Illicit Enterprise

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Today, Petersburg, Indiana, is a small community tucked away in the southwest corner of the state. It boasts a population of just over 2,300, according to the 2020 federal census, and is home to two coal mines and AES Energy’s Petersburg Generating Station. In 1860 the town’s population was 683, and its main business activities centered on agriculture, coal mining, and illicit banking.

At least on paper, this tiny hamlet was home to not one but two banks of dubious credibility—the Indiana Coal Bank and the Farmers’ and Drovers’ Bank. In 1859 both institutions attracted unwanted attention from the press, which led to their exposure and almost immediate demise.

Indiana Coal Bank

The first of Petersburg’s “banks” is mentioned in a summary published in the Chicago Tribune on Saturday, April 23, 1859, detailing a complaint heard at the City Hall Police Court in New York: 

“I make a complaint against an institution, called the “Indiana Coal Bank,” said to be located at Petersburg, Pike County, Indiana but has no place of doing business except at an office, No. 22 William street, first floor, in the rear, kept by _____ Durham, with the name of C. Bennett on the side of the door. The so-called bank has no charter and does not possess a dollar in specie. It is now in debt to complainant $150 for services rendered, which it has not the power to pay, all the parties being poor. The officers consist of the following parties namely, Charles L. Wilson, who originated the movement; George W. Versey, President and Director, Captain William Perrine, Director; Samuel H. Ormsbee, Secretary and Director, and Daniel Woodhouse, broker who is to go West with power of attorney to execute bills on false tokens. They have now in the office, locked up in one of the safes, over $20,600 with complainant’s name on each bill as “Cashier,” which will make him liable for arrest by any one holding a single dollar of this illegal currency; also liable, on requisition, to be taken to Indiana. Complainant has been denied the privilege of entering this office or in any way interfering or of having anything to say concerning these false tokens [bank notes] which he wishes destroyed. He, therefore, solicits an interference on the part of your Honor to prevent others from getting him into trouble with the authorities of this or any other State.

C. Ackerman No. 65 Wall Street”

Subsequently a warrant was made out, and the parties named above were arrested, on the 12th inst. [April 12] An examination was had, Ackerman being the only witness. The Magistrate reserved the case for further examination.

False Pretenses

From this account, we know that New York interests created the bank and intended to float a large quantity of the bank’s notes in “the West” (any state outside of New York) with no intention of redeeming them. The court hearing was initiated by Ackerman, who apparently got cold feet about participating in the scheme and attempted to distance himself from it before the plan was set into motion. 

There is no record of the outcome of this complaint, but the bank does not appear to have succeeded in placing any significant amount of its notes into circulation. Today, surviving notes are scarce, and all known examples bear Ackerman’s name (signed on his behalf under a power-of-attorney arrangement) as cashier and George W. Vesey’s signature as president. It appears that very few notes, if any, ever reached Petersburg. Ackerman, who was supposed to be the front man in Petersburg with a small amount of the bank’s circulation in hand, never left New York.

Farmers’ and Drovers’ Bank

About six weeks before the Indiana Coal Bank was exposed, another questionable bank that had also chosen Petersburg as its alleged place of business received negative publicity. The perpetrators of this fraud were a bit further along in their scheme. Baltimore’s The Daily Exchange reported on March 7:

There were recently arrested, at St. Louis, two flashing financiers, just as they were about to get into circulation a quantity of notes purporting to be issued by the Farmers’ and Drovers’ Bank of Indiana. Sixty thousand dollars of this fraudulent money have been stamped and signed, and the agent of the bank, and its ostensible Cashier, were, at the time of their arrest, on a visit to St. Louis, for the purpose of enlisting accomplices to aid in its distribution.

The article identifies the two masterminds behind the bank as Captain O’Brien—who used the alias Dr. Fenton—a Philadelphia quack purveyor of patent medicines, and W.K. Everson, a failed Indianapolis businessman known for producing low-quality liquors of his own concoction. The principal actors, however, appear to have been O’Brien and a man named Wells, both from Philadelphia, and a St. Louis accomplice named Beardslee. 

The article states that Wells (whose signature appears on all notes as the cashier) and O’Brien were arrested in St. Louis. By that time, they had already completed substantial preparatory work. Before the bank was even launched, its founders had provided incentives (bribes or cash payments) to Dye’s Wall Street Detector and North American Money Guide to quote the bank as “good.” A similar offer made to Paddock’s Detector would have been accepted if the payment had arrived before the publication date. 

Money handlers across the nation relied on such bank-note reporters or counterfeit detectors to provide accurate information about which notes and institutions were legitimate. False information was quite damaging to those who relied on these periodicals. The Milwaukee Daily News was also reportedly induced to provide a favorable comment on the bank.. 

Several trusted sources accepted bribes to list the Farmers’ and Drovers’ Bank and its notes, including this $1 at left, as legitimate. Later, some of its fraudulent notes were altered so that they appeared to be issued by a bank of the same name in Somers, New York. (Photos: Wendell Wolka)

Limited Damage

Much like the Indiana Coal Bank, the Farmers’ and Drovers’ Bank was shut down before it could cause significant harm. Most surviving notes from this bank are either very high-grade examples, suggesting they never entered circulation, or have been physically altered to appear to be notes of legitimate banks located elsewhere in the United States. At least 30 alterations are known. Farmers’ and Drovers’ Bank notes are not as rare as those from the Indiana Coal Bank, with the most interesting denomination being the $1 note that features a woodsman swinging an axe at a bear that is attacking his dog (pictured)

A Blind Eye

Another interesting observation is that W.L. Ormsby produced notes for both banks. It seems that Ormsby was often the bank note company chosen by banks that turned out to be fraudulent or marginally successful. It is unclear whether Ormsby was the most cost-effective company or simply did not ask any questions (although few bank-note companies questioned their potential customers as long as they could pay the bill). 

So, there you have it. Although the Indiana Coal Bank had only one tiny office in town and the Farmers’ and Drovers’ Bank had no presence, it seems that Petersburg was one of Indiana’s leading centers of fraudulent banking ventures, at least on a per capita basis. With its small population, Petersburg offered one fraudulent bank for every 341 residents!

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A version of this article appears in the April 2026 issue of The Numismatist (money.org)