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61ST CONGRESS )

2d Session

J

SENATE

/ DOCUMENT

I

N o . 582

NATIONAL MONETARY COMMISSION

The Origin of the National
Banking System
BY

ANDREW McFARLAND DAVIS

Washington : Government P r i n t i n g Office : 1910




NATIONAL MONETARY COMMISSION.

NELSON W. ALDRICH, Rhode Island, Chairman.
EDWARD B. VREELAND, New York, Vice-Chairman.
JULIUS C. BURROWS, Michigan.

JOHN W. W E E K S , Massachusetts.

E U G E N E H A L E , Maine.

ROBERT W. BONYNGE, Colorado.

PHILANDER C. KNOX, Pennsylvania.

SYLVESTER C. SMITH, California.

THEODORE E. BURTON, Ohio.

LEMUEL P . PADGETT, Tennessee.

HENRY M. TELLER, Colorado.

GEORGE E. BURGESS, Texas.

HERNANDO D. MONEY, Mississippi.

ARSENE P . P U J O , Louisiana.

JOSEPH W. BAILEY, Texas.

ARTHUR B. SHELTON, Secretary.




A. PIATT ANDREW, Special Assistant to Commission.

TABLE OF CONTENTS.
Page.

Preface
The field of investigation
Karly suggestions of a national currency
The circulating medium in i860
Travel in the interior difficult
Losses through failures
Ragged and worthless bills in circulation
J a y Cooke's opinion
Protests of governors
Fluctuations in quantity
Greatest trouble in the West
Counterfeits
Local restriction and inspection proposed
What the Treasurer could receive
Mj\ Chase's inaugural
Government depositories
Finance reports, 1861
The banks suspend
Marketing the bonds
National banks suggested
Uniform currency and bond market
Congress changes its attitude
Opposition of Secretary to legal tenders
Mr. Chase's correspondence
O. B. Potter submits a plan
Numerous suggestions
Pamphlet by Kleazar Lord
Advice, congratulations, and criticism
Treasury notes refused
Potter's plan Adopted
Mr. Spaulding prepares a bill
Mr. Hooper introduces a bill
Silas M. Stillwell takes a hand
Mr. Jordan prepares a bill
Notes explanatory of the system
The Stillwell-Jordan-Spaulding-Hooper bill
Opposition of banks




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12
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26
28
30
31
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42
44
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49
50
50
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54
55
56
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58
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Page.

More letters of advice and sympathy
Finance report, December, 1862
How the report was received
Mr. Chase seeks for help
Preliminary discussion in the House
Senator Sherman's aid solicited
Mr. Sherman takes hold in earnest
The debate
Final debate in the House
The Hooper bill and the Sherman act
Taxation
Sherman's changes
Sections dropped and sections added
The military situation influences votes
Opinions after the passage of the bill
Mr. Chase speaks in Ohio and in Indiana
Different views as to the progress of the system
Finance report, December, 1863
Attack of the New York Clearing House
Taxation urged
Praise for Hooper and R. J. Walker
An exclusive national currency
A new birthday for the system
Hostile taxation of state banks
Mr. Chase writes W. C. Bryant
The conclusions of authors
The order of the motives
General impression that the bond market leads
The predominant motive in Mr. Chase's mind.
Progressive belief that the system strengthens the Union
Appendix A.—The Hooper bill, 1862
B.—The Sherman Act, 1863
C.—Section 7 of " An act to provide ways and means for
the support of the Government," approved March
3, 1863
Index




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67
69
71
72
75
77
79
81
82
83
85
86
87
88
91
92
93
95
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100
101
102
103
104
106
108
109
no
113
155

199
203

PREFACE.
Salmon Portland Chase, through whose insistence the
national banking act was passed, was a lawyer by profession, who had drifted into politics and had held the
positions of governor of Ohio and of United States Senator. In no part of his career had there been any such
touch with financial affairs as would have justified his
selection as Secretary of the Treasury at this critical period
of the nation's affairs, if a supposed familiarity with
finance had been the basis of his appointment. In the
study of the evolution of the national banking system
which follows, frequent quotations are made from his
reports to Congress, and no person can read them without
being impressed with the force of his arguments and the
lucidity of his mode of expression. Forced by circumstances to resort to Treasury notes to meet current obligations, he was following in this respect in the footsteps
of his predecessors, who had at various times made use
temporarily of short-time interest-bearing notes. The
constitutionality of these emissions had been repeatedly
questioned, but the practice, so far as it applied to interest-bearing securities in this form, was well settled. It
was something of an innovation to emit noninterest-bearing notes which might serve as currency. Experience had
demonstrated the danger which accompanied the emission
by a government of notes which should serve as currency,
and in reports made by Mr. Chase he set forth with great
clearness the peril to the nation which accompanied his




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action in thus availing himself of a simple and, to a certain extent, an advantageous method of adjusting the
government debts. Whether his knowledge of the danger
which was inherent in this action was derived from the
example of France in the time of Law's Mississippi Bubble;
from the continental bills of the confederated colonies;
from the assignats of the French Republic, or from some
of the more modern experiences in Europe, does not
appear. I t is not probable that he could have known
much about the experiences in the American colonies in
the eighteenth century, which furnish an object lesson to
economists upon this subject, but concerning the details
of which very little was known at the time when he wrote
these reports. One very striking argument that he makes
shows how thoroughly he covered the ground, and an examination of what took place in Massachusetts in the first
half of the eighteenth century discloses that it was well
founded. He says in his report in 1862, " A government
issuing a credit circulation can not supply, in any given
period, an amount of currency greater than the excess of
its disbursements over its receipts." He then goes on
to say that if the receipts exceed the expenditures,
" There is then no mode in which a currency in United
States notes can be permanently maintained except by
loans of them, when not required for disbursement on
deposits of coin, or pledge of securities, or in some other
way. This would convert the Treasury into a government
bank, with all its hazards and mischief/'
During the emissions of bills of public credit by the
Province of Massachusetts Bay, in the first half of the




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eighteenth century, a somewhat similar condition of
affairs prevailed. There was not, it is true, a plethora of
receipts in the treasury, but there was a rise in prices
owing to excessive emissions, and the reduction in the
purchasing power of the bills resulting therefrom created
an impression of a shortage of the circulating medium.
To meet this, loans were resorted to, and to prevent a
scarcity of the currency when these loans became due and
large payments to the Government were therefore to be
made, other loans were effected. Thus the Province was
for many years a lender of its credit. In the technology
of the day, these loans were termed "banks."
With these few words of appreciation for the masterly
treatment by Mr. Chase of the subject of a uniform
national currency to be furnished by national banks in
preference to the Government itself, I submit the study
upon the subject of the evolution of the banks.
The material upon which this research rests was collected at my request and under my supervision by
Mr. Clyde O. Ruggles. I owe to him acknowledgment
for the intelligent manner in which he carried out my
instructions, following to their end on his own motion
clews which suggested themselves to him while making
the investigation along lines originally directed by me.
The papers of George Harrington must have contained
much that was of interest bearing on the questions subject to our consideration. We have but little knowledge
of what took place in the interviews that Mr. Chase had
with the bankers of New York, and to the papers of men •
in the department at that time we should naturally look




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for light on these hidden affairs. Mr. William K. Bixby,
of St. Louis, has a collection of Mr. Harrington's papers,
which he generously forwarded to me for my inspection.
Unfortunately they contained nothing of importance on
this subject. Searches were also made at my request at
the Treasury Department for any papers left by either
Harrington or Jordan. The latter search brought to
light some papers of interest relating to the amendatory
act, but nothing touching the original bill.
The correspondence of Mr. Chase is scattered, and the
gaps in the dates show that much has disappeared. What
is left is to be found in the Pennsylvania Historical Society
and the Library of Congress. A few official letters remain
in the Treasury Department. Access to these papers
has been freely granted to me. For the analysis of the
material collated as above I alone am responsible.
ANDREW MCFARLAND DAVIS.
CAMBRIDGE,




March 26, igio.

6

THE ORIGIN OF THE NATIONAL BANKING SYSTEM.
T H E FIELD OF INVESTIGATION.

The origin of the national banking system is probably
to be found in the germ from which sprang the establishment, in 1838, in the State of New York, of a set of local
banks, having the power to emit a currency secured by
the deposit of State bonds. The success of this plan
suggested that a uniform national currency might in the
same way be provided through the emissions of special
associations, which should secure their notes by the pledge
of government securities.
The desire to make use of the New York experience in
national affairs must be looked for in the mental operations of the man then in charge of the Treasury Department, through whose insistence it became possible to
secure the passage, as a war measure, of the law through
which the national banks came into being, even though
the act did not have the hearty support of Congress. If
we seek to trace the opinions of Salmon P. Chase on this
subject, prior to and during the years of trial and responsibility in which the national banking system was being
evolved, we must have recourse to his speeches, to his
official reports, and to his correspondence. To comprehend the causes which induced him to act, we must take
into consideration the condition of the currency upon
which our people were then dependent for a medium of
trade. To give him full credit for his final determination, we must examine the possible solutions of the problem which were called to his attention and we must
fairly consider the various plans and schemes for relief




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which were submitted to him, whether in the light of
later experience these rejected propositions seem reasonable or not. We must also give due credit to the opinions of those who aided in bringing into shape the bill
which was submitted to Congress, nor can we neglect
the motives which influenced those who contributed
toward securing the passage of the banking legislation
which was finally effected, whether their efforts were put
forth within or without that body. A review of the conditions of the times, the needs of the Government and
the personal influences brought to bear upon the Secretary of the Treasury during the years 1861 and 1862
will put us severally in position to determine whether we
shall conclude that the adoption of a banking system
similar to the one then in vogue in the State of New
York was to be credited to the suggestion of any one person, or to the resultant pressure of circumstances guided
and controlled by a strong will.
We must, of course, take into account the rapidly
changing financial condition of the country while the
bill was under consideration, and it may appear that
motives predominant at one stage of affairs necessarily
became of less importance at a later period. If such
should prove to be the case, it will help to explain why
different writers have with apparent good reasons reached
different conclusions as to the prevailing motive for the
adoption of the national banking system. If we follow the
matter to the passage of the banking act in 1864, when the
system assumed the form which it has practically preserved
until the present time, we shall realize that a powerful




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opposition inspired timidity and retarded progress, so that
measures essential for success were impeded until patriotism rallied to their support and demanded their passage.
EARIyY SUGGESTIONS OF A NATIONAL CURRENCY.

The first proposition on record which can be quoted as
suggestive of a national banking system other than that
of a central national bank was made as early as 1815.
A Frenchman, traveling in this country from South to
North, experienced loss and discomfort from the depreciation of the bank notes into which he had converted his
funds. He found that these conditions increased as he
journeyed farther and farther from the place where
the notes were emitted. His trials furnished the foundation for an article which was published in Philadelphia
in the Analectic Magazine, in which article relief was
suggested for this state of affairs, through a uniform
currency, which might be based upon United States stocks,
the use of which for this purpose would, as the writer of the
article phrased it, give " a new prop to the security" of
these stocks, by which he probably meant that their market value would be correspondingly increased with this
additional use. This article was signed W., and fifty
years later, a contributor to the Historical Magazine 0
rescued it from the oblivion of the pages of the Analectic Magazine and republished it with the comment that
twenty-three years after its appearance, New York
adopted the plan, and that when the national banking
system was created, substantially the same arguments
were used. W's proposition was that in the absence
a

Historical Magazine, August, 1865, Vol. IX, pp. 253-256.




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of specie the public funds might serve, "as the basis
and support, and limit of paper currency/' If the banks
did not have coin, his idea was that they should be
compelled to redeem their notes in Government 6 per
cent stocks at par. This could be brought about by the
establishment of a central national bank on this plan.
Other banks would necessarily follow the example.
In 1847 Millard Fillmore was elected comptroller of the
State of New York. He had previous to this served several terms in Congress. During his congressional term
the question of a national bank had come under consideration. He took no part at that time in the discussion of the
subject, but while comptroller of the State of New York,
he suggested in his report January 1, 1849, that a national
bank, with the stocks of the United States as the sole basis
upon which to issue its currency, might prove a great convenience to the Government with entire safety to the people. While this proposition apparently involved the idea
of a secured currency to be emitted by a single central bank,
it at any rate contemplated the use of United States bonds
as the basis for a circulating medium.
This fact was brought out by a contributor to the
Bankers' Magazine in December, 1861, who signed himself
L. Bonnefoux, and who styled himself "Originator of the
New York State Stock Security Bank in 1838.'' ° A second
article by the same writer, published in February, 1862, in
the same magazine,6 was entitled "Outline of a plan to
create a national currency, based on the pledge of certifio Bankers' Magazine, Vol. X I (new series), p. 41?; see especially pp.
433, 434, 443, and 450.
& Bankers' Magazine, Vol. X I (new series), pp. 589-597.




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cates of a special loan issued by the United States and guaranteed by a branch of the public revenue set aside as a sinking fund. ,, The author regarded it as self-evident that the
adoption of such a currency would render the Government
independent of foreign capitalists. Such a national currency would connect the people, the state banking institutions, and the National Government in a common bond.
This article was in the form of a letter dated Paris, November 19, 1861.
February 14, 1838, some person who signed himself
" J. B. C." printed an article on the subject of the currency
in the New Bedford Mercury, and forwarded the same
in the form of a circular to the leading men of the country.
The writer knew nothing of the plan suggested in the
Analectic Magazine. He proposed that one-fifth part
of the capital stock of every bank should be loaned to the
State at an interest of 6 per cent, and that every bank
should be allowed to issue bills to the amount of the loan
made to the State. The original article remained in comparative obscurity, but in August, 1865, the author republished his circular in the Historical Magazine.
The financial experiences of 1837 disclosed the defects
of the safety fund banking act of New York and brought
about the passage of the free banking act in 1838. This
introduced a new element into the banking systems of the
country. Security for the circulation and inspection of
the condition of the banks added greatly to the confidence
of the community in the notes of such banks as were incorporated under this system or under analogous laws,
wherever the conditions imposed were honestly enforced.




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Professor Dunbar, a in one of his essays, says: "The free
banking system with provision for a bond-secured note
issue was followed in other States in such rapid succession
in the later fifties as to suggest the probability that had
not the normal course of development been interrupted
the system might have become general. ,, The following
States had prior to i860 passed free banking laws: Vermont, Massachusetts, Connecticut, New Jersey, Pennsylvania, Virginia, Tennessee, Florida, Louisiana, Ohio, Indiana, Illinois, Wisconsin, and Iowa.
THE CIRCULATING MEDIUM IN

i860.

The notes of the New York banks, where the provisions
of the New York free banking act were rigidly enforced,
were favorably received, even beyond the region where details concerning their management were known. This
was also true of the stronger of the Massachusetts banks
where a system of redemption prevailed, the New England
country banks being compelled to maintain in Boston,
with the Suffolk Bank or the Mutual Redemption Bank, a
deposit for that purpose, which deposit was counted in
their reserves in the statements that they were required
by law to furnish. The strong banks of the East were the
only banks in the country whose bills had more than what
might be termed a mere local credit, and the question of
finding some convenient medium with which a traveler
could meet his current expenses was troublesome and its
solution a source of expense. The country was nominally
on a specie basis, but the actual amount of gold in circulao Economic Essays, by Dunbar.




Edited by O. M. W. Sprague, p. 322.
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tion was insignificant. In any event it was almost impracticable for a traveler to carry with him the coin necessary to meet his expenses for a protracted journey, and
except coin there was nothing that was universally acceptable. The percentage of notes of doubtful value which
were in circulation in the Western States was so great
that the knowledge of an expert was required at every turn
to determine what to receive and what to reject.
A writer in the National Intelligencer of February 4,
1863, thus describes the situation: "Heretofore, although
one nation, bound together by the ties of consanguinity,
of a common language and an interstate and international
commerce, we have been separated by diverse systems of
currency, bounded by the state lines, and as widely variant
as those which mark the alien and often hostile principalities and powers of Europe. London and Munich,
Paris and St. Petersburgh are not more inaccessible to
each other, except by the financial bridge of exchange, than
are New York, St. Louis, Boston, and Chicago."
The Independent, January 15, 1863, speaking of the
great load that was imposed upon our merchants by this
internal exchange, said of a uniform currency, that "if
adopted, millions of dollars, it is truthfully alleged, will
be saved in the way of exchange, which for years past has
been an enormous tax on the whole community."
TRAVEL I N T H E INTERIOR DIFFICULT.

There appeared in Hunt's Merchants' Magazine for
January, 1863,a an article "By a Western Banker"
a
Published separately in pamphlet form under title of "A Uniform
National Currency."




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(J. J. K.), presumably John Jay Knox, who was afterwards Comptroller of the Currency, in which the evils
of the situation were portrayed in the following picturesque language: "A foreigner or stranger traveling
through the country, at the hotel, in the railroad car, on
the river or lake, by friend and foe, has offered to him in
exchange for gold slips of engraved paper similar in size,
but as often worthless in value, (sic) as equal the sum
they represent and promise to pay." " In the West
the people have suffered for years from the issues of
almost every State in the Union, much of which is so irredeemable, so insecure, and so unpopular as to be known by
opprobrious names rather than the money it pretends to
represent. There the frequently worthless issues of the
State of Maine and of other New England States, the
shinplasters of Michigan, the wild cats of Georgia, of
Canada, and Pennsylvania, the red dogs of Indiana and
Nebraska, the miserably engraved notes of North Carolina,
Kentucky, Missouri, and Virginia, and the not-to-be-forgotten stumptails of Illinois and Wisconsin are mixed indiscriminately with the par currency of New York and
Boston, until no one can wonder that the West has become disgusted with all bank issues and almost unanimously demand that such a currency shall be taxed out
of existence, and give place to a uniform national currency. "
Senator Sherman in a speech in the Senate in February,
1863, quoted from a recent article in the " London Times "
the following estimate of the condition of our currency :a
a

Congressional Globe, February 10, 1863, p. 842.




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" By the want of a paper currency that would be taken
in every State of the Union at its nominal value the
Americans have suffered severely. The different States
were as to their bank notes so many foreign nations each
refusing the paper of the other, except at continually
varying rates of discount. Frequently there was a greater
loss on paper taken or sent from an eastern to a western
State than on English bank notes converted into Austrian
money in Vienna. Only adepts and regular money
changers could tell whether a note was current or not, the
paper of broken or suspended banks remaining in circulation long after their value had departed. The Federal
Government avoided loss by refusing all paper money of
every kind. Its import duties were taken only in gold,
and internal revenue it had none. The first appearance
of a department for collecting that kind of taxation is in
the present bill proposed by Mr. Chase. But the difficulties of the Government have compelled it to issue a
paper that will pass current in any part of the territory.
Through the evils of the war the people will at least gain
that deliverance from the previous confusion of their currency which to Europeans appears a barbarism. If the
social storm sweeps away the "wild cat" and bogus
banks of the Union, it will have left some small compensation for the wreck of better things."
LOSSES THROUGH FAILURES.

