Money might not grow on trees, but selling quality lumber certainly helped early Indiana settlers earn their fair share of funds. And during this time, none other than New Albany had some of the easiest access to the best timber around. With steamboat building and other industries, financial success soon followed for many in the bustling river town.
By the middle of the 19th century, these industrial works flourished, so much so that many laborers and businesses found themselves with the welcome problem of accumulating an excess of wealth. In addition, budding entrepreneurs needed to obtain a fair, reputable loan in order to maintain, and even at times, to start up their chosen company.
What New Albany needed was banks to provide these services. According to the 1882 book, “History of the Ohio Falls Cities and their Counties,” local merchants first tried their hand at basic lending practices. The first real semblance of an institution that included basic banking services began to develop when New Albany Insurance Co. was chartered in 1832 with $100,000 in capital.
“Banking was a lot different back then to what we think of today,” said Floyd County Historian David Barksdale.
Two years later, the Indiana General Assembly established Second State Bank and authorized 10 branches, one of which opened in New Albany. Unlike so many financial institutions of the time, the state banks of Indiana were considered sound and, as a result, proved to be quite successful.
In 1837, workers hauled stone from the knobs to construct a Greek revival-style building for the new bank. The structure, which still stands on the corner of Bank and Main streets, cost about $40,000 at the time. With thick stone walls and steel window shutters, the structure was designed to be incredibly secure.
“The dome and skylight up above has a steel grate section over it,” Barksdale said. “They had it very well protected.”
Other banks emerged, including the Bank of Salem (1857) and the New Albany Banking Co. (1877). After their charters expired, many of the businesses joined with other banks, or decided to form a new renamed bank altogether.
In fact, due in part to the National Banking Act, the Second State Bank merged with the First National Bank of New Albany in 1863.
With the nationalization of the banks and the monetary system, the United States forced local institutions to adopt a common domestic currency. Before, each bank produced its own notes and bonds.
President Abraham Lincoln, a proponent of the act, believed a shared national identity would help the fractured nation regain its harmony after the chaos the Civil War had inflicted.
Financial institutions in New Albany have mostly flourished since their inception. And despite calamities such as bank runs, panics and the Great Depression, banks and their branches can be found throughout the city employing residents and providing services that would most likely astound their pioneer predecessors.
Editor’s note: This is part of an ongoing series about the people and events that have shaped the 200-year history of New Albany. Read all installments by clicking on the bicentennial link under the “seasonal content” header at newsandtribune.com