16 NOVEMBER / DECEMBER 2022 study commission in the early ’30s. Herman B Wells has had a long, illustrious career in Indiana banking, as well as at Indiana University, where he now serves as chancellor. The decade of the 1930s saw a massive adjustment for state banks in Indiana through the advent of the Reconstruction Finance Corp. and the establishment of the Federal Deposit Insurance Corp. in 1935. State banks, unless they were members of the Federal Reserve System, had to undergo stringent examinations in order to become FDIC-insured. The Great Depression, followed quickly by World War II, influenced significantly the balance sheets and income statements of Indiana banks. In essence, Indiana banks became depositories during the Second World War, with lending almost eliminated. When the United States came out of World War II, banks had high levels of investments and few loans, and they participated in the sale of war bonds. In fact in 1944, this author won an engraved Schaffer fountain pen in a local war bond sales contest in Hagerstown, Indiana. The then Second National Bank of Richmond (later presided over by IBA’s Bill King) sponsored the contest. I sold 100 war bonds of $50 each, which was 75 war bonds more than any other child in Hagerstown sold. In all honesty, I should note that I sold 99 bonds to one doctor in town – and the other one to my mom and dad. The decades of the ’50s, ’60s and ’70s were relatively quiet for Indiana banking. Research into the activities of the Indiana Legislature reveal few historic battles over banking legislation during that time. One issue was that of “escheat” laws, which impacted significantly who had control over dormant funds at financial institutions. The changes in this law were a direct result of the rise of technology in banking. As computers became mainstream in financial institutions, the tracking of funds in dormant accounts became less of a burden, thus affecting the control and distribution of funds to the state. From a structural standpoint, Indiana fell behind adjacent states during this time. Ohio established laws governing multibank holding companies in 1929. By 1970 Ohio could branch into contiguous counties and expand through holding companies statewide. In Michigan, as of 1970, multibank holding companies were permitted – even though there was restrictive branching. Several significant statewide bank holding companies were born: NBD Bancorporation, Comerica, Michigan National Corp., Manufacturer’s National Corp., First of America and Old Kent Financial Corp. Kentucky’s laws also expanded banking operations by permitting statewide bank holding companies and contiguous county branching. Recognizing these events, the Indiana Legislature developed 1985's Senate Bill 1, which would change the state’s banking structure forever. Change did not take place overnight. Forces marched to and fro on the Indiana landscape for almost half a decade prior to the passage of SB1. The IBA in 1983-84 shifted from a position of neutrality Together, our current 40 year bankers have dedicated a combined total of 294 years to community banking in Indiana. Happy 125th Anniversary to the IBA! The Farmers Bank has supported community banking in Indiana since 1876! DŽDŽDŽȹƤĸĘİîƐŝĘƐƘĉîşőȹĊŪŝ ȀǿǾɍǿǾǽɍȁȀǼǺ David A. Coulter, the third president of The Farmers Bank, was also the third president of the IBA from 1899-1900. ØĘ îƐĘ 'îNJ ǻǹǻǻ Reprinted from 1997 centennial Hoosier Banker.
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