A writer in the National Intelligencer of January
24, 1863, called attention to the fact that in 1861 and
1862 there was a diminution of the circulation in the
Northwestern States "owing to the failure of 100 or
29582—10




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more banks in Illinois and Wisconsin/' This diminution was only accomplished through loss to the public, and this point was feelingly brought forth in an
article in Hunt's Merchants' Magazine in February, 1862.
"The losses," the writer said, "which have in times
past been sustained by bill holders have been immense
and have fallen mainly on the poorer classes. It has
been satisfactorily ascertained by careful examinations
that the people have suffered to the amount of more
than $100,000,000 by broken bank notes since our
present system came into being." This article was
written in response to the suggestion of a national currency made by Secretary Chase in December, 1861. In
that report the Secretary said: "The value of the existing bank-note circulation depends on the laws of 34
States and the character of some 1,600 private corporations. It is usually furnished in greatest proportions by institutions of least actual capital. Circulation
commonly is in inverse ratio of solvency. Well-founded
institutions of large and solid capital have in general
comparatively little circulation, while weak corporations
almost invariably seek to sustain themselves by obtaining from the people the largest possible credit in this
form." Following out the thought contained in this
suggestion, the writer in the magazine said such banks
"make it their chief business, in fact, to manufacture
and put out as large an amount as they can by any contrivance keep in circulation—$5, $10, $20, $40 for one
in specie. The Illinois banks had, for example, on the
1st of January, i860, a circulation of $8,981,723; specie




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on hand only $223,812, or $40 to $1, to say nothing of
$697,037 they owed besides for deposits.''
A contributor to the Bankers' Magazine in January,
1861, speaking of the expansion of the currency of the
Illinois banks in i860 by an amount of $1,400,000, made
the following assertion: "This statement embraces the
return of 94 banks, more than half of which are merely
banks of circulation without capital and doing no busi-.
ness at their nominal locations. Only 1 out of 94 is
established at Chicago; not one at Springfield."
To appreciate the feeling that existed concerning the
currency that business men in the West were compelled
to make use of prior to the passage of the national banking
act, we may turn to the contemporary discussion in the
West. If the language used shall seem strong, we must
remember that it was addressed to a community familiar
through daily experience with the facts set forth in the
arguments. Hence we may conclude that the general
picture presented by the authors is not much overdrawn.
RAGGED AND WORTHLESS BILLS IN CIRCULATION.

December 13, 1861, the Chicago Tribune called the
notes then in circulation "the ragged and doubtful
issues of 1,600 corporations." The writer of the article
in the "Tribune" referred with respect to the "great
banks of the country," those in New York, Boston,
and Philadelphia, but regarded as a menace certain
banks "in New England, New Jersey, Ohio, and Pennsylvania, where the habit is to issue $2 in notes for
each dollar of capital, and where the only sources of
revenue are in sums that customers pay in the shape of




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interest on what the banks owe." He spoke of recent
Illinois banks " t h a t did business without any capital
and that never pretended to pay their debts save in
Missouri or Virginia bonds at some uncertain rate per
centum * * *." This "bank nuisance/' he said, "has
become unbearable—a source of heavy loss, of infinite vexation, and of perplexing uncertainty to all business men."
The same paper January i, 1862, said: " B u t what
shall we say of our currency of the present time, of our
wicked, clumsy, absurd banking system ? * * * What
power shall put the curb on the 1,600 makers of paper
money in the States of the Union? What shall hinder
them from reducing the currency to a dead level in
value with that of continental money at the close of
the revolution, or with that of French assignats during
the days of the directory?" Farther on the writer
spoke of "this ruinous paper-money system, which knows
nor admits no control, which is managed alone for
private profit, and often in flagrant disregard of the
public weal * * *."
The evil was of course continuous, and on the 24th of
March, 1863, the same paper described the currency then
in circulation as "poor, mean, unsafe, inconvenient, and
tormenting," and called the bills "notes of the shinplaster shops called 'local banks.' Torn, greasy, issued
by nobody knows whom, payable—if payable at all—in
other scraps of printed paper, like those on demand, not
1 in 5 of which is as good as the notes for an equal amount
of any solvent business man; yet all clothed by custom
and prescription with the attribute of money."




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JAY COOKE'S OPINION.

Oberholtzer, in his "Jay Cooke, Financier of the Civil
War," quotes from Cooke's " Memoirs," a diatribe against
the currency from which a few extracts will give us the
estimate placed upon a part of the notes then in circulation, upon which merchants and bankers were compelled
to rely for remittances. After stating that their value
depended upon the prosperity, good management, and
honesty of the banks which emitted them, he goes on as
follows:a
" I n m o s t cases a bank could issue circulation far beyond the amount of its capital stock. I have known
instances in which banks have issued eighteen or twentyfive times the amount of their capital, and, so far as the
public was concerned, with no other security than the
good faith of the institution."
"Confusion worse confounded was the order of the day.
Exchange upon Philadelphia, New York, and Boston,
when procurable, rated all the way from i to 10 and
15 per cent premium, according to the locality.
Notes were printed upon every variety of paper, and no
two banks issued bills of similar appearance. It was
generally the case that bank notes current in one State
could not be current in the other States, and it was impossible for anyone but those skilled in handling money
in vast quantities to detect the innumerable counterfeits
and altered notes which were then in circulation. The
banks were breaking constantly, and in many instances
circulating notes became almost worthless. Fifty mil-




a

Vol. I, p. 327.
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lions of dollars per annum, it is safe to say, would not
cover the loss to the people of this country growing out
of broken banks, counterfeits, altered notes, and cost of
exchange between different points."
It must be borne in mind that the part of the country
which suffered most from this state of affairs was the
rapidly growing West, where business reputations were
quickly gained, and where newcomers in the field of
business were not looked upon as intruders. So also it
must be remembered that this was not a new experience.
The whole country had before this suffered in a similar
way in its experimental use of credit as a basis for a circulating medium, and in the seaboard States efforts were
at this time being made, and that too with comparative
success, to restrain the excessive use of credit and to protect note holders.
PROTESTS OF GOVERNORS.

From time to time protests had been raised in the West,
and ineffectual efforts had been put forth there, by those
holding responsible offices, to remedy the evils of the
situation.
In 1853 the governor of Indiana, referring to the organization of State banks of issue, said in his message :a "The
speculator comes to Indianapolis with a bundle of banknotes in one hand and the stock in the other; in twentyfour hours he is on his way to some distant point of the
union to circulate what he denominates a legal currency,
authorized by the legislature of Indiana. He has nomi« Quoted in Bankers' Magazine for October, 1882, vol. 37, or vol. 17, 3d
series, p. 278.




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nally located his bank in some remote part of the State,
difficult of access, where he knows no banking facilities
are required, and intends that his notes shall go into the
hands of persons who will have no means of demanding
redemption."
The governor of Michigan, in his message for the same
year, said: "At present we are giving charters to the
issues of banks (sic) about which we actually know nothing, in whose management we have no participation, and
are thus literally paying a large tribute for what generally
in the end proves to be a great curse."
Governor Lord (sic, the name should be Ford) of New
Jersey said: a " I n many cases our banks, although ostensibly located in New Jersey, have their whole business
operations conducted by brokers in other States. The
facility with which they may be organized and located,
without reference to the wants of the community or the
business of the place, is destructive of all legitimate ends
of banking."
Salmon P. Chase, in his inaugural address as governor
of Ohio, in 1856,6 touched briefly on this subject and indicated that relief was to be found through the use of coin
supplemented by a uniform currency to be gained through
congressional legislation.
FLUCTUATIONS I N QUANTITY.

Occasional acts of suppression on the parts of individual states, and failures in years of depression, once in a
while operated to reduce the number of banks, while at
a
Quoted in Bankers' Magazine for October, 1882, vol. 37, or vol. 17, 3d
series, p. 278.
& Inaugural address of S. P. Chase as governor of Ohio in 1856 (Columbus, 1856), p. 3.




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other times the creation of new corporations would increase their number and in consequence the amount of
notes in circulation would fluctuate. The finance reports
for 1862 and 1863 supply figures which illustrate these
points. In 1857, 1,416 banks furnished about $215,000,000 of circulation. In 1858, while there were six more
banks the circulation under pressure from the panic of
the previous year fell off to $155,000,000. The situations for the next five years were respectively as follows:
In 1859, 1A7^ banks, $193,000,000 circulation; in i860,
1,562 banks, $207,000,000 circulation; in 1861, 1,601
banks, $202,000,000 circulation; in 1862, 1,492 banks,
$183,000,000 circulation; in 1863, 1,466 banks, $238,000,000 circulation.
GREATEST TROUBLE IN THE WEST.

The impression made by this cumulative rehearsal of
the evils under which the entire country, but more especially the West, was laboring in 1861, may perhaps be
stronger than a more complete view of the situation
would justify. It is true, that the various statements
made are undoubtedly well founded, but the entire truth
is not sufficiently brought forth. There were strong
banks in the East in the great business centers. The
troubles experienced in the West were only felt by business men in the East, in so far as they were in touch with
the quarters in which the troubles existed. Locally they
were practically exempt, and the greater part of the volume of bills in circulation in the East were to be relied
upon. The limitation of the area of the free circulation




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of t h e good bills was, even with the best of them, a disadvantage to t h e banks which issued them, to the community in which t h e banks were established, and to the
regions where their circulation was impeded. I t is b u t
fair to t h e bankers, who, when t h e opportunity was
offered t h e m to furnish t h e country with a uniform currency, rejected Mr. Chase's proposition voluntarily to
nationalize their institutions, t h a t in connection with
this development of the evils of the currency, we should
call attention to the alleviating features of their geographical distribution.
COUNTERFEITS.

One great burden imposed upon the public at this time
was the necessity for constant discrimination between
the genuine bills and the enormous number of counterfeits then in circulation. Careful inspection of all bills
was necessary. Situated as we are to-day, with a limited number of designs for bills in circulation, uniform
throughout t h e entire country, the extent of t h e use of
which permits the engraver to avail himself of every possible exercise of skill in the preparation of his plates, no
m a t t e r how expensive it may prove, we can scarcely
appreciate the skill and acuteness demanded of a bank
teller in those days, if he would avoid receiving the fraudulent and altered notes in circulation, the number of
which known to be on the market was to be measured
by t h e thousands. The extent of the different designs
on t h e various bills in circulation furnished a wide field
for the skill of the counterfeiters, who not only repro-




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duced excellent facsimiles of actual existing bills, but
also by delicate manipulation altered the denominations
of small bills, converting them into those of higher value.
All of this resulted in the creation of a special literature.
"Counterfeit Detectors" were published as serials in all
of our principal cities. " A pamphlet bank-note detector/' says Professor Dunbar, a " was a part of the outfit
of every well-provided counting room." Associations
were formed for the suppression of counterfeiting and
the author just referred to records that "the New England association for the suppression of counterfeiting
paid for sentencing 228 persoris during the four years,
1858 to 1861. It received an annual subsidy from the
State of $1,500."
The "Western Banker" who contributed the article to
Hunt's "Merchant's Magazine" in January, 1863, already
referred to, thus describes the situation: " If any man has
the curiosity, or will take the trouble to study the statistics
contained in either of the quarto volumes which are weekly
published in all the large cities under the name of ' Counterfeit Detectors,' he will find that there are in existence
nearly sixteen hundred different banks, and that from
these banks are daily being issued more than 10,000 different kinds of bank notes, and that a large portion of these
issues have been frequently copied and put in circulation
by the counterfeiter and his copartners in business."
The mere statement of these facts is perhaps sufficient,
but the impression made by them upon participants in the
confusion resulting from their existence is perhaps more




a

Economic Essays, p. 325.
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an king

System

essential for our purpose. Even after the elimination of
the southern banks the figures required to describe this
condition of affairs were impressive. The Chicago Tribune, on the 13th of February, 1863, after stating that
there were at that time 1,395 existing banks in the loyal
States, goes on to say: "Every one of these banks has its
separately engraved and printed notes, differing more or
less in form or design pictorially, and each bank issues the
various denominations which by usage seem to have
become the rule."
"Taken together, each bank issues at least bills of six
different denominations. The 1,395 banks therefore issue
8,370 varieties of notes, which people are expected to distinguish from counterfeits. Moreover, the varied issues
of the fraudulent broken and worthless banks should not
be overlooked. Of this class of ' retired banks,' as they are
styled, 854 are enumerated in the published list furnished
by the ' descriptive list' for January, 1863. Such as these
have therefore contributed and in many instances still
contribute their quota to this promiscuous catalogue."
" One phase of our paper currency engendered by this
multiform system calls for special notice and consideration.
We refer to counterfeiting. It may be safely stated that
the art, as pursued in the United States, is without parallel, and that without vaunt or hyperbole, we can 'beat
the world' on this, our national specialty—counterfeiting.
A species of literature, even unknown to the rest of the
world, has been initiated among us, and no merchant or
mechanic dee*ns himself safe unless he consults the ' Counterfeit Detector.' * * * The absolute facts, as detailed




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by those interested in keeping the records of counterfeits,
appear monstrous and fabulous even beyond credence.
Of the various kinds it is estimated that there are about
six thousand. * * *. Of the various species of 'counterfeits/ as they are called, it is ascertained that but a small
part of those in circulation is composed of bona fide imitations of the genuine notes. Those known as alterations
number highest. One cause of this multiplicity of altered
notes is attributable to the similarity of titles among
banks in different sections of the country. As, for instance,
we find 27 Union banks, of which 7 are in the State of New
York. A yet further aid to ' alterations' is in the frequent
use of the same devices on notes of different banks, and
often of different banks of the same name." Although the
picture is drawn at a later date than that which we are at
present considering, it nevertheless is equally true for the
year 1861, and must be accepted as such.
A writer in the Bankers' Magazine, in November,
1862, stated that experienced New York bankers and a
former bank-note engraver were unable to detect certain
fraudulent notes. His conclusion was: "If experts such
as bank tellers and bank-note engravers are so readily
deceived by well-executed fraudulent bills, it can not be
expected that merchants, traders, and others will be
prepared to detect such frauds."
I^OCAIv RESTRICTION AND INSPECTION PROPOSED.

Such, in a general way, was the condition of the currency in use in our mercantile community which confronted Mr. Chase when he was suddenly called upon to




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administer the finances of the Government, under circumstances for which there was no precedent, and which
would compel decisions on his part the determination of
which, whether right or wrong, whether for better or
worse, was sure to be questioned. The only thought of
any remedy for the currency situation generally entertained at that time would seem to have been through
state legislation. Restriction of the proportionate circulation, improved government inspection, and more careful
supervision of the bonds offered under the free banking
laws for security were the proposed methods. " I n most
of the New England States," said Professor Dunbar, 0
'The chief effort of legislation was to restrict circulation,
this form of liability still continuing down to i860 in all
these States, except Massachusetts, to be more important
in amount than the deposits." The same author said:
" I n every New England State the legislature had placed
the banks under the supervision of one or more commissioners, armed with certain powers of inspection and investigation and had provided for returns of the condition of
every bank to be made to the state authorities. As to
the frequency of such returns, however, there was no
uniformity * * * ." This author also gave some
particulars as to the character of the bonds deposited in
some of the States to secure the circulation. It was clear
that steps were being taken to avert some of the perils of
the situation, but evident that relief in the way that
naturally would be taken could only come after long
probation of the evils.




a

Economic Essays, p, 318.
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WHAT T H E TREASURER COULD R E C E I V E .

At some point in this discussion some reference m u s t
be h a d to t h e existing laws with reference to t h e money
which could be received by t h e various agents of t h e
United States to whom p a y m e n t s of one kind or another
were made. A t t h e outset of Mr. Chase's career t h e
question of w h a t collectors could or could not receive
was of comparatively little consequence, b u t a t a later
d a t e it became of great importance. The bearing of w h a t
has just been said will be appreciated when we ascertain
t h e limitations imposed by t h e Government upon receipts
a t t h e Treasury a t this time.
T h e law relating to government collections h a d under-,
gone sundry changes, coincident with several periods of
financial excitement. In 1789, it was provided t h a t tonnage and import duties should be m a d e in coin alone.®
I n 1800, it was provided t h a t p a y m e n t to t h e U n i t e d
States- for land in t h e Northwest Territory should be
m a d e in specie or in evidences of t h e public debt. 0 I n
1816, provision was m a d e b y joint resolution, t h a t thereafter all dues to t h e United States should be collected in
t h e legal currency of t h e United States, or treasury notes,
or notes of the Bank of t h e United States, or in notes of
specie-paying banks. 6 This permission t o receive notes of
specie-paying banks worked disadvantageously to t h e
Government when the Northwest Territory was opened
u p t o settlement, and in 1836, during t h e height of t h e
aBrightly's Digest, Ed. 1858, p. 888, § 58.
&This provision is referred to in the act of July 4, 1840.
Large, § 19, p. 893.




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inflation and speculation, eiforts were made to secure the
repeal of this resolve. These efforts were however vain,
and after the adjournment of Congress, Jackson issued
his famous " Specie Circular," which limited to specie
the money permitted to be received by the government
land commissioners. A bill rescinding this order was
passed by Congress, March 2, 1837, but it failed to become
a law, through Jackson's refusal to put his signature to it. a
Van Buren continued to enforce the rule laid down in the
"Specie Circular."
In 1840 an act was passed b modifying the resolution
of 1816, but ignoring the intervening "Specie Circular."
One-fourth part of all payments for duties, taxes, sales
of public lands, debts, and sums accruing or becoming
due to the United States before June 30, 1841, was to be
collected in "legal currency of the United States." For
the succeeding year an additional fourth. For the year
ending June 30, 1843, still another fourth was to be collected in this manner, and after that all sums for the
purposes before mentioned and all sums due to the PostOffice Department were to be paid in gold and silver.
This act was repealed August 13, 1841.° On August 6,
1846, it was enacted that all payments to the Government
should be made in gold and silver coin only or in Treasury
Notes issued under the authority of the United States
on and after January 1, 1847.^
a Parton's Life of Jackson, vol. iii, p. 625.
b 5 Statutes at Large. An act to provide for the collection, safe-keeping,
transfer, and disbursement of the public revenue, § 19, p. 390.
c 5 Statutes at Large, p. 439.
dg Statutes at Large, § 18, p. 64.




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When it came to negotiating loans with the banks, the
impossibility of suddenly withdrawing from the market
and transferring the vast sums required by the Government from the vaults of the banks to the sub treasuries,
compelled some change in the definition of the powers
of the Treasury in regard to deposits, and August 5, 1861,
in the loan act a clause was inserted authorizing the
Secretary of the Treasury to deposit the money to be
obtained on the loans thus authorized to be made, in
such solvent specie paying banks as he might select. Mr.
Chase was not disposed to exercise his power of checking
out these deposits in a way which was altogether satisfactory to the banks, and on the 4th of October, 1861,
Mr. John E. Williams, president of the Metropolitan
Bank of New York, wrote him a tart, not to say arrogant
letter on the subject. This letter is not to be found
in any of the fragments of Mr. Chase's correspondence
which have been preserved, but it was reproduced by Mr.
Williams himself in a letter to E. G. Spaulding of later date,
which was printed by Spaulding in his " Extra sheets from
Spaulding's History of Legal Tender Paper Money," etc.
MR. CHASE'S INAUGURAL.

The details heretofore given concerning the character
of the money which could be received in the United
States Treasury, in so far as they deal with matters in
the past, are not absolutely essential for. our consideration. They are worthy of note, however, as evidences of the prolonged struggle on the part of the banks
to secure recognition for their notes. Mr. Chase was
a hard-money man, and although it was urged by some




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that excuse might be found for receiving bank notes at
the Treasury in some of the legislation relative to the
establishment of subtreasuries, he continuously adhered
to his original proposition. In his inaugural address as
governor of Ohio in 1856 he thus defined his views:
" A sound and sufficient currency is indispensable to the
welfare of every civilized community. The best practicable currency in my judgment would be a currency of
coin, admitting the use of large notes only for the convenience of commerce. Such a currency, however, is
only attainable through the legislation of Congress and
the action of the General Government. ,, This attitude
became of the utmost importance after the passage of
the internal-revenue act.
GOVERNMENT DEPOSITORIES.

