History of Banking in Greenfield - April 2013

Today the way we handle our money is much different than the way our first settlers handled it. Today my pay check never touches my hands. It goes straight to the bank and when I need money I simply write a check or use my debit card. Vary rarely anymore do I carry much cash on me. And just when we think we're high tech with our banking these days I found that I'm not all that far off than our early settlers, in the fact that they didn't carry much cash on them either.

In this chapter we're going to take a deep look into our banking system in Greenfield. How did the banks get started? How did they survive depressions? And who's still around today? I learned more than I bargained for when looking into this subject.

Citizens Bank of Greenfield first original vault. Located at 14 W. Main St. today it is home to Hometown Comics.

Our first settlers were "barterers." A farmer would exchange his surplus products for supplies for his family and farm. What currency was in circulation in Indiana was confined to a few notes of the United States Bank brought in by new settlers, bills of the State Bank of Kentucky and a coin known as the Spanish mill dollar. Coon skins, sugar and ginseng were a sort of legal tender used as fractional currency. Money in circulation was drained out of the territory by the unfavorable balance of trade between the new, struggling western part of the country and the older, more highly-developed sections in the East.

In 1814 the territorial legislature chartered two banks, one at Vincennes and the other at Madison. The Bank of Vincennes was not managed properly and the legislature cancelled its charter in its first year of statehood. Indiana also chartered a state bank with branches at Brookville, Corydon and Vevay. None of these early banks lasted. Part of the problem lay in the antipathy the Second United States Bank held for state banks in the West. Others fell victim to unwise policies of their managers.

Then in 1834 the Second State Bank of Indiana was chartered and a branch located in Indianapolis. This was the first bank even remotely near Greenfield, but it had little effect on Hancock County.
The Second State Bank of Indiana had a prosperous and honorable career. But its success, the result of conservative management, led to its downfall.

State growth and increased business activity demanded new credit and currency facilities. The Second State Bank held fast to a conservative course and in so doing, created many enemies.

During the Constitutional Convention of 1851 these enemies were successful. The new State Constitution clearly provided for the organization of privately-owned, independent banks. And the General Bank Act of 1852 ushered in the so-called -free bank era."

Under this system anyone could start a bank by depositing with the auditor of state bonds of any state or municipality of a share equal to the capital stock of the proposed bank and could issue bills or notes in the same amount. Banks started up everywhere where wealth and business interests could not sustain them. Few of these banks had an office in which to transact business. The currency they issued soon became known as "wildcat" and could only pass at discount. Chaos and trouble were inevitable.

In the midst of this turmoil of private bankers issuing drafts for money and the like the charter for the Second State Bank expired in 1859. In order to wind up its affairs by the date of expiration, the bank stopped discounting and began to call in its circulation on January 1, 1855.

The Bank of the State of Indiana was set up by the 1855 Legislature to inherit the business of the Second State Bank.

When the Civil War broke out in 1861, the national treasury was practically empty. President Lincoln took office with a deficit staring him in the face and the enormous expenses of a war bearing down upon him. There were men to fill the ranks of the army, but they had to be armed, clothed, transported and fed.
A uniform currency for the nation became a dire necessity. Every state had its own banking system. The bills issued by the banks circulated freely in the state itself, but away from the state of issue they were regarded with suspicion by the people if not by the banks.

Indiana had a number of free banks that had weathered the financial storms of the previous years and were considered sound, and the Bank of the State of Indiana had established such a reputation over the country that its bills were at par everywhere and in some places even commanded a premium.

By December of 1861 the 1.400 banks of issue in the country had suspended specie payment.
The nation's finances went from bad to worse and by 1863 Congress found it could not borrow money. The National Currency Act was passed in 1863 to meet the crisis.

Besides establishing a uniform currency for the nation, the act provided for new, nationally-chartered banks which would deposit with the government bonds equal to one-third of their capital against which they could issue notes up to 90% of the market value of the bonds. The purpose of the act was to create a new demand for government bonds and thus supply the government with the money it needed to finance the war. At the same time, the bills of the banks would supply a currency that would be stable and acceptable everywhere.

With the advent of the national banking system business with the Bank of the State of Indiana dwindled. And in 1865 the General Assembly gave it authority to discontinue operations. This marked the end of the state-wide bank system. From then on the field was open to free banks, operating under a state charter, and to the national banks.

September 12, 1869, went down in history as Black Friday when the Gould-Fiske combine attempted to corner the gold market, and the government sold $4 million in gold to break the corner. But this had little effect in Greenfield.

