis, Lawrenceburg, Richmond, Madison, New Albany, Vincennes, Bedford, Terre Haute, and Lafayette. A Fort Wayne branch was added in 1835 and branches in South Bend and Michigan City in 1836.
Each branch had an initial investment of $160,000, at first there were only ten branches and the total bank's value was $1.6 million dollars. The start up money was all hard money in Spanish and Mexican silver dollars. The money was raised by issuing stock sold at $50 per share. Half of the stock was to be purchased by the state and the other half was sold to the public. By May 20, 1834, all the public stock for the new bank had been issued. The state allowed the public stock to be sold at $18.75 per share, with the other $31.25 being financed on the state's credit, until the purchaser could pay the full amount back to the state with 6% interest. On August 6, the state completed its purchase of 50% of the bank's stock. The money to purchase the stock came through the sale and mortgage of thousands of acres of public land. On November 19 Governor Noah Noble declared the bank open for business.
Hugh McCulloch, who served under four presidents as United States Secretary of the Treasury, begin his career in banking at the Bank of Indiana. He was one of the few prominent businessmen in the young state, but had no experience in banking. He was chosen as president of the bank by the directors because he was "better fitted for the place than anybody else whose services they could obtain", he was the best they could get. Indiana was still a virtual wilderness inhabited by roving bands of American Indians and not at all appealing to the professional bankers of the east.
In its initial report to the shareholders, the bank reported that it held deposits of $127,236, had $456,065 of paper cash in circulation, $751,083 of cash on hand, and another $78,150 invested in other banks. This showed the bank to be in excellent financial health and to have a promising future.
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“That for which Paul lived and died so gloriously; that for which Jesus gave himself to be crucified; the end that animated the thousand martyrs and heroes who have followed his steps, was to redeem us from a formal religion, and teach us to seek our well-being in the formation of the soul.”
—Ralph Waldo Emerson (1803–1882)
“That for which Paul lived and died so gloriously; that for which Jesus gave himself to be crucified; the end that animated the thousand martyrs and heroes who have followed his steps, was to redeem us from a formal religion, and teach us to seek our well-being in the formation of the soul.”
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