There was still another point, which at the outset of
Mr. Chase's career as Secretary was of little importance,
but which was destined to become of great consequence to
him in carrying out his schemes in the near future, and
that was where should government officials, receiving
money in their official capacity, make their deposits?
The designated depositories of the United States were
under ordinary circumstances sufficient in number and
were adequate for the purposes for which they were
created, but the clause in the law of 1846 which prevented the use of banks for that purpose placed limitations and responsibilities on the officers having charge
of the government funds, which it was plain would prove
troublesome in case of the enlargement of their functions
or the increase of the area of their action.
29582—10




3

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FINANCE REPORTS, l86l.

At the extra session of Congress in July, 1861, Mr.
Chase submitted his first report. He estimated that
there would be required to meet outstanding obligations
of the Government, to pay interest, and to satisfy appropriations already made or required to be made by the
extraordinary exigencies of the Government for the fiscal
year ending July 1, 1862, $318,500,000. This was an
amount far beyond the capacity of our banks and bankers
to furnish through any ordinary methods, being greatly
in excess of the entire amount of coin in use in ordinary
business in the country. Estimates varied greatly as
to what that amount was, some placing the entire amount
in the banks and subtreasuries at but little over $200,000,000, others raising the limit to $275,000,000. This
enormous increase of the use by the Government of
the coin in the country when added to the normal demands
of current business did not seem to Mr. Chase to be
beyond the possibility of achievement, .and in his annual report in December, 1861, in which he submitted
various arguments in behalf of the establishment of a
national banking system, he said: ''The large amount
of specie now in the United States reaching a total of
not less than $275,000,000, will easily support payments
of duties in coin while these payments and ordinary
demands will aid in retaining the specie in the country
as a solid basis of circulation and loans." He then went
on to say (assuming as a condition precedent the nationalization of the banks), that the whole circulation,
whether of coin or bank notes would bear the impress




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of the nation and would not be likely to be increased
beyond the real wants of business. These words were
written and the report was submitted to Congress before
the suspension of specie payments, which took place
within less than a month after the report was submitted.
The suspension greatly modified the prospects of relief
to be obtained from nationalizing the banks, and compelled financial steps which with the growing magnitude
of the expenditures of the Government minimized
the argument of the immediately pending nature of the
relief to be derived from the banking scheme, but greatly
increased the potency of the claim that such institutions
could be used for government depositories.
THE) BANKS SUSPEND.

The suspension of the banks, although inevitable in the
near future, was precipitated by the emission of United
States notes to meet the current expenses of the Government. Writing to Mr. J. T. Trowbridge at a later date,
Mr. Chase said the banks wanted him to suspend the
emission of government notes, give credit to them for
subscriptions and accept in payment of drafts on them
such funds as they could furnish. He replied that if they
would furnish him what gold he required he would withdraw the government notes already issued and agree to
emit no more, but unless they could do that he must continue to make use of the government credit in this form
as far as his necessities should require. He further said
that "it soon became plain that the bank note circulation
could not be sustained at par of coin unless made receivable by the Government, and that it could not be made




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so receivable without risk of serious, perhaps irretrievable
financial embarrassment or disorder. In other words, it
became plain that suspension was inevitable except by
sacrifices which the banks could not make."
This letter to Mr. Trowbridge is in the possession of
the Pennsylvania Historical Society. It bears no date,
but was written after the suspension of specie payments,
and the negotiation with the banks which is referred to
was probably the one which drew forth the letter from
Mr. John E. Williams which has been already alluded to.
MARKETING THE BONDS.

When Mr. Chase took his seat in the Treasury Department he found still unexhausted some of the borrowing
capacity which had been conferred upon his predecessors.
The credit of the Government during the last days of
Buchanan's administration was clouded by doubts of
what the 4th of March might bring forth, but the inauguration of Lincoln at the Capitol gave promise of a future
for the country and furnished a rallying point for patriotism. Mr. Chase met the condition of the finances with
quick action and with ingenious devices to secure support
from the people, as well as from the great banking institutions. He evidently regarded the normal rate of interest at that time for a twenty-year government bond
as 6 per cent. Setting aside all considerations of temporary advantage to be derived from long term or indefinite loans such as are in favor in Europe, he adhered to
the policy which has always prevailed in this country of
loans with fixed terms. Recognizing the fact that under
the disorganization then prevalent and the enormous war




34

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expenditures inevitably impending he could no longer
claim that conditions were normal, he secured authority
to negotiate bonds and notes of various length of terms,
from noninterest-bearing demand notes to twenty-year
bonds, the rate of the interest-bearing securities varying
from^7T% per cent for three-year notes convertible into
6 per cent twenty-year bonds to ^rm per cent oneyear small denomination notes also convertible into longterm bonds, the whole being so arranged as to enable him
to secure help from every available source.
Hon. Samuel Hooper, reviewing the situation in a
speech in the House in 1869,° thus described the numerous
government obligations which were floated at one time or
another, under the pressure of these circumstances:
' 'Among the different forms of public debt were 'certificates of indebtedness/ payable within one year from their
date; 'temporary loans,' payable at ten days' notice;
'compound-interest notes/ principal and interest payable
at maturity; and 'seven-thirty Treasury notes/ convertible at the holder's option into five-twenty bonds or payable at three years from date." The temporary needs of
the Government having been provided for at these high
rates of interest, he was able a few months later to launch
the 6 per cent bonds, "redeemable after five years and
payable in twenty," thus making provision for a reduction of interest in the future, when the market might be
better. The bankers protested against this redemption
clause, and insisted that it would imperil the negotiation
of the bonds, but Mr. Chase was firm, and not only were
a Congressional Globe, February 5, 1869, p. 920.




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the bonds floated with this clause, but at a later date he
was able to negotiate a large number of 5 per cent bonds,
redeemable after ten years and payable in forty.
NATIONAL BANKS SUGGESTED.

It was during the summer of 1861, when his active brain
was at work devising schemes for raising money for the
country through taxes and through loans, that he realized
the advantage to be derived from "the preparation and
delivery to institutions and associations of notes prepared
for circulation under national direction and to be secured
as to prompt convertibility into coin by the pledge of
United States bonds.'' The predicted gains from the
adoption of this plan were that the people "in their ordinary business would find the advantages of uniformity in
currency; of uniformity insecurity; of effectual safeguard,
if effectual safeguard is possible, against depreciation; and
of protection from losses on discounts and exchanges;
while in the operations of the Government the people
would find the further advantage of a large demand for
government securities; of increased facilities for obtaining the loans required by the war; and of some alleviation
of the burdens on industry through a diminution of the
rate of interest or a participation in the profit of circulation without risking the peril of a great money monopoly.
A further and important advantage to the people may be
reasonably expected in the increased security to the
Union, springing from the common interest in its preservation, created by the distribution of its stocks to associations throughout the country as the basis of circulation/'




36

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System

This description of the advantages to be derived from
the proposed currency is quoted from the finance report
of December, 1861, in which Mr. Chase made a masterly
presentation of the subject, and in which he also discussed
the advantage to be derived from a circulation composed
of government notes. The gains which were evident in
the latter scheme—the permanent loan without interest
of the amount of the emission and the furnishing of a
uniform currency—would be desirable, he said, provided
"such a circulation could be certainly and strictly confined to the real needs of the people and kept constantly
equivalent to specie by prompt and certain redemptions
in coin. ,, He regarded as more than an offset to these
advantages the temptation to issue an excess of notes,
the hazards of panics, and the immeasurable evils of dishonored public faith and national bankruptcy.
He believed that the notes which he had suggested
would furnish a suitable uniform currency, and he thought
this step should be carried out "through the voluntary
action of existing institutions." He was of opinion that
the plan, if adopted, would "impart such value and stability to government securities that it would not be difficult to obtain the additional loans required for the service
of the current and the succeeding years at fair and reasonable rates * * *."
UNIFORM CURRENCY AND BOND MARKET.

Whether the predominant motive for the establishment of a system of national banks, to be inferred from
the arguments in this report, was that they would fur-




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Monetary Commission

nish a safe uniform currency, or that they would provide a
market for government bonds, it is evident that when he
wrote this report Mr. Chase hoped for the immediate voluntary transference of the entire circulation of the banks
of the country from their own notes to government notes,
and it is plain that his hopes for an early end to the war led
him to overestimate the influence that this nationalization
was ultimately destined to have upon the market, protracted as the time was in which the transference was to
be made through several years of patient waiting. The
daily expenditures of the Government, large as they seemed
at that time, shrank into insignificance when compared with
the gigantic outlays of the next summer, and great as was
the amount required by all the banks for security for their
circulation, it formed, when it was actually used for that
purpose, but a fraction of the national debt. The disbursements of the Government had crept up to between
$2,000,000 and $3,000,000 a day, a and the New York
Journal of Commerce of January 20, 1863, in an article
against Mr. Chase's scheme, showed the effects upon the
imagination of the large sums with which the Government was then dealing, by saying, "if all the circulation
should be based on entirely new bonds, the whole amount
realized would be less than $200,000,000." The provision of a market for two hundred millions was not
worth considering, in the opinion of that paper. Nevera
I t must be borne in mind that concurrently with these proceedings t h e
premium on gold had gone up, so that the expenditures of the Government,
reduced to a coin basis, were n o t much over those of the previous year.
Practically, however, these expenditures were ultimately paid a t the figures mentioned, in consequence of the resumption of specie payments.




38

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theless the benefits to be derived by the Government
from this feature were dwelt upon by Hon. Samuel Hooper
in a speech in the House January 19, 1863," m which he
said: "Another of the important benefits which the Government would derive from this system of national banks
would be the amount of United States stock which would
be absorbed to be used as security for its circulation.
* * * It must be clear to the feeblest comprehension
that by so much as the credit and strength of the federal
bonds would be improved by this plan of depositing
them as security for the notes in circulation it would be
sound policy to avail of it at this time when the necessities of the public service require so large an amount of
bonds to be issued."
CONGRESS CHANGES ITS ATTITUDE.

This speech of Hooper leads naturally to the consideration of the change of the feelings of Congress with regard
to the plan for a uniform national currency which was
evident at the time when the speech was made. This
attitude was necessarily affected by current events, and
foremost in their influence were those of a military or of
a financial character. Pronounced success in the field at
an early date in the war would have confirmed the existing
belief that the conflict would not last long, and, as a consequence, it would have been assumed that the finances
of the country would not be seriously deranged. On the
other hand, disaster in the field or even lack of success
made powerful the argument that the continuous disa

Congressional Globe, 3d sess. 37th Cong., p. 385.




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bursements occasioned by the military necessities demanded pecuniary sacrifices from the people and might
even call for a revolution of the banking system of the
country.
Setting aside for the moment all consideration of
military affairs, let us take a glance at the growing influence
of the financial situation, its imperative demands, and its
pressing needs, and let us endeavor to measure the everincreasing burden of the labor of providing funds for the
Government, which had been placed upon the shoulders
of the Secretary of the Treasury. The expenses of two
months of war, at the rate of disbursement which was
being made in the summer of 1861, were equal to the entire
national debt of July 1, i860. At a later date the
expenditures of less than a month reached the same figure.
When Secretary Chase, in July, 1861, reported that the
exigencies of the Government would require for the fiscal
year ending June 30, 1862, the sum of $318,519,581.87,
the size of these figures, notwithstanding the fact that
this amount was five times the total of the national debt
in July, i860, and three and one-half times that of the
debt of 1861, did not seem to disturb the optimism of
either Congress or himself. No conception was then had
of the character of the contest upon which we had entered.
By December of the same year, the financial difficulties
attendant upon procuring the funds for such enormous
and unprecedented expenditures gave birth in the mind
of the Secretary to a keener perception of the task before
him. Congress, however, was not at this time aroused to
a full realization of what the Secretary was confronted




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with. In July, in response to an appeal on the part of
the President for authority to borrow $400,000,000, the
Secretary had been empowered to issue $250,000,000 in
twenty-year bonds and three-year Treasury notes,
$50,000,000 in noninterest bearing one-year notes, and
another issue of notes at a lower rate of interest, amounting
to $20,000,000, was also authorized. a
It is no part of my purpose to enter upon any detailed
statement of the complicated measures then taken by the
Secretary to secure funds for the Government. These
details have no immediate bearing upon the topic under
consideration. The sole reason for this general review
of the finances is to call attention to the influence that this
growth of the national debt must necessarily have had
upon Congress in the final determination of financial legislation. The estimate of $318,000,000 for the expenditures
of the fiscal year of 1862 fell short by $240,000,000,
and as early as December, 1861, Mr. Chase realized
that he had -not only underestimated the expenditures
but that he had overestimated the receipts. He then
thought that it would require an additional appropriation
of $214,000,000 to make up the probable deficiency, being
still short of what was actually required upward of
$25,000,000. Experiences like these served to open the
eyes of those who were in charge of affairs to the hazards
to which their conjectures were exposed.
Authority was given the Secretary in 1862 to negotiate
the sale of $500,000,000 6 per cent bonds, redeemable in
five years and payable in twenty. Then followed the
a Bayley's National Loans of the United States, p. 78.




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wonderful success of the direct appeal to the people in
placing this enormous loan. Simultaneously with the
passage of this loan bill, authority was granted to emit
$150,000,000 legal-tender Treasury notes, and July 11,
1862, an additional emission of $150,000,000 of these notes
was authorized. Still another $ 150,000,000 was authorized
March 3, 1863. Fractional currency, certificates of
indebtedness, compound-interest notes, and, later, coin
certificates, all helped to swell the debt. The $65,000,000
of national debt at the end of the fiscal year of i860
became $91,000,000 in 1861, was $524,000,000 in 1862,
and rose to $1,120,000,000 in 1863. The extraordinary
expenditures which brought about this enormous increase
of debt from year to year necessarily compelled consideration of the recommendations of the Secretary of the
Treasury. Any radical departure from the plans under
which he was seeking to procure funds must have carried
with it a change in the head of the department at a period
when such a change would have been full ofiperil.
OPPOSITION OF SECRETARY TO LEGAI, TENDERS.
One other point concerning current financial events
ought to be mentioned before we turn to Mr. Chase's correspondence for information as to schemes submitted for
his consideration, and that is his opposition to the legaltender feature of the greenbacks. The demand notes
were not legal tender, and there was some hesitation in
receiving them at first. Ultimately it became necessary
to attach the legal tender function to government notes
in order to compel their reception in settlement of debts.




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In a letter addressed to Thaddeus Stevens, January 20,
1862, Mr. Chase said: " It is not unknown * * * that
I have felt, nor do I wish to conceal that I now feel, a
great aversion to making anything but coin a legal tender
in payment of debts.''
The passage of the legal tender law shortly thereafter
destroyed the last hope for carrying on the affairs of the
Government on a specie basis. Interest on government
securities continued to be paid in gold and the principal
of the long-term bonds would presumably be payable in
coin, but the ordinary government obligations maturing
from day to day could only be met in greenbacks. His
desire, then, for a currency which should meet with prompt
redemption in coin was therefore impracticable.
It must also be borne in mind that the passage of the
internal-revenue act modified the relative urgency of certain of the motives which may have influenced Mr. Chase
in determining the adoption of the national banking system as a measure of relief at this time. Hundreds of
collectors were now to be appointed. They would need
designated depositories in which they could place their
collections. The greenbacks, to the extent that the banks
required reserves, displaced a corresponding amount of
gold held for that purpose which was sold, and thus
through this withdrawal from circulation of the notes
which were substituted in the bank reserves, only the balance of the government notes fully performed the function of furnishing traders a uniform currency. Mr. Chase
was reluctant to emit more of them than he was forced
to, and he therefore dwelt upon the possibility of such




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a currency being furnished by the banks under his proposed system.
MR. CHASE'S CORRESPONDENCE.

The portions of the correspondence of Mr. Chase which
have been preserved contain letters from persons scattered over the country, many of them from eminent men
whose words of encouragement must have proved grateful,
some from friends of the existing banks, others from critics,
and not a few from well-meaning men of speculative temperament who felt impelled to come to the aid of the Secretary. Their consideration at this point is desirable.
January 8,1861, L. M. Kellogg, of San Francisco, wrote
Mr. Chase a recommending him to meet the current expenses of the Government with noninterest-bearing treasury notes, which should be redeemable at all subtreasuries
in gold and silver, or at the option of the Government in
interest-bearing treasury notes, the interest of which
should be payable in specie.
June 22, 1861, Mr. A. Campbell wrote from La Salle®
that 90 per cent of the people were in favor of the emission by the Government of noninterest-bearing treasury
notes, in denominations from $5 to $500, redeemable at
the end of two or three years, for the purpose of supplanting the worthless trash in circulation.
S. N. Goodale wrote from Cleveland,® Ohio, June 26,
1861, that the West wanted interest-bearing notes in
small denominations, payable in twenty years if not
redeemed before.




a

MS. Chase Letters, Library of Congress.

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July 7, 1861, Mr. E. Littell wrote from Boston,® suggesting that if the treasury drafts on the mints and subtreasuries were made in sm&ll sums and on paper specially
prepared and with special engraved designs, these drafts
might be made to serve as currency. He called attention to the fact that in England there were twenty millions
sterling of similar drafts constantly afloat in the market.
O. B. POTTER SUBMITS A PLAN.

Mr. O. B. Potter submitted a plan to Mr. Chase's consideration on the 19th of August, 1861,6 which bears a
close resemblance to the scheme set forth in the Treasurer's
report of that year. It is of sufficient importance to be
given in full.
Hon.

S. P. CHASE,

Secretary of United States Treasury, Washington, D. C.
DEAR S I R : I beg leave to suggest for your consideration a plan which
occurs to me as certain if adopted to secure for the country several ends
always important, but especially so now.
PlvAN.

Allow banks, and bankers duly authorized in the loyal States, to secure
their bills by depositing with a superintendent appointed by the Government United States stocks at their par value in the same way that the
banks and bankers in New York secure their circulation by depositing
New York State and United States stocks with the State, thus making the
stocks of the United States a basis of banking on which alone a national
circulation can be secured.
To do this it is necessary only for the Government to authorize and
appoint a superintendent connected with the Treasury whose duty it shall
be to receive from duly authorized banks and bankers within loyal States
United States stocks in sums of not less than $200,000 from one party and
hold the same as security for an equal amount of bills to be properly stamped
and signed by such superintendent and delivered to the depositing bank or
banker.
a Dated Office of Littell's Living Age. MS. Chase Letters, Library of
Congress.
& MS. Chase Letters, Library of Congress.