In 1871 Greenfield was a thriving town of over 1,000 people. The town needed a bank in order to continue to grow and progress. Five farsighted businessmen, Nelson Bradley, J. Ward Walker, Morgan Chandler, S.T. Dickerson and H.A. Swope, saw this need and formed a stock company for the purpose of carrying on a banking business.

On September 4, 1871, the new bank opened its doors for business and the Greenfield Banking Company began its many years of uninterrupted service to the community. Nelson Bradley was its first president and held that position until 1909. J. Ward Walker, the first cashier.

The first office was at the corner of State and Main St. in the Masonic building. It later moved to Main St. in its current location. It was at this time the other major banks in Greenfield consolidated their strengths. In Dec. 1898, the Greenfield Banking Company became a state bank with its first stockholders being Nelson Bradley, Ephraim Marsh, Henry Moore, D.B. Cooper, Charles Barr and W.O. Bragg.

Mid-1950’s picture. Greenfield Banking Co. is located on the middle-right of the picture. They still operate at this location.

Then came the panic of 1873, triggered by the failure of Wall Street's impregnable Jay Cooke & Company. Runs began on many banks over the country, but there was no panic in Greenfield. In fact this year saw Greenfield take a second big step in the direction of sound banking with the establishment of Citizen's Bank. The Citizens Bank began as a partnership or private bank commencing in the spring of 1873 by Philander H. Boyd, John B. Simmons, William S. Wood, Israel Poulson, and Abiram Boyd. Philander H. Boyd was its president. On interesting note about the sign for the bank was that it was painted by a young artist and poet named James Whitcomb Riley.

This building was home to Greenfield Citizens Bank when it first opened. Today it’s occupied by Hometown Comics. The bank later moved into the property below.

On April 1, 1898, Citizens Bank was purchased by James R. Boyd. Pres. and George H. Cooper, a prominent Greenfield lawyer, and William Bottsford, formerly a teacher in the public schools. On Feb. 28th, 1923 it reconstituted itself as a State Bank with stockholdings. Making it a "Stock Bank, its leading light, George H. Cooper, had suffered a stroke about 1920, but his son Sheldon, left school at the University of Chicago to return to Greenfield to pick up the family banking responsibility.

Greenfield Citizens Bank located at 8 W. Main St. Today it is home to the Stahl & Apple Law Office.

Every passing year brought progress. Greenfield was surrounded by fertile farms and its Indiana Central Railroad access rendered it a growing trade center for the county. The gas boom hit Greenfield and the economy grew with a burst of speed few had anticipated.

The Hughes Bank opened on July 1, 1881. It was a private institution established by John A. Hughes. It first location was a 15 S. Pennsylvania Street. After July 1, 1884, it occupied the rooms at 101 West Main Street. John Hughes remained in the bank until he died on August 25, 1885. George Cooper held a position as assistant cashier from July 1, 1883. At that time he was succeeded by William A. Hughes, who, after the death of his father, operated the bank until January 1, 1908. At that time the bank liquidated, and all depositors were paid in full.

John Hughes with customers at Hughes Bank 101 W. Main St.

In the summer of 1883 the Greenfield Building and Loan Association opened. James Morgan, Elam Judkins, F.E. Gedden, Nelson Bradley, James Demaree, J. Ward Walker, Charles Alexander, Sam Duncan, John Corcoran, Albert Hughes, D.B. Cooper, V.L. Early and others conceived the idea of organizing a building and loan association.

For a short time in the late 1890's the Home Savings and Trust Company was organized by Charles E. Barrett, and attorney from Indianapolis. Its offices were located in the New building in Greenfield. The venture, however, proved a failure and after a few months its doors were closed.

Other towns in the county saw the advantage of supporting banks. In September, 1891 the Fortville State Bank opened. On Aug. 10, 1892 the New Palestine Bank began doing business.

The over-expansion of the nation's railroads and accompanying speculation, doubt about the maintenance of the gold standard all contributed to the panic of 1893. Across the nation 600 businesses failed and 74 railroads were bankrupt. During the winter of 1893-1894, unemployment was widespread and Coxey's army of jobless men marched on Washington to be heard. This first New Palestine bank surrendered its charter in July 1895. Two years later, however, it would reopen.

In the recovery from the Panic of 1893, Greenfield's third major bank came into existence. This was Capital State Bank which opened its doors in Greenfield on Feb. 15, 1898.

