The panic of 1857, which was severe in many parts of the country, and which caused great alarm in Kentucky, produced no ill effects on the banks, all of them continuing to pay in specie, even after the New York banks had suspended. In 1860 the capital of these banks was $12,660,000 and the circulation was $13,520,000. MR. BANKER: The record made by the Kentucky banks was excellent, but for organization the State Bank of Iowa, like that of the State of Indiana, has had no superior anywhere in the world, and humanly speaking, the administration and working of both was practically perfect. Iowa in the morning of her statehood was opposed to banking as a business; her first constitution provided that "the general assembly shall provide for the organization of all other corporations except with banking privileges, the creation of which is prohibited." The Constitution also provided, that "the general Assembly shall prohibit any person or persons, association, company, or corporation from exercising the privilege of banking or creating paper to circulate as money," the penalty for each offense being one year in the county jail and a fine. During the intervening years down to 1857, when the new Constitution was framed, Iowa had suffered so severely from the _bond-secured circulation_ of Illinois in particular, known as "Wild Cat," "Red Dog" and "Yellow Dog" money that a provision was incorporated permitting the legislature to create corporations with banking power, subject, however, to a vote of the people, and also to establish a State Bank with branches founded on actual specie basis. I want to call the attention of you fellows to the fact that they had a referendum, a state referendum, in Iowa in those days. It was provided that the branches should be mutually responsible for each other's notes; that the stockholders should be liable for an additional amount equal to their stock; that the bank could issue _pure credit notes for double the amount of the paid-up capital_; that in case of insolvency the bill holders should have a prior lien over other creditors and that specie redemption must be maintained. To secure this solvency beyond peradventure, each branch was required to deposit with the State Bank either coin, United States stocks or interest-bearing state stocks at their market value in New York, but in no case above par. This deposit was equal to 12-1/2 per cent of the note issue, and was known as "the Safety Fund" to redeem the notes of the branches in case any of them failed to do so. In addition each branch must have on hand an amount of coin, equal to 25 per cent of its notes outstanding and deposits held. Here is a replica of the banking system of the Bank of the State of Indiana, and it contains all of the prerequisites of a well-nigh perfect banking system; and the result proved the soundness of the plan.