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This mark or stamp and signature of such superintendent to guarantee
to the holder of the bills issued that the same are secured by United States
stocks deposited with and held by the Government, and t h a t in case the
same shall fail to be redeemed by the bank or banker issuing them, then on
due demand and protest such superintendent will sell upon proper notice
to the bank or banker and apply to the redemption of said bills the stocks
held to secure the same.
This money might properly be designated United States currency as distinguishing it from the bills issued in the several States and not thus secured,
and should be so plainly and unmistakably designated as to be readily distinguishable anywhere a t sight.
I t might be received and paid out b y the Government in cases where it is
not otherwise agreed or provided, but this is not at all essential to the plan,
and might encounter the prejudices of those who think specie more reliable
than the faith and covenant of the Government under which they live.
The plan will be fully understood by an examination of the statutes of
this State regulating the securing of their circulations by our banks by
deposit with the State.
The objects which will be reached by this plan are:
i. I t is obvious t h a t the bills thus secured will have, in whatever State
issued, a national circulation, and be worth the same in all parts of the
country. Nay, these bills would be worth their face wherever American
commerce is known, a ready medium of exchange would be always at hand
throughout the country, and between all parts of it, and all fluctuations and
trouble in this respect would be forever ended.
2. The fact that in this way banks and bankers could obtain a national
circulation for their bills, would make United States stocks eagerly sought
after by them, and their price would be always maintained at or above
par though they bear only a low rate of interest; 4 percents could never
fall below par after the system is fairly understood and at work.
3. This will enable capitalists in the older States by investing in United
States stocks to engage in banking and furnish a currency to the younger
States which wTill be equally serviceable to them as if issued in their own
States; a bill thus secured issued in Boston will circulate as well in Oregon
as if issued in Oregon, and probably better.
4. None of the objections justly urged against a United States bank lie
against this plan. I t gives to the Government no power to bestow favors
and does not place a dollar in its hands to lend. I t leaves the banks and
bankers of the several States to do the business as now in the same banking
houses and under the same direction, within such safeguards and limitations
as the several States may themselves impose. The banks will hold their
charters from, be controlled by, and be accountable to their several States
as before. All the Government does by this plan is to place upon so much
of the currency as is secured by its own stocks the stamp of nationality,
to the extent of placing upon each bill so secured its assurance t h a t the bill




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is so secured to the bill holder, and that upon failure of the bank the stocks
deposited with the government officer shall be by him sold and the proceeds
applied to redeem the bills.
5. If the United States debt should not be sufficient to afford sufficient
security for the bank circulation of the country, the banks can issue bills
for domestic circulation secured by the stocks of their own States as they do
now, the bills being so marked as to be readily distinguishable at sight
from those secured by United States stocks. Indeed, all the bills secured
by United States stocks deposited with the Government should have
engraved upon them some suitable stamp which should be the same upon
every bill, so that it might readily become familiar to everybody.
6. This would make the Government and the capital mutually dependent
on each other, and every bank and banker would feel a daily interest in
supporting and keeping the Government credit above suspicion. Every
citizen, too, who is supplied with such a currency—a currency which will be
equal to gold throughout every foot of our territory, and everywhere of the
same value, with which he can travel from Oregon to Florida, and from
Maine to Mexico—would feel and realize every time he handled or looked
upon such a bill bearing the national mark, that the union of these States
is verily a personal benefit and blessing to all.
If it is thought more prudent, but 90 per cent of the stocks deposited may
be issued in bills, and thus all fluctuations in the stocks be provided against.
Exactly what legislation would be required to carry out this plan you
will readily see. One simple statute creating the superintendent, and directing him how to receive and hold the stocks, mark the bills, and sell and
apply the stocks to the redemption of the bills in case of failure of any bank
issuing them would be all that would be demanded. Such a statute
passed and the national stocks would instantly be absorbed by the banks,
because thus and thus only could they make their circulation national. No
sooner would one bank supply itself with such a currency than all must in
self-defense, because the people would have a national currency for daily
use, and would deal with the banks who could supply this.
The several States will promptly provide the required legislation on
their part by providing that this United States currency need not be further
secured by deposit with the State.
The adoption of this plan could not fail to put an end to all financial
troubles during the war, and be an increasing benefit and blessing ever
after. While it would supply all the means required for the war, it would
instantly enable the older and newer portions of the country to increase
their trade with each other by supplying to such nearer portions an abundant and perfectly safe currency.
If it be said that this plan bases the currency upon a permanent national
debt, the answer is: I t bases so much of the currency as is necessary for
purposes of exchange and interstate commerce upon the credit of the
nation, and leaves with the nation, by regulating the amount of its debt,
29582—10




4

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or limiting the amount of bills which may be thus stamped and secured,
the power to control the amount of the national currency and keep it
within the wants of the people, while the power of loaning the money and
using it reposes with the people exactly as now through their banks.
Bankers can get no more bills than Congress authorize: and legislators
and politicians can not handle one dollar of these bills unless they are
placed in their hands by the owners of them.
I t is impossible to see how such a system can be made use of for political
ends.
This plan has many decided advantages over the present expedient of
treasury notes. I t makes it for the direct interest of every bank and
banker to keep the United States stocks above par. I t also puts upon the
banks, and not upon the Government, the redemption of the circulation,
the Government only acting as trustee in selling the deposited stocks in
case the bank fails to redeem.
A permanent national debt of sufficient amount for these purposes, which
is a band of union, a guaranty for peace, and a daily convenience and
blessing to all, will have no terrors for a people whose interests have been
the sport of fluctuations in exchange as ours have for the last ten years.
Very respectfully, your obedient servant,
O.

B.

POTTER,

495 Broadway, New
N ^ w YORK, August i%

York.

1861.

Potter's full name was Orlando Bronson Potter. He
published in 1875 a pamphlet entitled "Plan for appreciating the national bank notes to the value of coins without diminishing the volume of the currency," by O. B.
Potter; also, his "Plan of the national-bank currency
based upon, and secured by, the national stocks;" submitted to Secretary Chase August 14, 1861. New York:
Brown & Hewitt, printers, 30 Frankfort street, 1875.
The date given in the title of the pamphlet for the submission to Mr. Chase differs from the apparent date of the
letter already quoted, the one being August 14, the other
August 19. It is not important which is correct. A
second pamphlet containing this plan was printed by
Potter in 1883. Its title was "The national currency;
its origin. Compliments of O. B. Potter, New York,"




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etc., 1883. There is nothing in it of interest in view of
what has already been given.
NUMEROUS SUGGESTIONS.

Hon. J. R. Doolittle, United States Senator from Wisconsin, wrote from Chicago,0 September 13, 1861, suggesting that the West was in need of treasury notes and
recommending that the circulation of banks below the
$20 notes be taxed out of existence and the place supplied
permanently by treasury notes.
Hon. Simeon Nash, of Gallipolis, urged Mr. Chase on the
17th of September, i86i, a to receive bank notes from subscribers to the popular loan. To this Mr. Chase replied
on the 26th of September, in a long letter the gist of which
is contained in one sentence: "At any rate until Congress shall decide otherwise, I must execute the law as it
exists, and receive and pay out only coin and Government
notes."
William Gunckel, a native Buckeye, wrote from Germantown, Ohio, October 3, i86i, a announcing the first
arrival of the $20 United States Treasury notes. "Many
persons," he said, "called to see them, and with glad
hearts rejoiced at the event. " John W. Caldwell, of Cincinnati, on the 2 2d of October, wrote that he wanted the
entire national debt to be put in circulation in the form of
money.
S. M. Felton wrote November 9, 1861, from the office
of the Philadelphia, Wilmington and Baltimore Railroad,
in Philadelphia, 0 offering to make as much use as was




a MS. Chase Letters, Library of Congress.
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possible of treasury notes in paying off the employees of
the road. They could hardly be adopted to the full extent
at once. The president of the Pennsylvania road and the
president of the Philadelphia and Reading road would
also cooperate in a similar way.
PAMPHIvKT BY ELEAZAR LORD.

In chronological sequence we may at this point glance
at a pamphlet entitled "A letter on (the) national
currency, addressed to the Secretary of the Treasury,"
which is dated November 22, i86i, a and the authorship
of which is attributed to Eleazar Lord. He makes the
following suggestion: "Let the Treasury Department
(or a bureau under the responsibility of the Secretary)
be authorized to propose to the existing banks throughout the country, and to new banking companies, to
invest their capital at once or gradually, and in part or
wholly, in national stock (which when due is redeemable
in specie) having twenty or more years to run; to deposit
the said stock with the department as security for circulating notes to a like amount." He ventures to think
that his suggestion "will in some degree tally with your
own views and reflections."
ADVICE, CONGRATULATIONS, AND CRITICISM.

Joseph Medill wrote from Chicago, November 25, 1861, 6
urging the circulation of the demand notes as a national
currency and the taxation of the "debt factories,'' as
he termed the banks, whose notes he denominated "heto Published in New York in 1861, see p. 8.
6
MS. Chase papers, Pennsylvania Historical Society.




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erogeneous rags." These familiar phrases we have m e t
with in t h e Chicago Tribune, probably from the pen of
Medill himself.
On t h e n t h of December Alphonso Taft, of Cincinnati,
t h e father of t h e President of t h e United States, wrote
Mr. Chase, a complimenting him upon his report which
had just been submitted, and saying t h a t if Congress
should adopt his recommendations it would in itself
be no inconsiderable compensation for the war.
Mr. James Brown, of New York, wrote on t h e same
day, inclosing a criticism of Mr. Chase's report. 0 H e
seemed t o think t h a t it was expected t h a t t h e Treasury
should derive direct benefit from the notes to be furnished b y t h e Government to the proposed national
banks. This is shown by t h e title which he gives to his
analysis, viz.: "Analysis of the report of Mr. Secretary
Chase, so far as it relates to raising $150,000,000 by
substituting treasury or government notes in lieu of, or
for, t h e b a n k notes now in circulation."
W. D. Gallagher, wrote from St. Louis, December 13,
1861, 6 commending t h e report and saying t h a t m a n y
people t h o u g h t t h e recommendations ought to be adopted
and t h e unsafe and fraudulent local currency be utterly
and forever driven out of circulation.
G. W. Gorum wrote from Newark, N. J., December
16, i 8 6 i , a suggesting a plan for nationalizing banks,
which was similar to t h a t proposed by Secretary Chase,
b u t which apparently contemplated t h e emission of
t h e national currency to state banks to t h e full value of
a

MS. Chase Letters, Library of Congress.
& MS. Chase papers, Pennsylvania Historical Society




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the bonds deposited with the Government, and with no
suggestion of national incorporation.
Hon. Amasa Walker wrote from North Brookfield a the
same day expressing approval of Mr. Chase's project,
which seemed to him a noble and a beneficent one. He
hoped Congress would give the matter careful and dispassionate consideration.
E. K. Alburtis wrote from New York, a December 17,
1861, inclosing a printed document published by him,
in which the emission by the Government of as many
legal-tender notes as were required to place its financial
wants at ease was advocated and the proposition to
drive out state issues on state stocks was opposed.
James W. Taylor wrote from St. Paul, December 24,
1861,a calling Mr Chase's attention to a review of the
Secretary's report written by J. J. Knox, which was
then being published in the St. Paul Daily Press.
Some of the material used by Mr. Knox in this review
was also made use of in an article in Hunt's Merchant
Magazine in January, 1862. In this discussion the
author enumerates the objections as well as the advantages of Mr. Chase's plan, which on the whole meets with
his approval. He is somewhat satirical when he speaks
of the voluntary conversion of the state banks to the
system through inducements to be offered them. " What
these inducements are does not appear," he says, " b u t
they may perhaps be found in the proposed tax act,
where in company with distilled liquors, tobacco, carriages, etc., bank notes will be seen. The fact that




a MS. Chase Letters, Library of Congress.
52

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state bank notes would be taxed while United States
bonds and notes would be exempt would also be. in his
judgment, " no small inducement."
Isidor Bush wrote from St. Louis, December 28, 1861,
as follows:a "Your report has induced me to explain to
my German fellow-citizens the great, lasting, and beneficial revolution in our monetary system which we may
anticipate from the adoption by Congress of your plan
* * *." Inclosed with this was a newspaper clipping from the Daily Democrat of December 27, 1861,
headed "The Report of the Secretary of the Treasury.
A Revolution in Our Monetary System." (Translated
from the Mississippi Blatter, December 15, 1861.) The
writer attributes the suffering under the swindling of more
than 1,500 banks, from more than 30 different States,
with contradictory and ruinous banking laws, to the states
rights doctrine, and thinks that this "revolution," as he calls
it, must destroy the fatal mania of the sovereignty of the
several States. He is of opinion that Mr. Chase's plan
will be adopted, for the reason that it is the most feasible
way to raise the loans necessary for prosecuting the war
to a successful issue. It makes it for the interest of
capitalists, of the money power, and of banking institutions to uphold and sustain the credit of the Government.
It would increase the common interest for the preservation and safety of the Union.
John D. Martin, of Lancaster, Ohio, wrote, December
31, i86i, a advocating the indefinite emission of greenbacks to pay government expenses.




a

MS. Chase fetters, Library of Congress.
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TREASURY NOTES REFUSED.

William G. Thomas wrote from Baltimore a the same
day, saying that a five-dollar treasury note payable in
New York had that day been refused by the Baltimore
Gas Company, a company controlled by enlightened men
in financial matters, who were friendly to the Government. He recommended the prompt emission of $300,000,000 in demand notes, receivable for all public dues,
except import duties, which should be continued to be
paid in specie. The notes should be a legal tender. It
should be understood that they were not to be increased
under any circumstances. The effect would be to drive
out of circulation the good and the worthless notes of
state banks and possibly compel the banks to wind up.
Meantime Mr. Chase's scheme might be put into operation.
POTTER'S PLAN ADOPTED.

The subject as laid before Congress by Secretary Chase
in his report, December 1, 1861, was practically in the
same form as that in which it 'had been presented for his
consideration by Mr. Potter in his letter of the 19th of
August, 1861. It corresponded also with the suggestions
in Mr. Lord's pamphlet, dated November 22, 1861, of
which it must be said that the quoted remark to the effect
that the author thought that his suggestions tallied with
Mr. Chase's opinions indicates clearly that the project
then presented by him could not be considered novel, and
perhaps was not original. He was, in other words, bringing to the Secretary's attention something with which the




a

MS. Chase Letters, Library of Congress.
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Secretary was already familiar. Mr. Gorum's proposition, submitted December 16, 1861, differs so little from
t h a t incorporated in t h e finance report t h a t t h e suggestion
naturally arises, H a d t h e writer read t h a t report? All of
these proposals were founded upon the use of existing state
institutions as mediums for distributing a national currency secured by government bonds.
MR. SPAUIvDING PREPARES A B I I X .

At this time, according to Hon. E . G. Spaulding, Mr.
Chase had n o t prepared any bill incorporating his views.
I n an address, in 1876, to the Bankers' Association, entitled b y Mr. Spaulding " O n e hundred years of progress
in t h e business of banking," he narrated a t some length
his connection with t h e bill which was ultimately introduced in the House in consequence of the recommendation of the Secretary. The report of t h e Secretary was
referred, he said, to the subcommittee of Ways and
Means, of which he was chairman, the other members
being Mr. Hooper, of Massachusetts, and Mr. Corning, of
New York. Mr. Chase, when asked for a bill incorporating his recommendations, requested Mr. Spaulding to prepare one. Such a bill, Mr. Spaulding said, was prepared
b y him during t h e holidays in December, 1861, of which
200 hundred copies were printed for t h e use of the Committee of W a y s and Means. In proof of which, Mr.
Spaulding then quoted from t h e report of Hon. J . J . Knox,
comptroller in t h e year 1876, a statement incorporated
therein, which corroborated his assertion. At this meeting
of t h e Bankers' Association Mr. Spaulding exhibited a




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copy of the bill to his audience. When he published his
History of the Legal Tender Paper Money, etc., he repeated
this statement as to his connection with the framing of the
bill, and added that he then sent to Governor Cornell
for a copy of the New York currency act. He further
announced in this work that he had still in his possession
several copies of his bill. Other matters intervened in
Congress, and he did not introduce the bill in the House,
but left it for future consideration. The suspension of
the banks on the 28th of December made their notes
uncurrent, and under these circumstances Mr. Spaulding
not only dropped the national-bank question, but he
introduced into the House of Representatives the legaltender act, which for a time monopolized his attention.
This act became a law February 25, 1862.
MR. HOOPER INTRODUCES A B I U , .

The banking bill being thus hung up in the Ways and
Means Committee, the matter was taken up by Mr. Hooper,
and July 11, 1862, he introduced in the House a bill to
provide for a " National currency secured by a pledge of
United States stocks," etc. On the 16th, after meeting
with some opposition, he secured the passage of a resolution authorizing the printing of 5,000 copies of his bill.
It is this bill with which any study of the national banking
system has to do, for although the law which was passed
the next February after this was known as the Sherman
act, it was in fact the Hooper bill with a few changes, and
it was probably introduced in the Senate, because Thaddeus Stevens, of the Ways and Means Committee, had reported on the 3d of August in the House against the bill.




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It may indeed be said to have been in substance the
Spaulding bill as well,for Spaulding says in his "History
of the Legal Tender Paper Money," etc., that the bill introduced by Mr. Sherman was his own bill, except that it
had been altered and amended in several important particulars. There were 61 sections in the original bill and
65 in the Sherman act. Of these, the sixty-second, which
was an added section, is the most remarkable. The original bill was drawn with the intention of bringing the
emission of national currency under national control, and
provision therefore was made for the organization under
the law of institutions which desired to emit notes according to its terms. Section 62 provides that any existing
bank at the date of the passage of the act, being the holder
of United States bonds to the extent of 50 per cent of its
stock, could transfer the bonds or any part of them to
the Treasurer and receive circulating notes to the extent
of 80 per cent of the amount of the bonds.
SILAS M. STlWKlvI, TAKES A HAND.

There is in the Boston Public Library a pamphlet
entitled " Private History of the Origin and Purpose of the
National Banking Law and System of Organized Credits
for the United States, with Comments by the Author.
New York, 1879." Attached to the volume is a manuscript letter addressed to Robert C. Winthrop, in which
Mr. Silas M. Stilwell says that " this letter "—the pamphlet
is in the form of a letter—"was called for by Mr. Buckner,
in consequence of claims of authorship by several persons
since the death of Mr. Chase."




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The pamphlet itself is dated "New York City, April 20,
1879," and is addressed to Hon. A. H. Buckner, chairman of the Committee on Banking and Currency, Washington, D. C.
The author, after a few paragraphs by way of introduction, says: "As a reply to your third question, 'Who is
the author of the national banking law?' I send you a slip
from the New York Graphic, which will also explain to you
why, with a weight of years pressing upon me, I still continue to defend and advocate this great and unequaled
credit system."
MR. JORDAN P R E P A R E S A BILL.
[Special dispatch to the Graphic]
WASHINGTON, September 21,

1878.

I called yesterday upon Edward Jordan, the confidential friend of
Mr. Chase, late Chief Justice. When Mr. Chase became Secretary of the
Treasury in 1861 he invited Mr. Jordan to become Solicitor of the Treasury.
Mr. Jordan occupied this office and remained at the head of the law bureau
of the Treasury until 1869. I had been told that Mr. Jordan was the author
of the original bill introduced into Congress, under which the national
banking system was organized. After a few words of introduction I asked
him to give me the history of the origin of the national banking law.
Said he, in reply: " L a t e in the year 1862, December, I am quite sure, Secretary Chase introduced me to Silas M. Stilwell, of New York City, asking t h a t
I would hear Mr. Stilwell's views in regard to a national system of banking
to supersede the state banking system * * * . Mr. Stilwell spent two
or three days in elaborating his views to me, as he had previously with Judge
Chase, and concluded by submitting a draft or bill embodying them * * *
I was directed by Judge Chase to prepare a bill to be submitted to the
Committee of Ways and Means of the House of Representatives. I n
accordance with Judge Chase's directions, I prepared a bill, using Mr. Stilwell's materials."
NOTES EXPLANATORY OF T H E SYSTEM.

