In July 1841, the State of Indiana declared bankruptcy. After years of crushing debt incurred from loans associated with the 1836 Mammoth Internal Improvements Act, the state finally defaulted on their payments to investors, and continued to do so for the next half decade. Hoosiers—because of their insolvency—were attacked from all angles by angry investors and newspapers from as far away as London, denouncing the “plundering vagabonds,” saying that “Indiana mocks all the obligations of good faith and common honesty” and is “the land of promise for all the knavery and thievery of the known world.”1 In response to attacks on their moral character, Hoosiers could do little to assuage the guilt mongers other than promise to pay their debts later.
Wenig, Kelly, "Another Peril of Progress: Indiana Canals and Economic Collapse in Mid-19th Century”" (2013). History Conference Papers, Presentations and Posters. 4.