Capital State Bank re-incorporated itself in 1923. J.H. Binford was president. Its directors were William Torres, N.C. Binford, J.L. Binford, J.H. Binford, and P.M. Curry. Just as the Citizen's Bank became known as the bank of the Coopers and Boyds, Capital State Bank had been the bank of the Binfords.

Nationally, the banking picture became mired in doubt and anxiety. The panic of 1907, kindled by over speculation and a severe stock market drop, brought demands for a reexamination of the nation's monetary system. A National Monetary Commission was appointed, and in 1913 a group of Indiana bankers, along with others, called on President Woodrow Wilson to discuss banking and currency legislation. This study and discussion resulted in the passage of the Federal Reserve Act in 1913, just in time to be effective in meeting the demands of World War I.

This legislation resulted in a good feeling about banks and spawned the establishment of banks in even the smallest communities in the county.

The banks of Hancock County soon took up the task of assisting to finance the United States War effort in World War I. The first Liberty Loan drive was launched on April 24, 1917 when the United States Treasury Department issued for sale $2,000,000,000 in Liberty Bonds. The banks fell heir to the job of selling the bonds to the people and the myriad details that go with such an undertaking.

Hancock County was apportioned the task of selling $203,000 in the first Liberty Loan drive during the month of June. 1917. The county not only achieved this goal but oversubscribed. William T. Leaman, Cashier of the Greenfield Banking Company was the county chairman of the Liberty Loan Committee of Hancock County to help with the sale, churches were encouraged to, and did, ring their church bells every evening at 9:00 P.M. to remind citizens of responsibility toward the Liberty Loan drive. During WW II the job for the Greenfield and Hancock County banks would be ready to do their part. Far less likely than even those roles which might be foreseeable if the country would again enter a war, and as this era in Hancock County Banking closed, it would not have seemed that the county might ever find its banks closing.

The Great Depression

After the end of World War I came the Roaring-20's, the time of the Charleston, the Flapper and the Flask. But the extravagant days of the '20s roared past, and storm warnings were out for the financial world. Indianapolis News columnist Harold C. Feightner reported in an article May 12, 1927 on Greenfield that "Its banks are solid and reflect the financial stability of the countryside."

But they were about to be tested.

As the precursors of the Depression began appearing, banks began to fail in Indiana. After a decade of stock speculation and glorious spending sprees, the stock market broke in October of 1929 and the nation was propelled into the Great Depression. Remember, there was not even a Department of Financial Institutions in the state government at that time and until 1933 when the Financial Institutions Act became state law.

Roosevelt's Federal Deposit Insurance Corp., bulwark of the security of the banks of the country and guarantor of solvency was not created by the United States Congress until 1934.

The only guarantee that your money would be safe in a bank was the strength of the stockholders of a bank who could be assembled to restore bank capital up to twice their share holdings in the event of insolvency under the law of that time.

Many did not trust this system and many farmers did not have bank accounts but hid their money, often in gold, on their farms. Stories of gold hidden on farms and not recovered still are told. Is this Depression Era folklore true farmers?

Since 1919 some banks had been in trouble. Public confidence was shaken by bank failures over the country. From 1927 through 1933, ten banks in Indianapolis alone closed their doors, leaving helpless depositors and customers standing on the doorstep with empty hands and pocketbooks.

A study during the aftermath showed that the surplus and undivided profit accounts of some of these failed institutions had fallen far below normal. The indiscriminate chartering of banks and "cut-throat" competitions were major causes of failures in Indiana. Bankers with long records of successful management were driven by the emergency in which they found themselves to take "long" chances.

During this era, Capital State Bank began experiencing loans that became uncollectable. Hancock County might have suffered a disaster of lost deposits if the Binfords had not gotten together with the Coopers and Boyds and worked it out.

On July 30th, 1927, Indianapolis' largest bank, the J.F. Wild and Company State Bank, closed its doors in insolvency while outside hundreds of its depositors were left to look in through locked doors. Inside that institution the bank tellers had been told to close their cages one at a time in the middle of the afternoon as bank customers were "shooed out."

Also on July 30th, 1927, Capital State Bank in Greenfield secretly transferred all its assets and liabilities to Citizens Bank in merger, with the resulting Bank, Citizens Bank, taking on one of the Binfords, N.C. Binford as Vice President. The announcement of this event was not made until end of business on Friday, and the Citizens Bank opened as usual on Monday with the accounts and business of the Capital State Bank safely taken under wing and Capital's lock boxes made available for transfer then into the Citizen's Bank "Burglar Proof" vault.