Mr. Stilwell then goes on in the pamphlet, as follows:
" Early in the winter of 1862 and 1863 I visited Washington/' following which comes a long and confused




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account of his relations with Mr. Chase and the advice
which he gave him, in the course of which he refers to the
legal-tender act in such a way as to show that he has postdated his visit to Washington one year in this account.
Perhaps in this he was misled by the date given by Mr.
Jordan in the account in the Graphic, but so far as his
own story is concerned the error is manifest. While it is
obvious from his own language that he made this error of
date, there is other evidence to be found that it is an
error in a letter from Stilwell, dated at the Treasury Department, January 24, 1862, offering his services to James
Gallatin as a correspondent.a In the course of this
account he describes the preparation by himself of a
pamphlet treating of the financial situation, at Mr. Chase's
request, of which 30,000 copies were printed by the Public
Printer for distribution. This doubtless was "Notes
explanatory of the system of national finance and currency proposed by the Secretary of the Treasury. Washington 1861: Printed at the Government Printing Office."
This pamphlet is attributed to Stilwell in "Appletons'
Cyclopaedia/' and is evidently the one referred to in the
St. Paul Press of December 29, 1861, in the following:
"A pamphlet has appeared from the Government Printing Office, understood to be from the pen of Silas M. Stilwell, of New York, which discusses Secretary Chase's
plan for a system of national finance and currency, and
the additional propositions now made by the Secretary
to enable all existing banks and associations to become
national institutions. In the opinion of the writer




a

MS. Chase Letters, Library of Congress.
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* * * the Secretary's plan will furnish for the nation
all the credit and money that a prudent administration
ought to require to conclude the war with an honorable
peace * * *."
The pamphlet develops the idea that the use of national
stocks as a fund for the security of a national currency
will at the same time create a demand for them on the
part of investors, touches slightly on the argument of the
value of the uniform currency which would thereby
accrue, and sets forth the advantages to be obtained from
the banks being available as government depositories.
The patriotism of readers is also invoked in an appeal
"To banks, bank officers, stockholders, farmers, mechanics, manufacturers, merchants, laborers, lawyers, physicians, clergymen, and every other class and calling
* * * ." Apparently Mr. Stilwell felt called upon to
publish still another paper on this subject, for there is such
a publication in the Boston Public Library, bound in
with "Notes Explanatory," etc. It is dated January 6,
1862, and winds up with the statement that "The object
of this paper is to make plain what many did not understand from the pamphlet." This was apparently to
show that "the object to be obtained by this system of
banking is to provide a plan that will create a demand
for bonds and thus fund, in this way, as many demand
notes as possible." While it could not be expected that
the banks should at once become heavy purchasers, the
author thought that when they did others would follow
them, probably fast enough to furnish the treasury with
$250,000,000.




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T H E STlIvWEUv, JORDAN, SPAUIvDING, HOOPER BIUv.

That Mr. Stilwell's services were invoked by the Treasury Department for work in connection with the preparation of a bill to carry out the intentions of the Secretary
is beyond dispute, and in all probability his work is to be
found incorporated in the bill known as the Hooper bill.
If Mr. Stilwell's date is carried back one year, it necessarily
carries back Mr. Jordan's with it, since they cooperated,
and this again agrees with the date that Mr. Spaulding
sets for the time devoted by himself to the preparation of
the bill. When Mr. Spaulding asserts that he prepared
the bill, he does not necessarily mean that he himself did
all the work in that connection. He means merely that
he was devoting his attention to the subject, guiding and
controlling others in shaping the proposed legislation
according to his views, and it is quite reasonable for him
to assume as his work that in which other government
officials participated and in which he merely cooperated
as an overseer and director. His claim for participation
in the authorship of the bill is not inconsistent with his
permitting it to slumber in the hands of the subcommittee
after he discovered that Thaddeus Stevens, chairman of
the committee, was utterly opposed to it. It is not
unlikely then that the Stilwell bill, the Jordan bill, the
Spaulding bill, the Hooper bill, and the Sherman bill are
practically one and the same thing. In that event we
should have one who was familiar with the state legislation under which an experience of a similar character to
the proposed scheme had been successfully prosecuted,
furnishing from this knowledge the necessary outlines for




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a bill; another representing the Treasury Department,
safeguarding the provisions affecting the custody of the
bonds and the control of the emissions; and a third conversant with the methods of the House, watching the details
to see that they were in sympathy with the customs of
that body. Mr. Spaulding records his abandonment of
the bill in its early stages in the committee. It was then
taken up by Mr. Hooper, and notwithstanding Mr. Spaulding's statement that it embodied Hooper's views, it is
not unlikely, now that he had become sponsor for the
bill, that he added to the work of so many hands a few
finishing touches of his own. The amendments and
changes afterwards made that mark the differences between
the House and the Senate bill were most of them unquestionably made at the demand of Mr. Sherman, as we
shall see later.
OPPOSITION OK BANKS.

If we recur to Mr. Chase's words when he submitted to
Congress his plan for nationalizing the banks of the
country, we shall see that he entertained " the hope that
the plan now submitted if adopted" * * * will
"impart such value and stability to government securities that it will not be difficult to obtain the additional
loans required for the service of the current and the succeeding year at fixed and reasonable rates * * *."
This was, of course, dependent upon the immediate passage of the proposed legislation and the voluntary acceptance by existing banks of the opportunity to reorganize
under its terms. The opposition in Congress was so
powerful that it was evident that nothing could be accom-




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plished for the time being, and as this opposition was
doubtless inspired by the banks the corollary was evident
that the banks themselves would not cooperate with the
Secretary in securing for him the benefits which he thought
would accrue from their support. of his project. The
"bond market," which up to this point had been a conspicuous feature of his advocacy of the scheme, though
not necessarily his principal motive, became from that
time of less importance. The strength of the "uniform
currency " motive was also dependent upon the cooperation of the banks, and the acceptance by the country of
the greenbacks furnished a partial equivalent for such a
currency, with, however, the disadvantage that the inflation of the currency by the Government produced a
corresponding inflation on the part of the banks.
MORE LETTERS OF ADVICE AND SYMPATHY.

The submission of Mr. Chase's scheme to the public
brought forth comments and advice from many quarters.
Mr. James Brown, who had already written once from
New York, wrote from Brooklyn on the ist of January,
1862,0 and inclosed a plan prepared by him for the
emission of government notes. The proposed plan
involved a reserve fund and a sinking fund, and was accompanied with an argument against Mr. Chase's scheme.
S. Sturgis & Sons, of Chicago, on the 20th of January,
i862, a said that demand treasury notes were what were
needed. The people of the Northwest were with the
Government and against the banks. They suggested that
a MS. Chase Letters, Library of Congress.
29582—10




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all banks of issue should be taxed 10 per cent per annum
on their circulation, and they called attention to the fact
that government credit was suffering by delay.
The Chicago Tribune of February 5, 1862, quoted
from the special correspondence of R. J. Walker in the
New York Times, the following exposition of the great
evil of inflation arising from the uncontrolled power of
banks to emit bills. " Necessity and sound policy alike
demand the adoption of Mr. Chase's well-guarded, free
banking system, as a means of averting impending peril
* * *." " The first inquiry of the reader, doubtless, is how
will the adoption of such a plan sustain the public credit ?
I answer, by restricting the amount of paper currency
afloat, keeping it entirely within control of the Government,
correcting the present great redundancy and inflation, and
checking the disastrous competition between local banks
on the one hand and the Treasury on the other, in the
matter of putting afloat their respective paper * * *."
E. Littell, Boston, February 7, 1862,° in the belief that
the hope of banks absorbing stocks as security for notes
to be furnished by the Government had now passed,
recurred to his plan for creating a circulation of gold
drafts for interest money on the various mints, the same
to be drawn in denominational sums for $5, $10, etc.
"Enoch T. Carson, of Cincinnati, wrote February 9,
i862, a expressing sympathy with Mr. Chase, and saying
that the people were with him, believing that it was a
fight between the Government and the banks, and that
Mr. Chase represented the people in the struggle.




.0 MS. Chase Letters, Library of Congress.
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On the ioth of February, 1862, Mr. Chase addressed a
letter to Hon. William P. Fessenden,® in which he said
that while it was desirable to keep down the interest
charges by furnishing at that time as many government
notes in small denominations as were needed for circulation, still he thought that the real relief from the situation
was to be found in a banking system organized on the
basis of specie payments, secured by deposits of government bonds and suitable legislation * * *. " I n my
judgment,'' he says, " a s per cent bond, capable of being
used as a basis of circulation, would be worth more in the
market than a 6 per cent bond without that capacity."
Joseph Medill, of the "Chicago Tribune," wrote again,
May 30, 1862,h urging the emission by the Government of
small bills and the severe taxation of banks.
John C. Hamilton, June 27, 1862,b addressed Mr. Chase
from the Saratoga Springs, calling attention to the opposition of the superintendent of the banking department of
the State of New York to Mr. Chase's scheme, because of
the loss that would take place on the sale of state stocks
held by the state banks as security for their issues. He
hoped that Mr. Chase's plan might ignore the state banks
by a general authorization under national authority.
October 7, 1862,° Mr. Chase wrote to John Bigelow
inclosing a copy of the proposed bill and explaining its
probable effects. He called attention to the fact that the
a Treasury Department files, correspondence from the Treasury Department to individual Members of Congress, May 14, 1859, to February 28,
1866.
& MS. Chase papers, Pennsylvania Historical Society.
c An Account of the Private Life and Public Services of Salmon Portland
Chase, Cincinnati, 1874, by Robert Bruce Warden, pp. 502-503.




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circulation of government notes had "not displaced that
of banks as yet, but on the contrary had actually caused
it to increase." His plan would "bring to the support of
the public credit the whole banking interest of the country." It would open " a gradually enlarged market for
the securities of the Government, and thus sustain their
credit at the highest point." If the war was prosecuted
actively and expenditures were economical " t h e adoption
of the system would furnish all the money that is needed
at reasonable rates * * *."
November 13, 1862, Hon. Samuel Hooper inclosed two
articles from the London Globe, written by Mr. Latham,
the governor of the Bank of England, a which he had
caused to be republished because they gave the most
candid and clear statement he liad seen of the condition
of the currency here and the character of the measure
proposed. The articles themselves are unfortunately
missing, but they can be easily identified with two communications to the Boston Evening Transcript, one
November 8, the other November 14, 1862. They
touch but lightly on the subject that we are specially
considering.
Morris Ketchum wrote from New York, November
29, 1862,a urging Mr. Chase to go ahead with his banking
plan, which would provide a resting place for a large
amount of government securities and furnish the country
with a stable and uniform currency. Great caution
would, however, be necessary in making the change, and
it would be well to relieve the money market by a further
0 MS. Chase papers, Pennsylvania Historical Society.




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emission of greenbacks. Without an easy money market
the change would be accompanied by great distress. It
should of course, as far as possible, be voluntary.
FINANCE REPORT DECEMBER, 1862.

In December, 1862, Mr. Chase issued his second annual
report as Secretary of the Treasury. He set forth, in clear
language, the necessity of abandoning a gold basis, forced
upon him by the increasing discount of loans which he
sought to negotiate. The absolute unreliability of the
bank notes in circulation was disclosed in impressive
language, and he dwelt upon the fact that owing to
their freedom from control the banks were enabled to
meet every demand upon them by new emissions of notes,
thus increasing their depreciation with every loan that
might be effected through them. This had led him to
prefer to make use of government notes alone. While
thus expressing preference for these notes over those of
the banks, he repeated the opinion expressed in his previous report that a circulation furnished by the Government, but issued by banking associations organized
under a general act of Congress was to be preferred to
either. Such a circulation, uniform in general characteristics and amply secured as to prompt convertibility by
national bonds deposited in the Treasury, would unite,
in his judgment, more elements of soundness and utility
than can be combined in any other.
"The central idea," he said, "of the proposed measure
is the establishment of one sound uniform circulation
of equal value throughout the country upon the foundation of national credit combined with private capital.




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The organization proposed would require within a very
few years, for deposit as security for circulation, bonds
of the United States to an amount not less than
$250,000,000 * * *.. Should Congress see fit to restrict
the privilege of deposit to the bonds known as fivetwenties, authorized by the act of the last session, the
demand would soon promptly absorb all of that description already issued * * *."
He then went on to say that it was not in immediate
results that the value of this support would be only or
chiefly seen. He looked for a future support of the
prices of bonds through the continuous demand thus
created for them.
" Another advantage to be derived from such associations would be found in the convenient agencies which
they would furnish for the deposit of public moneys,"
and he added that inasmuch as their bills would be received for all dues, except customs, such agencies would
"constitute the best and safest depositories of the revenue
derived from such receipts. ,,
"Iyittle direct aid," he said, "is, however, to be expected from this plan during the present, nor very
much perhaps during the next year * * * ." "The
immediate advantage to the Government will be found
in the market created for bonds, and the support thereby
given to the national credit. The more general advantages which have been described must attend the gradual
organization of banking associations when the national
circulation furnished to them shall become the established
and sole national circulation of the country."




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H O W THE REPORT WAS RECEIVED.

Hon. Samuel H. Walley wrote Mr. Chase from Boston
December 9, 1862," saying that this banking scheme
will give no aid now, but would not be objectionable
with some alterations.
On the 10th of December, 1862,b Mr. Chase wrote
John J. Cisco, asking him if he could not procure from
leading financial gentlemen who favored the national
banking plan some expression of their views which
should be addressed to the members of the financial committees. " I am firmly convinced," he said, " t h a t the
adoption or nonadoption of this plan is the turning
point of credit or discredit. If it be adopted, the finances
can be placed on a firm and satisfactory footing. If it
be not adopted, the finances are delivered rudderless
to be tossed helplessly on the gulf of irredeemable currency by conflicting gusts of opinion until the inevitable
wreck." Just one month after this letter was sent there
was a meeting of financiers at the residence of Mr. Cisco,
possibly the outcome of it. Apparently it did not
accomplish much, for the "New York Journal of Commerce" of Monday, the 12th of January, satirically observed that the meeting "might have been a success as
a social gathering, but we fear has not contributed largely
toward the replenishing of the treasury."
December 13, 1862/ Mr. Chase wrote Joseph Medill,
saying: "Give us the plan and I can borrow. Without
a MS. Chase Letters, Library of Congress.
& MS. Chase papers, Pennsylvania Historical Society,
c MS. Chase papers, Pennsylvania Historical Society.
letter is printed in Schucker's Life of Chase.




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it I can not borrow except at enormous sacrifices. Give
me the plan and I can carry on the Government to the
close of the war, I hope, successfully. Without it there
may be success, but I don't see it * * *. "
In a letter to William C. Bryant, bearing date the
same day,° Mr. Chase said that his support of a national
system of banking association might be justified under
the circumstances even if the plan were intrinsically
defective. "The support of the demand which will be
created," he said, " b y the enactment of the plan for bonds
will enable the Government to borrow at reasonable
rates. Without that I see nothing less than the Serbonian bog before me for our finances."
Hon. Robert J. Walker, on the 19th of December, 1862,
issued a brochure, entitled "Review of our Finances and
of the Report of Hon. S. P. Chase." In this*he said:
" W e are upon the verge of ruin. We are hanging over
the gulf of an irredeemable paper system. * * *
Never did any representative assembly encounter so
fearful a responsibility as the present Congress. * * *
What can Congress do? They can consider at once
this great financial question uninterrupted by any other
measure until there shall have been action complete
and decisive. * * * If my words be too bold, let
them be attributed to my profound conviction that the
American Union is in extreme peril and that its downfall
involves the final catastrophe of our country and of our
race. * * * The bill organizing the new system
presented in Congress by Mr. Hooper last summer is
o A Biography of William Cullen Bryant; with Extracts from his Private
Correspondence. New York, 1883. Vol. I I , p. 185.




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drawn with great ability, and it is much to be deplored
that (with some amendments) it had not then become a
law, when it would have been much more easily set in
operation and would have saved hundreds of millions of
dollars to the Government. ,,
On the 23d of December Mr. Chase wrote Hon. Thaddeus
Stevens, chairman of the Committee of Ways and Means,®
urging the favorable consideration of the banking act.
"Under existing legislation," he added, "it is next to
impossible to collect the internal revenue in lawful money
of the United States; and I see no ground for belief that
the funds necessary for the pay of the army and the prosecution of the war can be in any way provided without
the support to public credit expected from that measure."
MR. CHASE SEEKS FOR HElvP.

Oberholtzer states that Mr. Chase actively sought the
support of Jay Cooke for this bill, h and quotes from Cooke's
"Memoirs" a statement that he and his brother Henry
after carefully examining a copy of the bill, which had
been submitted to their consideration about this time,
decided to support the measure. They thereupon began
a campaign with the press and made personal appeals to
Senators and Representatives.
January 7, 1863,° while the bill was still pending, Mr.
Chase wrote a letter to Mr. Fessenden relating to financial
« Treasury Department files. Letters from the department to committees
of Congress. February 1, i860, to May 20, 1864.
b Jay Cooke, Financier of the Civil War, by Ellis Paxson Oberholtzer.
Philadelphia, 1907, Vol. I, pp. 331, 332.
c Treasury Department, letters from the Department to committees of
Congress, February 1, i860, to May 20, 1864.




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legislation in which he said, "No measure, in my judgment, will meet the necessities of the occasion and prove
adequate to the provision of the great sums required for
the suppression of the rebellion which does not include a
firm support to public credit through the establishment
of a uniform national circulation secured by bonds of the
United States."
On the 17th of January, 1863,® President Lincoln took
advantage of a message to Congress on financial matters
to add a few words in favor of " a uniform currency in
which taxes, subscriptions to loans, and all other dues,
as well as all private dues" might be paid. Such a currency could be furnished by banking associations organized under a general act of Congress. The pledge of
United States bonds to secure circulation would facilitate
loans. He urged the early passage of the bill.
PRELIMINARY DISCUSSION I N T H E

HOUSE.

Mr. Hooper had, as we have already seen, introduced
in the House July 11, 1862, "A bill to provide a national
currency secured by pledge of United States stocks,'' etc.
On the 8th of January, 1863, he secured unanimous consent to introduce " A bill to provide a national currency
secured by pledge of United States stocks and to provide
for the circulation and redemption thereof." The details
of the new bill are not known, but it is quite probable
that parliamentary reasons dictated this movement. One
clew to the bill that was probably presented at that time is
to be found in the title to the pamphlet containing the
a Richardson's Messages, Vol. 6, pp. 149, 150.




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Hooper bill. It contains the following words: "Submitted to Congress in December, 1861, and December,
1862." There was no separate discussion of the bill at
that time but it was taken up in the House by several of
the speakers in connection with the "bill to provide ways
and means/' etc.
Mr. Morrilla opposed the bill It was directed against
the country banks. It would force the state bonds
already deposited against circulation on the market in
competition with United States securities.
Mr. Gurley,6 of Ohio, thought the legal-tender notes furnished a uniform currency and regarded as serious the
throwing on the market of the bonds now deposited as
security for the circulation of state banks.
If Mr. Sherman was the sponsor for the bill in the Senate, Mr. Hooper was its backer in the House. While he
had neither the influence nor the power of Mr. Sherman,
he was greatly respected as a man of conservative opinions, whose judgment upon financial matters was likely to
be sound, and Mr. Chase was fortunate in securing him as
the principal advocate for the passage of the bill.
Mr. Hooper c said: " If this banking law is rejected the
Government has no control over the depreciation of the
currency, for just in proportion as the amount of the
United States notes is increased the bank circulation,
which is redeemable in those notes, will be augmented,
^nd both will depreciate together."
«Congressional Globe, January 13, 1863, pp. 295-297.
& Congressional Globe, January 15, 1863, pp 341, 342.
cCongressional Globe, January 19, 1863, pp. 384-387.




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The value of the banks as fiscal agents, where deposits
could be made, against which drafts could be drawn by
the Treasury in the ordinary course of business was dwelt
upon. The uncontrollable nature of the currency situation now furnished the rebellion one of its main supports.
"The revolted States/' he said, "could never have inaugurated this rebellion without the currency of state
bank notes for circulation, and we must deprive them
hereafter of this ready aid for treason/'
"Another of the important benefits which the Government would derive from this system of national banks
would be the amount of United States stock which would
be absorbed to be used for its circulation." The sale to
the banks would affect the whole market, and it would be
sound policy to avail of it.
Mr Walker a was not ready to give his assent to such a
system. He thought the Secretary of the Treasury had
admitted that it would not do much good.&
Mr. IyOvejoyc believed in taxing banks out of existence.
Hon. Samuel H. Walley wrote from Boston,** on the
17th of January, 1863, disclaiming hostility to the banking act and saying that there would be perfect willingness
to give it a trial if the bill were amended in some respects.
"Whenever our affairs are in better condition," he says,
"you will find no difficulty in summoning aid to your
bank scheme."
a Congressional Globe, January 19, 1863, p 392.
& A reference to a speech of Mr Walker's prepared a t a later date for
delivery in the House, in which he supported the bill, will be found chronologically arranged under date of May, 1863
cCongressional Globe, J a n u a r y 22, 1863, p. 460.
dMS. Chase Letters, Library of Congress.




