Bank

From "Lexington" by Mary Wilson and Sharon Y. Asher, published sometime after 1975.

THE BANK OF LEXINGTON

Article 10 of the Indiana Constitution of 1816 provided that:

There shall not be established or incorporated in this state, any Bank or Banking company or monied institution for the purpose of issuing bills of credit or bills payable to order as bearer; provided that nothing herein contained shall be so construed as to prevent the General Assembly from establishing a State Bank and branches, not exceeding one branch for any three counties, and be established at such place, within such counties, as the directors of the State Bank may select; provided there be subscribed and paid in specie, on the part of individuals, a sum equal to thirty thousand dollars: Provided also, that the Bank of Vincennes and the Farmers' and Merchant's Bank of Indiana at Madison shall be considered as incorporated Banks, according to the true tenor of the charters granted to said Banks by the Legislature of the Indiana Territory; provided that nothing herein shall be so construed as to prevent the General Assembly from adopting either of the aforesaid Banks as the State Bank; and in case either of them shall be adopted as the State Bank, the other may become a branch, under the rules and regulations herein before prescribed.

Prior to this the Indiana Territory had not had a general banking law. As little money was in circulation, the majority of people's wealth was in land and property and most businesses were conducted on a barter basis. Skins and furs were the main items of exchange. Specie came into use in the Territory possibly from the sale of produce taken to New Orleans in flatboats. It was, however, dangerous to travel with any large amount of specie. Therefore, as the old U. S. Bank existed, its bill provided a convenient medium for transferring monies.

After its expiration a series of private banks sprang up originating in New England and soon spreading throughout the new land. In general, most anyone could start a bank and issue bills payable on demand. Few such banks existed in the Indiana Territory although some merchants issued "skinplasters" for small change of which the only other supply was silver coins cut into smaller sections.

In 1814 the Farmers Bank and Merchants Bank at Madison, whose charters were based on that of the Vincinnes institution, were incorporated, both having capital stock of $750,000. The managers of both were among the most respected and wealthy citizens of the State. Through the efforts of Indiana Congressmen and Senators both were made depositories of land office receipts.

There were a few other banking institutions in the Indiana Territory; however, they were, in general, too small to be considered major state financial institutions. Some of these were regarded as suspicious. One of these was the Bank of Lexington.

In 1815 the State Legislature passed an act "to prevent swindling," aimed to some extent specifically at the Lexington institution, and requiring banks to publish the names of their stockholders.

The Lexington bank was called the Lexington, Indiana Manufacturing Company. Its directors, recorded by James W. Donald--cashier in writing to Mr. Hawthorn of the Bank of Cincinnati, Ohio were Andrew Ross--President, William McFarland, Samuel Donald, B. W Hunt, Thos. Donald, William Hunt and John Ross. The bank issued notes without capitol to back them and as a result some of the officers were convicted of swindling and were imprisoned.

Lexington Bank closed its doors around 1930.

CHARTER NO. 597
BANK STATEMENT*

Report of the condition of Lexington State Bank at Lexington, in the State of Indiana, at the close of its business on December 31, 1928:

P. F. Smith, President
J. L. Walker, Vice-President
Thomas Loftus, Cashier-Secretary

RESOURCES

LIABILITIES

State of Indiana, County of Scott, as:

I, Thos. Loftus, Cashier of the Lexington State Bank of Lexington, Ind., do solemnly swear that the above statement is true.

(signed Thos. Loftus)

Subscribed and sworn to before me this 5th day of January, 1929.

(signed Myra M. Green, Notary Public)

My commission expires February 15, 1930.

*Scott County Journal

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