Looking Back by Rose McIlveen April 1981
Monroe Countians who are used to making regular stops at the drive-in-windows of their banks probably didn’t realize that their ancestors had to swap goods and services to get their necessities.
In 1833, Mrs. Cornelius Perring, wife of the principal of the Young Women’s Seminary, wrote to a friend back home in England: “In this State we have principally silver and United States Notes, there being as yet no Bank in this State….Money is scarce in this State at present, but the people are looking forward to their State Bank, which is to make plenty enough.”
Actually, it was a good thing Monroe Countians didn’t hold their breaths until Mrs. Perring’s predictions finally came true. Meanwhile, the small amount of cash in circulation was a strange mixture of English and French coins as well as Spanish pieces of eight of pirate story fame.
Considering the scarcity of actual money, Hoosiers resorted to trading for the staples they needed. Mrs. Perring wrote that such ordinary table and household items were going for the following prices: “tree sugar”, 6 ¼ cents per pound; cane sugar, 12 ¼; loaf sugar, 16; dried ham and bacon, 6 ¼; coffee, 20, and wood, 75 cents a cord.
Mrs. Perring’s husband was paid for his services as principal of the seminary in money, but many of their rural neighbors brought their produce into town in the buckboard and either traded it off the back of their wagon parked on the square or ventured into the nearby businesses to make a swap. It was not uncommon for church members to tithe with ground corn or eggs and patients to pay physicians in bacon or firewood. Homebrew, legally produced by many farmers, was also used for exchange, along with homespun cloth – until the years when improved local transportation brought in the cloth from eastern mills.
In the midst of America’s precarious and haphazard banking system, Monroe Countians fared pretty well, considering the chaos of banks that issued their own paper money. In 1811, when Congress failed to re-charter the Bank of the United States, state-owned banks began to spring up. The Encyclopedia of American History says that such banks flourished in Indiana, Ohio, and Virginia.
Widespread bank panics followed in 1837 and 1857, when the public reacted nervously to the federal government’s lack of credibility and unwillingness to make up its collective mind about a sane banking system. Since paper money was scarce, Monroe County businessman Tarkington and Atkins issued “shinplasters”, in the denomination of 50 cents and a dollar in 1855. Another merchant, J.M. Howe, soon followed suit.
Only a temporary measure, the home-made money began to depreciate in value and according to an account in Pop Hall’s Historic Treasures, Bloomington businessmen ganged up on the dubious money changers by running the following ad in the local paper:
We, the undersigned citizens of Bloomington, Indiana, pledge our word and honor that we will not take any ‘shinplaster’ currency after the 1st day of February for more than ninety cents on the dollar; and that we will not circulate any more after that date – nor any other paper currency not regularly chartered according to law.
January 20, 1858
Signed – William O. Fee, Thomas Mulliken, A.W. & Faris P. Henoch, A.S. Mercer, E.E. Sluss, B.S. Cowgill, J.S. Tibbets, A. Halton & Co., M.L. McCullough, A. Adams, Dunn & Co., E. Johnson, B.J. Wade, J.C. McCullough.
In the History of Lawrence and Monroe Counties, Indiana, Amzi Atwater, IU professor wrote: “The bank of Akin and Tarkington having ceased in war times to do business, there was no bank in Bloomington forty years ago. People had to obtain their bank drafts as best they could. A little later, Smith HUnter, Brother of Gen. M.C. Smith, started a kind of banker’s office in a building where Campbell’s dry goods store is not. Through his hands the professors received their salaries and cash on their drafts.”
By 1857 a bona fide Bloomington Bank was established backed by $20,000 in capital. A few years later another private bank started doing business, and out of it evolved the First National Bank as we know it today. Other businessmen followed suit with the founding of the Monroe County State Bank, which was chartered in 1892, the Citizens Loan and Trust Company in 1899, and the Bloomington National Bank in 1906-07.
Through the National Bank Act of 1863-65 brought some order to the chaos of goods-swapping and homemade currency, Monroe Countians were still a long way from running past the drive-in-branch to get some money.