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January 22, 1863, Mr. Chase wrote Charles A. Hecksher
of New York, a to the effect that the trouble in the situation was the divorce of the Government from control of
the currency. If the currency were under regulation of
the Government and were receivable for taxes, then the
banking associations could become depositories. " I have
no doubt," he added, " t h a t the bonds would be so
strengthened that loans would be comparatively easy and
the great evils of an exceedingly redundant currency
averted * * *."
SENATOR SHERMAN'S AID SOLICITED.

January 23, 1863, Henry D. Cooke wrote 6 "in the
strictest confidence" to Jay Cooke, "Governor C. expressed the greatest anxiety that Sherman should take
hold of his bank bill and asked me to use my influence
with him to do so. I had an interview with S. last evening and again to-day. Sherman has not positively promised to champion the bill, but from his talk to-day I think
he will do it. I am sure he will do so if Governor C. will
consent to two slight modifications, viz, restricting the
charter (which at present is perpetual) to twenty years,
to prevent inflation limiting the amount of circulation to
be issued and apportion it among the States. I will get a
definite answer from Sherman to-morrow, and meanwhile
am to see the governor about S's proposed modifications. " Since all of these limitations and amendments
a The Life and Public Services of Salmon Portland Chase, by J. W.
Schuckers. New York, 1874, pp. 384, 385.
& Oberholtzer's Cooke, the Financier of the Civil War, Vol. I, pp. 332, 333.




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are to be found in the act as passed, it is evident that Mr.
Sherman carried his point.
On the 27th of January, 1863,® Mr. Chase addressed
a letter to William P. Mellen, then at Cincinnati, in which,
speaking of the passage of the bills, he said, "With it,
success is possible and probable. Without it, failure is
probable, if not certain. "
January 30, 1863,6 Hon. W. P. Fessenden wrote as
chairman of the Senate Finance committee to Secretary
Chase asking him to give his views to the committee on
the House bill " to provide ways and means to support the
Government," with the request that he consider the bill
as a distinct measure, entirely disconnected from the bill
submitted by Mr. Sherman " t o provide a national currency/' Mr. Chase replied February 2, c saying that it
was, in his judgment, "impracticable to frame any measure which will work satisfactorily in the absence of proper
regulation of the currency. "
Mr. Chase received from Horace Greeley on the 30th
of January, 1863,^ a letter approving his plan for banking and national securities. Mr. Greeley added that he did
not believe any measure could be adopted by Congress
that could help the credit of the Government at any tolerable standard if the war were not ended within the next
six months. He believed we were on the very brink of a
o Schucker's Life of Chase, p. 286.
& Treasury Department Files. Senate Committee on Finance to Treasury Department, 1862. W. P. Fessenden, chairman, etc.
c Treasury Department. Correspondence from the Treasury Department to committees of Congress, February i, i860, to May 20, 1864.
d
MS. Chase papers, Pennsylvania Historical Society.




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financial collapse and a copperhead revolution, and that we
must have crushing victories or a ruinous peace very soon.
February 5, 1863,0 Mr. Chase, in a letter to T. C. Day,
showed signs of impatience at the prolonged opposition
of the banks. He wrote as follows: "The tax on bank
notes will, I think, be imposed. The demand for it from
the people is, happily, too strong to be resisted. With
this and the banking system, which will root out the
heterogeneous local banks, and give us a uniform currency.
* * * I hope we shall get along * * *."
The Philadelphia Bulletin summed up the advantages
to ensue from the passage of the banking bill, on the 7th
of February, 1863, in the following order: (1) A uniform
currency; (2) fiscal agencies in every city; (3) the support
of government credit by sales of bonds to banks and to the
people; (4) the facilities thereby afforded for returning to
specie payments; (5) the curtailment of the circulation
of the present bank notes.
MR. SHERMAN TAKES HOLD I N EARNEST.

February j , a John Sherman wrote saying that it was
vital that the bank bill be taken up before the supply bill,
saying: " I will not guarantee the passage of the bank bill
if Fessenden insists upon first passing the supply bill."
February 10, 1863° Thomas W. Olcott wrote from the
Mechanics and Farmers Bank, Albany, saying that a friend
had said to him in a letter that Governor Chase's bank bill
with Mr. Olcott's amendments, is likely to become a law.
The writer then went on: " With the proposed amendments
a

MS. Chase papers, Pennsylvania Historical Society.




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it will be a good working bill, decidedly more encouraging
to the formation of new associations, and the more so from
leaving all existing institutions undisturbed, thus securing
a general and cordial wish for success." He then prophesied that the bank act could not afford relief to the treasury for a long time. Nor would there be enough new
organizations to act speedily as agents and depositories.
The Sherman act had four more sections than the Hooper
bill, some of these referred to the subject specifically mentioned by Mr. Olcott, when he said that with the proposed
amendments the bill would be a good one. Other than
this there was no change in the bill to which the language
used by him could have applied. In a letter of later date
Mr. Olcott refers to the fact that his name had been suggested by Mr. Chase to Mr. Lincoln, for comptroller of the
currency.
On February i2, a after Sherman's speech, which was
delivered February ioth, Henry D. Cooke wrote: " I t will
be a great triumph, Jay, and one to which we have contributed more than any other living men. The bank bill
had been repudiated by the House, and was without a
sponsor in the Senate, and was thus virtually dead and
buried when I induced Sherman to take hold of it, and
we went to work with the newspapers."
Whether Henry Cooke's influence over Senator Sherman had the full force which he attributed to it in the
foregoing letter, or whether in common with the Cookes
themselves; with other bankers; with legislators in both
houses, and with the nation at large, the impressive




o Oberholtzer's, J a y Cooke, pp. 332-333.
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nature of Mr. Chase's demand for the passage of this
bill, the support that he received from the President
and the entire Cabinet, and the chaotic condition of the
finances out of which it was hoped that through this bill
some reform could be effected, were the true causes for
Mr. Sherman's conversion, can not be stated with certainty. That Mr. Cooke's opinion, representing as he
did important banking interests which had heretofore
been opposed to the bill, should have had some weight
with Mr. Sherman is extremely probable. That Mr.
Sherman's advocacy of the bill was coincident with
Cooke's claim is also clear. That Mr. Sherman's speech
was powerful and effective is undoubtedly true, and t o .
him more perhaps than to any other person Mr. Chase
owed the successful passage of the bill at this time.
THE DEBATE.

Mr. Sherman advocated the bill because it would furnish
a uniform currency; a because it would create a market for
bonds; because through the sale of bonds thus effected the
nation would be consolidated; because it would furnish
depositories for public funds, and because the bills could
be used in payment of taxes. Greenbacks he considered
not suitable for the desired uniform currency, because
they were liable to inflation. The more of them that
were put out, the greater had been the emissions of
state banks. "The consequence has been," he said,
" t h a t while the Government has been issuing its paper
money, some of the banks have also been inflating the
a Congressional Globe, February 10, 1863, p. 843, et seq.
29582—10




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currency by issuing paper money on the basis of United
States money * * *. There is no way to check this
* * * except by one uniform currency system."
What benefit, he asked, does the United States obtain
from this system? "The first benefit is, there is a
market furnished for the bonds of the United States.
Then banks must furnish 10 per cent more of the bonds
of the United States than they receive in paper money.
This at once if the full amount is issued, which I do not
anticipate within a year, will furnish a market for
$330,000,000 of bonds, and we know very well by the
laws of supply and demand that where a demand is made
for a given article the demand extends far beyond the
particular want." He thought the passage of the bill
would "promote a sentiment of nationality," the want
of which was one of the evils of the times.
The fact that the banks could be made use of as depositories was another advantage to be derived from the
passage of the bill. Now "every collector is bound to
take what paper money he gets, and hold it in his hands
subject to all risks. He dare not under our laws deposit
it with banks. He runs all the risk of fire and accident,
and all the money he may have on hand he is responsible
for. He has no safe where he can deposit it. The
United States Government does not furnish a safe."
Under the new laws the banks could receive and care
for such deposits.
Senator Pomeroy said a that in Kansas they had no currency of their own, and in consequence they sometimes
«Congressional Globe, February 10, 1863, p. 850.




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had to pay for exchange to pay debts in the East " 2 per
cent, and 5 per cent." He would vote for it because it
would give more uniformity of currency.
Senator Henderson would, if he had the power, blot out
of existence every bank in the country,61 and would not
himself turn to a new system of banks for relief, but he
would vote for this plan, at this time, because it was supported by the Secretary of the Treasury and the entire
Cabinet as a measure essential to give character and
standing to the bonds of the United States.
Senator Doolittle thought that the practical way to
subdue the inflation then going on was for the Government " t o dominate, master, and control the currency of
this country." 6 He would "sustain the measure because
the friends of the administration look upon it as one of
those measures which will enable the Government to go
on under the great and pressing necessities of the hour."
The bill had been held up in the House by opposition
from quarters which the supporters of the bill could not
overcome, but the passage of the similar bill introduced
in the Senate by Sherman brought the subject before the
Representatives in a new form, and the same pressure
that had secured the support of Sherman operated successfully in the House. The debate there was brief.
FINAL DEBATE IN THE HOUSE.

Hon. E. G. Spaulding c would vote for the bill, although
he did not look for any considerable relief therefrom for
a Congressional Globe, February 10, 1863, p. 851.
b Congressional Globe, February 11, 1863, p. 882.
c Congressional Globe, February 19, 1863, p. 1114.




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the next two or three years. If wisely administered, he
thought the system would be of great benefit to the people and a reliable support to the Government in the
future.
In the course of the debate it was plain that the character of the financial situation was such that some who had
hitherto felt the necessity of supporting the state banks,
realized that opposition to the Secretary of the Treasury
at this time was full of meaning, and might bring disastrous consequences. For instance, Reuben E. Fenton, 0
of New York, said that in giving his support to the bill he
should run counter to his previous convictions.
Stephen Baker,6 of New York, pointed out that it was
not claimed that the passage of the bill would be of any
service to the Treasury within the space of two years.
John B. Alley, of Massachusetts, 0 thought that a uniform
currency would be an inestimable blessing scarcely less
valuable than the preservation of the Union itself. The
present tendency of inflation was toward repudiation.
Any bill that would check this was not hostile to the
banks.
THE HOOPER BII^Iv AND THE SHERMAN ACT.

The passage of the bill by the House on the 20th of
February, 1863, was followed by the President's approval
on the 25th, and there was now an opportunity to test how
far the system would in actual operation assist the Secrea Congressional Globe, February 19, 1863, p. 1117.
& Congressional Globe, February 19, 1863, p. 1141.
c Congressional Globe, February 20, 1863, p. 1146.




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tary in handling the great financial problems, the solution
of which was then forced upon him.
We may as well pause here for a moment in order to
take note of the changes which had been made in the bill
since its original introduction in the House.
In the Hooper bill, a method was specified by which
any five or more persons could form an association which
had the privilege of using a common seal, which could
adopt a name by which it could have succession and could
complain and defend in any court of law or equity as fully
as natural persons. Thus, and thus only, could associations be formed, no special provision being made for the
nationalization of state banks. The functions and privileges conferred by the act upon the associations organized
under it were in all essentials those of corporations, but
the associations were nowhere declared to be corporate
bodies. The declaration, however, that they could " sue and
be sued" "as fully as natural persons" involved this idea.
In section 30 there was a provision for winding up associations and the expression "all the corporate powers shall
cease" is there used. In section 37 the phrase "any other
incorporated company" is used in connection with the
word association. In a few of the sections the associations are spoken of as "banks and banking associations,"
but as a rule they are called simply "associations," and it
is obvious that whoever drafted the bill intended to apply
that name to them and to exclude any other designation.
TAXATION.

In the matter of taxation the Hooper bill contemplated
taxing the circulation of state banks and associations, on




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the basis of 2 per cent per annum payable in equal semiannual installments. The tax on the associations was not
laid on the circulation itself, but on the bonds deposited
to secure the circulation, and inasmuch as only 90 per
cent of the market value of the bonds could be furnished
in bills, and in no event could that 90 per cent exceed the
par value of the bonds, it is evident that there might have
been a discrimination against the associations in this
method of taxation. It was a curious way to undertake
to raise the tax, and was suggested probably because the
treasurer could simply hold back the amount when he
paid the interest money on the bonds.
The Senate was the stronghold of the banks. It would
have been impossible to have secured the passage of any
bill in that body which seemed in any way to be unjust
toward the state banks. The capitalists who owned these
banks had rallied to the support of the Government, and
their aid in the summer of 1861 had been of incalculable
service. It is not surprising to find, therefore, in the Sherman act, that the clause in the Hooper bill which brought
the state banks under the 2 per cent per annum tax on
circulation had disappeared, while the associations were
still held liable for such a tax, the same being laid this
time directly on the circulation and not on the bonds
deposited to secure it. In this form, with the associations
subject to the circulation tax and the state banks exempt,
the law went into effect. This exemption did not last
however, for more than a week. On the 3d of March,
1863, it was provided in the seventh section of an "Act
to provide ways and means for the support of the Govern-




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ment/' that all banks should pay i per cent per annum
for each half year upon the average amount of their circulation. From this tax, however, there was a sliding scale
of exemptions, running from 90 per cent of the circulation
in the case of banks having not over $100,000 of capital to
25 per cent in the case of the capital being over $2,000,000.
On the circulation thus exempt a tax was laid of onehalf of 1 per cent for each half year. This rate of taxation
was made applicable to associations organized under the
"Act to provide a national currency secured by a pledge
of United States bonds," etc., approved February 25,
1863, in order that government taxation of associations
and state banks might be equalized. A further tax of
one-eighth of 1 per cent for each half year was laid in the
act of March 3, 1863, on deposits in the hands of banks,
associations, individuals, or corporations.
There is no hint as to the origin of the proposition for
the individual liability of stockholders. The clause imposing this liability is not to be found in the Hooper bill. It
was added to the twelfth section of the Sherman act.
SHERMAN'S CHANGES.
J

The suggestions mentioned by Henry D. Cooke in his
letter to his brother Jay, that Sherman wished the amount
of the possible emissions of national currency limited, the
term of the certificate of the associations fixed, and the
right to establish associations distributed among the States
with suitable apportionment, found embodiment in the
new bill in the seventeenth section, which was an entirely
new and intrusive section. On the other hand, the




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thirty-first section in the Hooper bill, which related to the
voluntary winding up of associations and provided under
certain circumstances that they might receive back the
deposited bonds when 90 per cent of the circulation had
been redeemed, was stricken out and has no place in the
later bill. Providence, St. Louis, and Chicago were added
to the cities specifically mentioned in the bill.
SECTIONS DROPPED AND SECTIONS ADDED.

There were other changes of minor significance, but
these represent the more important differences between
the Hooper bill and the Sherman act, so far as the text
of the original bill can be used for comparison. There
were, however, 61 sections in the Hooper bill. In the
Sherman act a new section had been added and one of
the sections of the Hooper bill was dropped out. The
greater part of the sections of the two bills correspond in
number and in the subject treated in the respective sections. The last section of the Hooper bill, which was
perfunctory, was not renewed, but in its place a paragraph was inserted providing for the nationalization of
such existing state banks as should desire to avail themselves of the privilege. The sixty-second section has been
referred to heretofore. It made provision for the emission
of national currency to state banks under certain conditions, and the sixty-third and sixty-fourth sections dealt
with the subject of banks of this description. The sixtyfifth and last section was a reservation on the part of Congress to alter, amend, or repeal the act at any time.




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The opposition of the state banks had been continuous
from the outset. When Hooper secured the passage of
the order to print, it was realized that the only immediate
result to come from that order was the distribution of
copies of the bill among an interested public who might
read, ponder, and perhaps be convinced. Through the
convictions of their constituents a realizing sense of the
opportunity which was being lost might be brought home
to Congressmen.
THE MILITARY SITUATION INFLUENCES VOTES.

The first draft of the bill was probably submitted to the
Ways and Means Committee in January, 1862, and was hung
up there in the subcommittee until Mr. Hooper took the
matter up in July and introduced in the House his bill,
presumably much the same as the one already in the hands
of the subcommittee. Even then some obstructions were
thrown in the way of the passage of the routine order to
print, and the subsequent opposition of Thaddeus Stevens
prevented further progress in that body. The summer of
1862 had greatly changed the views of the people as to the
period which might be set for the duration of the war.
The failure of McClellan's peninsular campaign, followed
by the disasters in the immediate vicinity of Washington,
had brought with them a realizing sense of the magnitude
of the task which our Government had undertaken, and
had taught the people that the disadvantage of operating
upon the circumference of a circle greatly reduced the natural advantages derived from our superior control of men
and materials. How long it would take for this supe-




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riority to effect its work could not be foretold, but the
hopefulness of a speedy termination of the war had given
place to grim determination to prosecute it to the bitter
end. The battle of Antietam had settled for the time
being the question of an invasion of Pennsylvania, and the
changeable campaigns, under different generals, which
resulted in Fredericksburg and Chancellorsville, with the
alternate hopes and fears aroused by the situation, was
being conducted when the national bank act was brought
to the consideration of Congress through its introduction
in the Senate by Mr. Sherman. His brilliant advocacy of
its merits and the ultimatum pronounced by Mr. Chase that
without its passage he was powerless had led to a reluctant
adoption in the Senate. How Mr. Chase's ultimatum was
interpreted will be seen from the following extract from
the New York World of January 12, 1863: " I t is
now given out that he [Chase] will certainly retire from the
Cabinet unless his banking scheme is indorsed by Congress/ ' This was stating the case stronger perhaps than
the circumstances warranted, but at any rate it is an indication of the situation.
OPINIONS AFTER T H E PASSAGE OF T H E B I I X .

In following the debate in Congress, as we have done,
down to the passage of the bill, we have reached a point
which relieves us of the necessity of further examination
of the correspondence of Mr. Chase in our search for hints
as to the evolution of the system, if we accept the passage
of the original bill as the true birth of the system, but it
may be profitable to analyze the opinions of a few selected




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correspondents and authors in order to see what was the
effect of passing events upon their opinions as to the motives
which had led to the adoption of the bill. So, also, Mr.
Chase's retrospective views as set forth in his replies to letters of congratulation, sympathy, and advice may contribute something to aid us in forming an opinion on this
subject. Moreover, the amendatory act of 1864 repealed
the original bill, thus furnishing a new birthday for the system, and perhaps compelling us to follow the matter a
little further than we already have done.
After the passage of the bill, Mr. Chase wrote, on February 21, 1863, to Hon. Benjamin Eggleston a setting
down the benefits to accrue from the bill in the following
order: "The strengthening of the public credit; the
strengthening of the bond of union; a safe currency for
the masses; a uniform money, with some of which in
his pockets a traveler who leaves San Francisco can
pay for his breakfast on the Isthmus, for his dinner in
New York, and for his supper in Liverpool.''
A copy of a letter from Samuel Hooper to Governor
Andrew of Massachusetts, dated Boston, March 25, 1863,
is to be found among the Chase papers in possession of
the Pennsylvania Historical Society. Mr. Hooper urges
the governor to secure legislation facilitating the conversion of Massachusetts banks into national banks,
saying that Mr. Chase does not overstate the importance
of the national banking act to the General Government.
March 30, 1863, Mr. Chase wrote Messrs. W. H. Aspinwall and J. M. Forbes, a who were in London at that time,
a

MS. Chase papers, Pennsylvania Historical Society.




