Indiana at 200 (33): Banker Lanier Made his Mark Here
by Andrea Neal
James F. D. Lanier twice came to the rescue when Indiana desperately needed his help. Without him, state history might have turned out differently.
Lanier was born in 1800 in Beaufort County, North Carolina, and died in 1881 in New York City. During the interlude, he lived in Indiana and made lots of money in law, banking and railroads.
His parents moved several times before ending up in Indiana in 1817, one year after statehood. His father opened a dry-goods store in Madison, a pioneer town of 150 that Lanier described as primitive woodland: “It was wholly without streets or any improvements fitted to make it an attractive or agreeable place.”
Madison quickly became attractive and agreeable, in no small measure due to Lanier’s efforts.
A lawyer by training, Lanier had wide interests that ranged from politics to business. From 1824 to 1827, he worked as a clerk at the Indiana House of Representatives, maintaining its journal of proceedings and earning $3.50 a day. It took him three days on horseback to travel from Madison to the capital in Indianapolis — a trip that a few decades later would take four hours on railroad tracks he financed.
In 1833, Lanier left his law practice to help run the State Bank of Indiana, which had a central office in Indianapolis and 10 branches in leading towns. Lanier held more shares in the bank than anyone and was president of the Madison branch.
During the Panic of 1837, the nation’s first big recession, banks across the country collapsed while the Bank of Indiana paid dividends of 12 to 14 percent.
Ten years later, Indiana government faced financial ruin, unable to pay interest on an $8-million debt acquired to finance canal construction and internal improvements. Lanier traveled to Europe to meet with representatives of the largest investors, among them the Baron N. M. Rothschild of London, and negotiated the transfer of ownership of most Indiana canals to their bondholders in exchange for a 50 percent reduction in bond value.
“The result was that I was enabled to get up nearly all the outstanding bonds and was in this way instrumental in placing the credit of the State on the firm basis upon which it has ever since rested,” Lanier wrote in his 1871 autobiography. “The State immediately entered upon a career of prosperity which has never flagged to the present moment.”
Around the same time, Lanier made his mark as a railroad financier. He was instrumental in the success of the Madison and Indianapolis Railroad, and, in 1851, he moved to New York where he and a business partner, Richard Winslow, opened a bank that specialized in railroad securities.
Although he never returned to Indiana, Lanier came quickly to the aid of Gov. Oliver P. Morton during the Civil War.
Indiana had only $10,000 in its treasury, and Morton had promised President Abraham Lincoln 10,000 troops to help the Northern war effort. Governor Morton was reluctant to call the Legislature into session for fear that southern-sympathizing Democrats would revoke his power to control the militia.
Lanier loaned the Indiana government $1 million to equip troops and pay interest on the state debt. It was all paid back by 1870.
Lanier’s legacy is preserved in Madison at the mansion he built along the Ohio River in the early 1840s. The home was designed by architect Francis Costigan and is considered one of the finest Greek Revival structures in the country.
The home is a state historic site and National Historic Landmark, open daily with guided tours at the top of the hour.
Note to readers: This is one in a series of essays leading up to the celebration of the Indiana Bicentennial in December 2016. The essays will focus on the top 100 events, ideas and historical figures of Indiana, beginning with the impact of the Ice Age and ending with the legacy of the bicentennial itself. Neal is a teacher at St. Richard’s Episcopal School in Indianapolis and adjunct scholar with the Indiana Policy Review Foundation. Contact her at firstname.lastname@example.org.
Directions: The GPS address of the Lanier Mansion State Historic Site is 601 W. 1st St., Madison, IN 47250.