Compare this to the Citizens Bank of Elwood in Madison County which did just that, closed its doors and sent a janitor off to Indianapolis to give the door key to anybody he could find at the State Banking Dept.

This kind of attitude, the feeling within the banking "families" of the county that the people of the city were to be served, not "predated upon" represents this subtle fact about Greenfield banking that needs to be remembered when we consider Greenfield and how it survived the Depression with so much less hardship than many other places.

During all of the Depression not a single city resident lost a dime of deposits and the banks remained "hungry" but strong. Other parts of the county found their banks in less happy circumstances. Other banks in the county did close or fell into Receivership.

Between 1929 and 1933, fifteen million people were unemployed, 32,000 commercial businesses collapsed. Mortgage foreclosures caused the farmers to revolt. 10,000 banks failed and the banking structure generally was in danger of collapse.

The Clerk's Office shows very few mortgage foreclosures filed during the Depression period by any of the banks of the city at that time.

The banks of the county had to work through a lot of grief and did so by being smart and working hard. The banks had to work with customers very closely. When the Depression struck, banks had lots of mortgage loans outstanding and borrowers, the county business people and farmers had little money to pay back loans. Unemployment was rampant. The seriousness is attested by the fact that on March 5, 1933, the day after his inauguration, President Franklin D. Roosevelt proclaimed a national bank holiday from Monday, March 6, through Thursday, March 9. When the Greenfield banks reopened on March 10, they did so under rules and regulations of the Treasury Department designed to restore some measure of stability and confidence in the nation's banks.

The banking families of Greenfield can be credited with keeping borrower's businesses going in those "tough" times, "reworking" loans when necessary to keep them current. The bankers had -some awfully lean years. But the county survived. The change in the laws made banking more stable, too. The 1933 General Assembly passed measures providing for reorganization of the state banking department, and Congress adopted the Banking Act of 1933 which revised and restricted banking operations on a national scale. Two federal agencies played an important part in this reconstruction - the Federal Deposit Insurance Corporation, which insured bank deposits on a national basis, and the Reconstruction Finance Corporation, which supplied funds to bolster the capital structure of banks.

But local concern of the Greenfield Banks was notable too. The banks spent most of 1933 and 1934 adjusting operations to comply with the new federal code, qualifying for the FDIC and maintaining their already-strong capital positions.

Even the small Mohawk and Willow Branch Banks were delivered unscathed from the Depression to be eventually consolidated, due largely to the genius of their bank attorney, William Wolf into Hancock Bank which then became, in 1965 Hancock Bank and Trust, after the further acquisition of Citizens Bank.

Hancock Bank & Trust built this building in the late 1970’s. Located at main and State Streets. Today it is the Keith J. McClarnon City Hall of Greenfield.

One of two original vaults in the Hancock Bank and Trust Bank now currently City Hall of Greenfield.

SENATE BILL 1 of 1985

No other law has ever been so crucial and devastating to local banks. Senate Bill 1 of 1985 gave one bank the ability to acquire other banks under one holding company and further the right to have branches out of county.

In another section not effective until Jan 1, 1986, this law even gave an out of state bank the right to buy Indiana banks.
The effects are seen everywhere. Hancock County has only one locally owned bank left, Greenfield Banking Co. The county has, in the short time the law has operated, seen numerous branches of larger banks come to town. Of the banks that are located in Greenfield, a vast majority are out of state owned.

Greenfield Banking Co. has gone on to open several branch locations throughout the county. In 1999 a new bank building was constructed at the corner of State Road 9 and new Road. This new headquarters would be home to all offices of the bank as well as the Investment Management and Trust Departments.

Current Greenfield Banking Company headquarters.

Other banks that are currently in Greenfield are the Union Savings & Loan Assoc., Chase Bank, Fifth Third Bank, Star Financial, Charter One, Old National Bank, Family Horizon, Bank One, Flagstar, Finance Center Federal Credit Union and National City Bank.

It is this kind of tradition of which communities are made and Greenfield and Hancock County have much to be thankful for that our Greenfield bankers and the great banking families of the town understood their responsibility was in absolute dependence upon their society in whatever time it exists, and that there is an ultimate to be achieved, a society of community and family which can live peacefully under its empowerment in history

By Greg Roland

Resources:
Hancock County in the World War, 1914-1919
Binford History of Hancock County
Hancock's City and Towns in 1938
A History of Hancock County by Dorothy June Williams