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having authority to negotiate a loan for the Government,
saying that he had received applications for the authorization of associations under the national banking law
from most of the principal towns in the loyal States,
including Portland on the Atlantic and San Francisco on
the Pacific. " You will readily perceive from this statement,' ' he added, " t h a t I do not regard it as a matter of
very great importance that you use the authority given
you to negotiate a loan of $50,000,000 in Europe. It is
my undoubting belief that the 6 per cent bonds of the
United States are now worth intrinsically a large premium
in gold."
In May, 1863, Hon. Amasa Walker published in the
Banker's Magazine 0 some remarks which he had
prepared for a speech in the House of Representatives,
but which he was prevented from delivering through
the application of the previous question. After having
shown that the proposed currency was full of imperfections, that at best it was a " feeble and imperfect currency/'
he, nevertheless, says he prefers it " t o that which it
is designed to supersede; because it will be uniformly
current everywhere; because there is a tax on it; because it will reduce the danger of counterfeits; because
it will aid the Government in financial operations, and
because it will identify the interests of our moneyed
institutions with the credit of the Government. ,,
It has already been stated that the understanding
was that interest on United States bonds was to be paid
in gold, and that the principal of the long-term bonds
a Banker's Magazine, vol. 12 (new series), pp. 833-43.




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stood upon the same ground, but that current obligations
would be met in currency. On the 5th of August, 1863,
George Harrington, Assistant Treasurer, officially announced to Fiske & Hatch, New York, that such was the
policy of the Government and authorized them to sell fivetwenties on that basis. This letter was published by E. G.
Spaulding in his " History of the Legal Tender Paper
Money," etc.
MR. CHASE SPEAKS I N OHIO AND I N INDIANA.

In October, 1863, Mr. Chase went home to vote in
the election held in Ohio, Tuesday, October 13. He
made numerous speeches from the platform of his car
during his trip, and at Cincinnati he delivered a long
address. A delegation sent from Indianapolis persuaded
him to visit that place, and there, too, he made a speech
of some importance. All of these speeches were reported.
From the Cincinnati and Indianapolis speeches I quote
a few passages.0
The Cincinnati address was delivered at Mozart Hall,
and in it his main theme was a uniform currency. He
said: " I have been doing something in my humble way to
promote the welfare and secure the permanence of the
reconstituted Republic. It seemed to me that if labor
was henceforth to have fair wages, it was highly desirable to have a medium of payment, a substantial, permanent, and uniform medium, so that labor should not
be cheated of its rewards. So I set myself to work to
devise a uniform currency for the whole country."
a From a pamphlet in Harvard University Library.
some newspaper.




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In the address at Indianapolis he discussed briefly
the emission of greenbacks and the bestowal upon them
of the legal-tender function, and then vyent on as follows: " B u t to perpetuate the national currency and
to avoid the disturbance of capital already invested in
banks under state laws, another step was necessary. I
therefore recommended and Congress adopted the national banking system. I think the capital of the country
employed in furnishing circulation will be organized under
this system and that, when in full operation, we shall
have no note circulating in this country which does not
bear the national imprint and guaranty. When this is
done, and only when this is done, labor will be sure to
have its just reward.'' In this speech Mr. Chase did
not refer to the creation of a market for bonds or to the
improvement of the credit of the Government as a motive for the foundation of the national banks.
DIFFERENT VIEWS AS TO THE PROGRESS OF THE SYSTEM.

On the 2d of November, Samuel Hooper wrote Mr.
Chase from Boston a inclosing with comments, a slip
cut from the London Examiner, which he thought might
interest Mr. Chase as expressing the opinions of an intelligent and experienced writer on financial subjects.
He closed his letter with the following expression of his
disappointment at the situation: " I do not like having
only small banks organized under the new law, and
regret that no large banks are yet organized in the principal commercial cities to be made depositories of public
money, as it seems to me very desirable; though I doubt
a

MS. Chase papers, Pennsylvania Historical Society.




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if any large banks here or at New York would receive
deposits of the public money on the conditions that I
understand to # be prescribed by the Treasury Department * * * ."
November 19, 1863, Mr. Chase wrote "Mr. Harrington" 0 (presumably George Harrington, his assistant),
saying: "The national banking scheme is working well.
About 130 banks have been organized. The organization of one in San Francisco is expected, and the one in
New Orleans is making good progress. It will not be
long before they exist in all parts of this country, and
then it will be an easy matter to bring all the present
capital of the state banks into it."
F I N A N C E REPORT DECEMBER, 1 8 6 3 .

In the finance report, submitted in December, 1863,
Mr. Chase referred to what he had already said about the
national banking system and added: "Except through
such a system no sure way is seen to the complete and
permanent establishment of a uniform currency; and a
system of national banking fair to all and secure for all
can only be safely and firmly established by making use
of a portion of the national debt as security for the national
currency * * *." Further on the Secretary said
that he had "heretofore expressed the opinion that
whatever may be the true degree in which the currency
of the country is affected by a bank-note circulation
issued without national sanction and by corporations
independent of national authority and not receivable for
a

MS. Chase papers, Pennsylvania Historical Society.




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national dues, it can not be questioned that in some
similar degree the negotiation of national loans must be
prejudiced and their value to the national finances
diminished. This opinion is confirmed by observation
and experience. Impelled therefore by a profound
sense of the present necessity of a national currency to
the successful prosecution of the war against rebellion,
and of its utility at all times in protecting labor, cheapening exchanges, facilitating travel, and increasing the
safety of all business transactions, and at the same time
unwilling to urge even salutary and necessary reforms
in such a way as needlessly to disturb existing conditions
or impair the value of existing investments of capital,
the Secretary recommended in two successive reports
the authorization of national banking associations, to
which the capital of the corporations now issuing notes
for circulation might be transferred, with advantage to
the parties in interest as well as to the general public
The sanction of Congress was given to these views at the
last session, and the simple assurance thus given that
henceforth the country is to have a national currency
secured by a pledge of national bonds, and the belie!
that this currency will at no distant day take the place of
the heterogeneous corporate currency which has hitherto
filled the channels of circulation at once inspired faith
in the securities of the Government and more than any
other one cause enabled the Secretary to provide for
the prompt payment of the soldiers and the public
cr editors.''




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"If the policy thus indicated shall be fairly and judicially pursued and proper measures adopted to induce the
conversion at the earliest practicable period of the bank corporations of the States into national banking associations
and of the corporate circulation into national currency, t h e
Secretary believes, and, as he thinks, not without good
ground, that all the money needed for prompt payment
of troops and for the most vigorous prosecution of the war
can be obtained by loan on reasonable terms * * *."
In this report the^number of banks organized under
the act was stated to have been 66 on the ist of October,
1863. We have seen that Mr. Chase reported to Mr.
Harrington on the 19th of November that there were
130. Small as their numbers were in comparison with the
number of banks organized under state laws, the insignificance of the number was not the real source for the disappointment which Mr. Chase must then have felt at the slow
movement of his scheme. " I do not like having only
small banks organized under the law," wrote Mr. Hooper
in his letter of the 2d of November, and when he said that,
he sounded the true cause for regret and alarm. It was
easy enough to secure a few banks of numerical designations in the principal cities, but their capitalization was
not large, and the men who furnished that capital were
not leading financiers.
ATTACK OF THE NEW YORK CLEARING HOUSE.

The new organizations were attacked on this and other
grounds by a committee of the New York clearing house
on the 28th of November, 1863. This committee was
composed of John E. Williams, president of the Metro29582—10—7




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politan Bank of New York, and John L. Everitt. The preparation of the report was attributed to Mr. Williams.
It was submitted to the clearing house at a meeting on
the 5th of December, 1863, and was accepted and ordered
to be printed and distributed. The following clause of the
report is of interest in this connection: 0 "It must have
been observed by all that the applications for banks under
this law, though numerous, are for small amounts, many
of only $50,000 or $60,000 capital. Your committee
know of very few which are designed to do a legitimate
banking business. There may be others, but from the
small amount of capital of more than a hundred of them,
and the localities of several, your committee strongly suspect them of being intended for banks of circulation only,
not regular banks for deposits and discounts, but what are
known in our Western States by the expressive term
'Wildcat banks.'" Mr. Chase had written Mr. Harrington on the 19th of November, as we have just seen, to the
effect that when the system had been established throughout the country it would be " a n easy matter to bring all
the present capital of the state banks into it." How this
was to be accomplished he did not, at this time, suggest.
TAXATION URGED.

The war cry of Medill in the Chicago Tribune had been
"Tax the banks out of existence." Lovejoy echoed it in
the House of Representatives. Mr. Chandler in the Senate, said, " I would vote an absolute prohibition tax. I
a

Report on the National Bank Currency Act; its Defects and its Effects.
New York, 1863, p. 7.




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would take possession of it [the circulation] during the
continuance of this war, and say to the banks, ' You shall
not occupy it until peace is restored/ " In July, 1861,
Mr. Chase included bank notes with ale, beer, and tobacco,
as suitable objects for taxation under the then existing
circumstances. In his report in December, 1861, he had
said, " A moderate tax on bank notes will relieve the nation
from the competition of local circulation." On the 5th
of February, 1863, he wrote: "The tax on bank notes will,
I think, be imposed. The demand for it from the people
is happily too strong to be resisted." It is possible that
Mr. Chase referred in this letter to the fact that in the Sherman act the provision made in the Hooper bill for the
taxation of the circulation of state banks was stricken out,
and he may have had in mind the possible restoration of
this clause. The strength of his language, however, would
seem to indicate the taxation out of existence of that
circulation, a measure which came in 1866.
January 2,1864, Mr. J. W. Schuckers, Mr. Chase's secretary, wrote to Mr. Hooper inclosing certain memoranda,
which Secretary Chase had dictated. a The Secretary had
gone home, and Mr. Schuckers forwarded the dictation
without waiting to incorporate it into a letter to be signed
by Mr. Chase. He (Mr. Chase) said: " I n my judgment
sufficient stress has not been laid in arguments for the
national banking system, upon the absolute necessity
of a currency in which the transactions of the Government
& Treasury Department files, correspondence from the department to
individual Members of Congress, May 14, 1859, to February 28, 1866.
MS Chase papers, Pennsylvania Historical Society, but without date and
without signature—in a letter book.




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as well as those of the people can be conducted.'' He
thought if such a system had been inaugurated promptly
it would have been entirely practicable to have negotiated
all the loans to carry on the war without suspending specie
payments.
January 23, 1864,° writing to Thomas W. Olcott, the
Secretary said that the banking act was not regarded by
him as perfect, but he was clear that the " currency of a
State should be supplied only by the nation, either directly
or by institutions organized under national law."
On the 30th Mr. Chase wrote to Joseph Medilla saying:
" I have recommended the tax you favor."
February 4, 1864, writing to Pliny Freeman, of New
York, Mr. Chase said: 6 "If I can succeed in giving a
permanent, uniform currency to the country, and carry
the nation financially through the war without failure, I
shall be satisfied, even 'though obliged to forego much
that I think desirable to the solidity and perfection of
the financial system.' "
In March, 1864, the following outspoken opinion is to
be found in a letter from Mr. Chase to Hon. Edward D.
Mansfield:0 "We must also have an exclusive national
currency. The state bank currency must be driven out
of existence." Writing to Charles A. Hecksher, March
7, 1864/1 Mr. Chase intimated that his main purpose in
urging the passage of the national banking act was to
secure a uniform currency. He said: "Then I seized
a

MS. Chase papers, Pennsylvania Historical Society.
6 Warden's Life of Chase, p. 571.
c MS. Chase papers, Pennsylvania Historical Society, the day of the month
not filled in.




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the occasion to introduce and establish a national currency * * *. To aid in accomplishing these objects,
I called the national banking system into existence/'
PRAISE FOR HOOPER AND R. J WALKER.
.

March 22, 1864, Mr. Chase wrote J. T. Trowbridge as
follows:a "I had already urged on Congress the adoption
of a system of national currency to be furnished
by associations organized under national authority
and secured by the pledge of national securities. Congress was not yet prepared for so decided a measure as
this * * *."
" A majority of both the House and the Senate Financial Committees were incredulous or hostile. Only
Mr. Hooper, of Massachusetts, a gentleman whose sound
judgment and large knowledge of financial subjects gave
great and deserved weight to his opinions, encouraged
me by open support; and the most he could do was to
obtain leave to bring in a bill authorizing a national
banking system and providing for a national currency,
and procure an order for the printing of it. Out of Congress Robert J. Walker, distinguished by his brilliant
administration of the treasury when himself Secretary
and by his great ability, gave the plan the sanction of
his approval."
March 31, 1864, the Secretary wrote the Rev. Joshua
Levitt, 0 New York, saying: "If the judicious and patriotic men of business to whom you refer would devote
their energies to inducing Congress to tax the local bank
a MS. Chase papers, Pennsylvania Historical Society.




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on et arv

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s to n

circulation out of existence, they would be much better
employed than in suggesting large sacrifices of government securities in order to create vacuums to be filled
by the expansion of the circulation."
AN EXCLUSIVE NATIONAL CURRENCY.

Writing to Horace Greeley, April 6, 1864, Mr. Chase
said: a " I t is in vain for me to strive to maintain the
public credit, and still more vain to think of keeping
down the price of gold unless we can have an exclusive
national currency, and it is vain to hope for an exclusive national currency unless we can have such
amendments of the National Banking System as will
facilitate the conversion of the state banks into national
banks * * *."
April 15, 1864, the Secretary addressed a letter to the
President 0 in which he said: "Next to taxation and
retrenchment a uniform national currency is most important. This can be accomplished only through the passage
of the national banking law now before congress * * *."
May 9, 1864, Mr. Chase wrote to S. DeWitt Bloodgood, b New York, saying: "The national banking system
is a necessary and, indeed, an inevitable step in our financial progress to a more perfect political union. Had
such a system existed specie payments would never have
been stopped."
May 27, 1864, Mr. Chase, a writing to Richard Smith,
esq., Gazette, Cincinnati, said: " I think then that the
state bank currency should be withdrawn and that no
a MS. Chase papers, Pennsylvania Historical Society,
&Schucker's Life of Chase, pp. 402, 403.




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currency should be allowed except the national. So
far as this consists of legal tenders, their issue and circulation are a direct gain to the country by a saving of
interest, and if not issued in excess the benefit would be
unmixed. So far as it consists of national banks, it is
recommended by the indispensable necessity of such
institutions to make a uniform currency permanent, by
the benefits derived from the support afforded by them
to the credit of the Government and by the convenience
and utility of these institutions to the Government."
A NEW BIRTHDAY FOR THE SYSTEM.

It has been already suggested that the repeal of the
Sherman act in 1864 might be considered as a new
birthday for the national banking system. The act
by which this was accomplished bore the same title
as the Sherman act and was passed June 3, 1864. By
its terms the Sherman act was absolutely repealed
except that organizations under that act enjoyed all the
rights and were subject to all the duties imposed by the
new act. In the new act the associations were declared
to be bodies corporate and power was given them to use
a corporate seal. While the bulk of the Sherman act
was made use of in the new act, the whole of it was rearranged and much new matter was introduced. There
are in the Treasury Department two blank books containing printed copies of the Sherman act cut up into
sections and pasted in according to the proposed rearrangement, together with sections from the "Act to
provide ways and means." Accompanying these are




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manuscript drafts of proposed additions, alterations, and
amendments where the changes were too great to designate upon the pasted slips themselves. The whole
reveals the great amount of labor involved in bringing
forth this act.
HOSTILE TAXATION OF STATE BANKS.

The subject of taxes which throughout this discussion
was^ evidently one which was full of possible contention
was treated in much the same manner as it was left by
Congress in the spring of the previous year. The act
dealt with associations alone. One-half of i per cent
on the circulation was to be paid each half year; onefourth of i per cent was to be paid each half year on
the average amount of deposits, and, in addition, onefourth of i per cent each half year on the amount of the
capital stock beyond the amount invested in government
bonds. Shares in such associations were made taxable
as personal property under state authority at the place
where the association was located and not elsewhere.
The legislation on this subject up to this time did not
bring about the voluntary nationalization of the state
banks which was hoped for and was expected from it,
but on the 3d of March, 1865, an act was passed which
sounded the death knell of the state banks, in so far as
they were dependent upon their circulation for their
existence. A tax of 10 per cent was laid upon the amount
of notes of state banks which should be paid out by any
bank or banking association after the 1st day of July,
1866. This gave the state banks a little over a year to




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get under cover. The necessity for this legislation becomes apparent if we consider that up to the 15th of
November, 1864, there had been organized only 584
banks, having a capital of $81,961,450. Less than a year
afterwards, on the 1st of October, 1865, there were 1,566
associations, capitalized at $276,219,450.
MR. CHASE WRITES W. C. BRYANT.

In seeking for the predominant motive in Mr. Chase's
mind in connection with the evolution and development
of the national-banking system we have culled from his
correspondence while Secretary of the Treasury a number
of quotations which, as a rule, seem to indicate that the
securing of a uniform currency was the uppermost thought
at this time. This is especially prominent after the passage of the Sherman act. Curiously enough the last
letter that we have from his pen bearing upon the subject
while he was still Secretary, which was written to William
C. Bryant, is capable of another interpretation. a The
letter was dated June 30,1864, after Mr. Chase had resigned,
but before he had received notice of the acceptance of
his resignation. "My grand object has been," he said,
"first to provide for the vast demands of the war, and
second the substitution of a national bank-note currency for a state bank-note currency, and through the
last, resumption of specie payments, and so permanence
and strength in the financial order * * *." At first
thought this might seem to be a recognition of the predominance in Mr. Chase's mind of the function of the




a

Schucker's Life of Chase, p. 405.
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banking system in providing a permanent market for
national securities, but more mature consideration will
probably lead to the conclusion that the Secretary was
speaking of the wider field of his strenuous labors in
meeting the obligations of the Government, rather than
of any particular method by which this might have been
accomplished. Even the furnishing a uniform currency
was "second" to providing funds to pay the army, and
the navy, and to meet current expenditures.
Passing from the contemporaneous correspondence of
the Secretary it may be of some interest to note the
impressions concerning the subject that we are considering made upon a few authors who have in a general
way devoted some attention to the affairs of this period
or have directed their investigations specially to the
career of Mr. Chase.
THE CONCLUSIONS OF AUTHORS.

Horace White in "Money and Banking," a says: " I n
1861, Mr. Chase, the Secretary of the Treasury, conceived
the plan of making the bank-note circulation of the country
a means of enlarging the sales of government securities.''
* * * "Among the advantages to be gained," he said,
"would be uniformity of style, uniformity of goodness,
and a large demand for government securities. Of these
three, the last was not the most important, although it
then seemed so."
Albert Bushnell Hart, in his life of Chase,5 said: " I n
Chase's mind a great advantage of the scheme was the
a

Money and Banking, by Horace White, p. 372.
& Hart's Life of Chase, pp. 282, 283.




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demand thus created for government bonds, and the consequent relief of legal-tender notes; and it was not his fault
that during his administration little progress was made in
the actual accepting of United States securities as a basis
for notes. A second consideration which Chase had always
in mind was the national need of a currency at once uniform and safe."
George Walker, in an article entitled "The advantages
of the national-banking system of the United States
now in force," published in the Banker's Magazine for
March, 1868, quotes from Mr. Chase's reports, a then says:
" It has been alleged that his leading motive was to obtain
a market for $200,000,000 or more of bonds, which would
be required as a basis for the new circulation, but a careful
perusal of his reports of 1861 and 1862 does not justify
this conclusion."
A letter from Jay Cooke was published in the New
York Tribune, October 23, 1867, under title of "The
origin of the national-banking system." It contains
but little to help us in settling priority of motives for
the adoption of the national ba#ks, but the following testimony to the efficiency of the system is perhaps worthy of
our consideration: " I am glad of this opportunity of bearing witness to the fact that not only in negotiating the first
$514,000,000 loan of five-twenties, but more particularly
in the subsequent negotiation of the $830,000,000 of seventhirties the country was largely indebted to the national
banks for the promptness with which the National Treasury
was supplied with sorely needed funds * * *."
a Banker's Magazine, Vol. XXII, pp. 681, 715.




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THE ORDER OF THE MOTIVES.

The completion of this review of the material at our
command calls for an analysis of what has gone before,
and a statement of the conclusion that has been reached
as to the predominant motive for the urgency with which
Mr. Chase insisted that Congress should pass the national
banking act. The various reports of the Secretary, his
speeches, his correspondence, the discussion in Congress,
the newspaper articles, and the contributions to magazines
all agree that the following were the benefits to be derived
from the passage of the bills: A uniform currency controllable in amount by the General Government, and receivable for taxes by the Treasury; a market for a large block
of government securities, and an improvement of the
national credit in consequence of the permanence of the
demand for the securities required for use under the act;
the creation of a large number of institutions under national
control widely distributed over the country, which could
not only serve as depositories for government funds, and
thus relieve the collectors of internal revenue and other
government officials havftig custody of such funds from
the anomalous situation in which they were placed under
the existing law, but which could also act as the fiscal
agents of the Treasury, and could receive subscriptions
to loans and distribute bonds to subscribers; and, finally,
the stimulation of the patriotism of the people which
would arise from their closer touch with national affairs
in consequence of their direct interest in government
securities brought about by the popular distribution of
the loans.




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In the rehearsal of the arguments advanced in favor of
the establishment of the national banking system, I have
placed first the one in which the benefits to be derived
from a uniform and controllable national currency were
advanced. The uniformity of the currency was the point
specially dwelt upon, but it was plain that uniformity
could be accomplished by the Government itself through
its own notes. The advantage that a currency furnished
by associations under government control would have
over notes issued directly by the Government lay in the
fact that while the former were to be secured by the deposit of national securities and were to be always subject
to jealous oversight and control, the latter were, to quote
the language of Mr. Chase, subject to "the temptation,
especially great in times of pressure and -danger, to issue
notes without adequate provision for redemption."
What that temptation amounted to no man knew better
than he. The Government could furnish such a currency,
but a national currency at once uniform and controllable
could only be obtained through the national banking law.
As we run through the various extracts from documents,
papers, and correspondence which have been submitted
to our consideration, we find Mr. Chase always the advocate of a uniform currency. The opinion expressed in
his inaugural address as governor of Ohio in 1856 has the
clear ring of conviction. Even in 1861, in enumerating
the advantages of the proposed system, he does not put
the improvement of the bond market first—"uniformity
in currency," "uniformity in security," "safeguard
against depreciation," "protection of travelers from loss




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by exchange/' " a large demand for government securities,' ' with certain other consequent advantages, and,
finally, the "increased security of the Union springing
from the common interest in its preservation, created by
the distribution of its stocks to associations throughout
the country * * *."
GENERAL IMPRESSION THAT THE BOND MARKET LEADS.

The impression that has since prevailed-, and was perhaps most prominent in the thoughts of the general
observer then, was that the immediate relief to be expected
in the bond market was the argument which influenced
opinions and votes. There are, indeed, among Mr. Chase's
letters several which might be quoted in support of this
view. It must be borne in mind, however, in forming an
opinion from these that Mr. Chase may have been at the
time developing a special phase of the subject and not
undertaking to discuss the entire question on its merits.
So in Congress the argument used by a speaker may have
been that which he thought would appeal to the public,
but not that which really produced his own convictions.
Among the expressions of opinion as to the real advantages to be derived from the adoption of the system
there has been quoted one from Horace White to the effect
that as between the several advantages rehearsed by the
Secretary the demand for government securities was not
the most important, although it then seemed so. Yet
Mr. White, while distinctly stating that the bond market
was not entitled to be regarded as the predominant
motive, goes on to say that, as a matter of fact, it actually




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was. This thought is expressed as follows: "The expectation that the scheme would be a great financial aid to
the Government was the real motive for its adoption/'
If we turn to the speech of Mr. Sherman in the Senate,
we find that while he first enumerates the advantages of
uniform currency he follows it up, asking the question,
"What benefit does the United States obtain from this
system?" And to this question he replies, "The first
benefit is, there is a market furnished for the bonds of the
United States." This statement that the market is the
first benefit is significant and corroborates Mr. White's
view
T H E PREDOMINANT MOTIVE IN MR. CHASE'S MIND.

The language of Mr. Chase's reports relieves him from
responsibility for Mr. Sherman's utterances. Whatever
support of this sort was to come was future and distant.
The uniformity of the currency, first advocated in 1856;
placed first in the series of advantages named in the
report of 1861; and denominated to be " t h e central idea
of the proposed measure" in the report of 1861, is over
and over again stated in Mr. Chase's correspondence
as the great thing to be gained by the adoption of the
system. The "enlarged demand for bonds" as time
went on became of minor importance through the
diminution of the relative size of the amount required
by the banks when compared with the total of the
government debt, but the permanent effect of this demand upon the market and the prop that would thus
be given to the government credit became more and more




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prominent in the appeals of the advocates of the system.
The combination of all the advantages to be obtained
from the adoption of Mr. Chase's scheme formed a powerful argument. The various benefits were cumulative, and
while it is possible to separate the chain and assign a relative measure of strength to the different links, yet it must
be remembered that it was their union and cohesion that
furnished the strength which secured the adoption of the
bill.
PROGRESSIVE

BEUEF

THAT THE

SYSTEM

STRENGTHENS

THE UNION.

At the outset it was stated that search for the predominant motive which prompted the adoption of the system
must be made in the mental operations of the man then
in charge of the Treasury Department. The investigation
which has been conducted includes within its scope the
official reports, the speeches, and the correspondence of
Mr. Chase so far as the same are at our command to-day,
and to all intents and purposes the conclusion which has
been reached upon this point is of such a nature that this
review of the situation might be considered as completing
our work. There are, however, one or two points which
have disclosed themselves in the course of the investigation which seem worthy of mention, but for which no suitable place was found in the narrative. Hooper, for instance, coupled the uniform currency with the fiscal
agencies and said the benefits of these are "of far more
importance than the more direct benefit of creating a permanent demand for a large amount of government bonds/'




no

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The need of depositories was plain, but by thus coupling
this with the uniform currency on one side of the scales,
while the benefit of the bond market was placed on the
other, he cut us off from citing his valuable name as one
of those who placed the uniform currency over the bond
market as a motive, although in all probability he actually
thought so.
Another point which is worthy of notice is the steady
growth of the belief in the protection which would be
afforded from the future revolt of any portion of the
Union against the General Government by a national
banking system. Mr. Chase, in his report in 1861, claimed
that increased security of that sort would come " from the
common interest in the preservation of the Union created
by the distribution of national stocks to associations
throughout the country * * *." This argument appealed to many others and cropped out from time to time.
Thus Hooper, in a speech in the House of Representatives,
January 19, 1863, said: " I t is justly said by an eminent
financial writer, who was once distinguished as the head of
the Treasury Department [probably Robert J. Walker],
that this abdication by the Government of its power to
control the currency of the country has furnished one of
the main supports of this rebellion.'' Hooper then added
the following impressive statement: "The revolted States
could never have inaugurated rebellion without the currency of state-bank notes for circulation * * *."
Mr. Sherman expressed the point tersely when he said
that he thought the passage of the bill would "promote a
sentiment of nationality," the want of which was one'of
29582—10




8

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the evils of the times. Amasa Walker covered the same
ground when he said, " It will identify the interests of our
moneyed institutions with the credit of the Government. ,,
In further support of the opinion on the point of the security
to be derived from a distribution of the securities of the
Government, which gradually developed and gained
strength as time went by and people pondered over these
problems, we may close our references on this subject by
quoting from the New York Tribune of February 3, 1863,
the following strong expressions: "Considered, however,
as a permanent plan, there can be no stronger argument
in its favor than that it tends to strengthen the Union by
closely interwoven ties of common interest in the permanence and credit of the National Government." These
remarks upon the value to the General Government of a
system of banks emitting a uniform currency, subject to
national control, in the way of protection against future
outbreaks, owing to the difficulty which would arise in
financing them, have but little bearing on the evolution
of the system, but the growth of belief in the truth of this
proposition is a matter of considerable interest.
In conclusion, then, we may repeat that the prevailing
motive which dominated Mr. Chase throughout the struggle was the desire to secure a uniform currency which
should be more controllable than would be government
notes emitted for the same purpose. His method of obtaining this currency brought with it the benefit to the
market for bonds, the securing of depositories and fiscal
agents, and, above all, the guaranty that in the future there
should be no banks capable of furnishing credit to revolting States.




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APPENDIX A.

THE HOOPER BILL.
A B I L L To provide a national currency, secured by a pledge of United
States stocks, and to provide for the circulation and redemption thereof.

Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled,
That there shall be established in the Treasury Department a separate bureau, which shall be charged with
the execution of this and all other laws that may be
passed by Congress respecting the issue and regulation
of a national currency secured by United States bonds.
The chief officer of the said bureau shall be denominated
the Comptroller of the Currency, and shall be under the
general direction of the Secretary of the Treasury. He
shall be appointed by the President, on the nomination
of the Secretary of the Treasury, by and with the advice
and consent of the Senate, and shall hold his office for
the term of five years unless sooner removed by the
President, by and with the advice and consent of the
Senate; he shall receive an annual salary of five thousand
dollars; he shall have a competent deputy, appointed
by the Secretary, whose salary shall be two thousand
five hundred dollars, and who shall possess the power
and perform the duties attached by law to the office
of Comptroller during a vacancy in such office and during
his absence or inability; he shall employ, from time
to time, the necessary clerks to discharge such duties
as he shall direct, which clerks shall be appointed and




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classified by the Secretary of the Treasury in the manner
now provided by law. Within fifteen days from the
time of notice of his appointment the Comptroller shall
take and subscribe the oath of office prescribed by the
Constitution and laws of the United States; and he shall
give to the United States a bond in the penalty of one hundred thousand dollars, with not less than two responsible
freeholders as sureties, to be approved by the Secretary
of the Treasury, conditioned for the faithful discharge
of the duties of his office; and he shall not, either directly
or indirectly, be interested in any association issuing
national currency under the provisions of this act. The
Deputy Comptroller so appointed shall also take the
oath of office prescribed by the Constitution and laws
of the United States, and shall give a like bond in the
penalty of fifty thousand dollars.
SEC. 2. And be it further enacted, That the Comptroller
of the Currency, with the approval of the Secretary of
the Treasury, shall devise a seal with suitable inscriptions for his office, a description of which, with a certificate of approval by the Secretary of the Treasury, shall
be filed in the office of the Secretary of State with an
impression thereof, which shall thereupon become the
seal of office of the Comptroller of the Currency, and
the same may be renewed when necessary. Every
certificate, assignment, and conveyance executed by
the Comptroller, in pursuance of any authority conferred
on him by law, and sealed with his seal of office, shall
be received in evidence in all places and courts whatsoever; and all copies of papers in the office of the Comp-




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troller, certified by him and authenticated by the said
seal, shall in all cases be evidence equally and in like
manner as the original. An impression of such seal
directly on the paper shall be as valid as if made on wax
or wafer.
SEC. 3. And be it further enacted, That there shall be
assigned to the Comptroller of the Currency by the Secretary of the Treasury suitable rooms in the Treasury
building for conducting the business of the Currency
Bureau, in which shall be safe and secure fire-proof vaults,
in which it shall be the duty of the Comptroller to deposit
and safely keep all the plates and other valuable things
belonging to his department; and the Comptroller shall
from time to time furnish the necessary furniture, stationery, fuel, lights, and other proper conveniences for
the transaction of the said business, the expense of which
shall be paid out of any money in the treasury not otherwise appropriated.
SEC. 4. And be it further enacted, That the term " United
States bonds," as used in this act, shall be construed to
mean all coupon and registered bonds now issued, or that
may hereafter be issued, on the faith of the United States
by the Secretary of the Treasury in pursuance of law.
SEC. 5. And be it further enacted. That associations for
carrying on the business of banking may be formed by any
number of persons, not less in any case than five.
SEC. 6. And be it further enacted, That persons uniting
to form such an association shall, under their hands and
seals, make a certificate which shall specify—
First. The name assumed by such association.




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Second. The place where its operations of discount and
deposit are to be carried on; designating the State, Territory, or district, and also the particular city, town, or
village.
Third. The amount of its capital stock, and the number of shares into which the same shall be divided; which
capital stock shall not be less than fifty thousand dollars.
Fourth. The names and places of residence of the shareholders, and the number of shares held by each of them.
Fifth. The time when such association shall commence,
and when the same shall terminate.
Sixth. A declaration that said certificate is made to
enable such persons to avail themselves of the advantages
of this act.
The said certificate shall be acknowledged before a
judge of some court of record or a notary public, and the
acknowledgment thereof certified under the seal of such
court or notary, and shall be transmitted, together with
a copy of the articles of association which shall have been
adopted, to the Comptroller of the Currency, who shall
record and carefully preserve the same in his office.
Copies of such certificate, duly certified by the Comptroller, and authenticated by his seal of office, shall be
legal and sufficient evidence in all courts and places
within the United States, or the jurisdiction of the government thereof, of the existence of such association, and
of every other matter or thing which could be proved by
the production of the original certificate.
SEC. 7. And be it further enacted, That at least thirty
per centum of the capital stock of such association shall




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be paid in at the time of the commencement of its banking business, and the remainder of the capital stock of
such association shall be paid in instalments of at least
ten per centum each on the whole amount to which the
association shall be limited, as frequently as one instalment at the end of each succeeding two months from the
time of the commencement of its banking operations,
until the whole of the capital stock shall be paid in.
SEC. 8. And be it further enacted, That if any shareholder, or his assignee, shall fail to pay any instalment
on the stock when the same is required by the foregoing
section to be paid, the directors of such association may
sell the stock held by such delinquent shareholder, at
public auction, having given three weeks' previous notice
thereof in a newspaper published and of general circulation in the city where the association is located, if the
same be located in a city, and if not so located, then in a
newspaper printed, or of general circulation, in the
county where the same is located, to any person who will
pay the highest price therefor, and not less than the
amount then due thereon, with the expenses of advertisement and sale; and the excess, if any, shall be paid to
the delinquent shareholder. If no bidder can be found
who will pay for such stock the amount due thereon to
the association, and the costs of advertisement and sale,
the amount previously paid shall be forfeited to the association, and such stock may subsequently be sold as the
directors may order.
SEC. 9. And be it further enacted, That whenever a
certificate shall have been transmitted to the Comp-




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troller of the Currency, as provided in the seventh section
of this act, and the association transmitting the same
shall notify the Comptroller that at least thirty per
centum of its capital stock has been paid as aforesaid,
and that such association has complied with all the
provisions of this act required to be complied with before
such association shall be authorized to commence the
business of banking, and that such association is desirous of commencing such business, the Comptroller
shall immediately proceed, in such manner as he shall
by general rules prescribe, to examine the condition of
such association; to ascertain especially the amount of
money paid in on account of its capital stock; the name
and place of residence of each of the directors of such
association, and the amount of the capital stock of which
each is the bona fide owner, and generally whether such
association has complied with all the requirements of
this act to entitle it to engage in the business of banking;
and shall cause to be made, and attested by the oaths
of a majority of the directors and by the president or
cashier of such association, a statement of all the facts
necessary to enable the Comptroller to determine whether
such association is lawfully entitled to commence the
business of banking under this act.
SEC IO. And be it further enacted, That if, upon a
careful examination of the facts so reported, and of any
any other facts which may come to the knowledge of
the Comptroller, whether by means of a special commission appointed by him for the purpose of inquiring
into the condition of such association, or otherwise,




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it shall appear that such association is lawfully entitled
to commence the business of banking, the Comptroller
shall give to such association a certificate under his
hand and official seal, showing that such association has
complied with all the provisions of this act required to
be complied with before being entitled to commence the
business of banking under it, and that such association
is authorized to commence said business accordingly;
and it shall be the duty of such association to cause
said certificate to be published in some daily newspaper,
published in the State where such association is located,
for at least sixty days next after the issuing thereof.
SEC. I I . And be it further enacted, That every association formed pursuant to the provisions of this act may
make and use a common seal, and shall have succession
by the name designated in its articles of association
and for the period limited therein; by such name may
make contracts, sue and be sued, complain and defend
in any court of law or equity as fully as natural persons,
and may make by-laws, approved by the Comptroller
of the Currency, not inconsistent with law or the provisions of this act, for the election of directors, the management of its property, the regulation of its affairs, and
for the transfer of its stock; and shall have power to
carry on the business of banking by obtaining and issuing
circulating notes in accordance with the provisions of
this act; by discounting bills, notes, and other evidences
of debt; by receiving deposits; by buying and selling
gold and silver bullion, foreign coins, and bills of exchange; by loaning money on real and personal security




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in the manner specified in their articles of association
for the purposes authorized by this act, and by exercising such incidental powers as shall be necessary to carry
on such business; to choose one of their number as president of such association, and to appoint a cashier and
such other officers and agents as their business may
require; and to remove such president, cashier, officers,
and agents at pleasure, and appoint others in their place;
and their usual business shall be transacted in banking
offices located at the places specified respectively in its
certificate of association, and not elsewhere.
SEC 12. And be it further enacted, That the shares of
associations formed under this act shall be deemed personal property, and shall be transferable on the books
of the association in such manner as may be prescribed
in the articles of association; and every person becoming a shareholder by such transfer shall, in proportion
to his shares, succeed to all the rights and liabilities of
the prior holder of such shares; and no change shall be
made in the articles of association by which the rights,
remedies, or security of the existing creditors of the association shall be impaired.
SKC. 13. And be it further enacted. That it shall be lawful for any association formed under this act, by its
articles of association, to provide for an increase of its
capital from time to time as may be deemed expedient;
but no such increase shall be valid until the increased
capital shall be paid in and notice thereof shall have
been transmitted to the Comptroller of the Currency
and his certificate obtained specifying the amount of




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such increase of capital stock, and t h a t t h e same has
been duly paid t o such association.
S E C . 14. And be it further enacted, T h a t it shall be lawful
for any such association to purchase, hold, and convey real
estate as follows.:
First. Such as shall be necessary for its immediate
accommodation in t h e transaction of its business.
Second. Such as shall be mortgaged to it in good faith
by way of security for loans made by such association, or
for moneys due thereto.
Third. Such as shall be conveyed to it in satisfaction
of debts previously contracted in the course of its dealings.
Fourth. Such as it shall purchase at sales under judgments, decrees, or mortgages held by such association.
Such association shall not purchase or hold real estate
in any other case for any other purpose t h a n as specified
in this section.
SEC. 15. And be it further enacted. T h a t every association, after having complied with the provisions of this
act preliminary to t h e commencement of banking business
under its provisions, m a y transfer and deliver to t h e
Treasurer of t h e United States any a m o u n t of United
States bonds bearing an interest, which bonds shall be
deposited with t h e Treasurer of t h e United States, and
by him safely kept in his office until t h e same shall be
otherwise disposed of, in pursuance of the provisions of
this act.
* SEC 16. And be it further enacted, T h a t upon t h e making
of any such transfer and delivery, the association making
t h e same shall be entitled t o receive from t h e Comptroller




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of the Currency circulating notes of different denominations, in blank, registered and countersigned as hereinafter
provided, equal in amount to ninety per centum of the
current market value of the United States bonds so transferred and delivered, but not exceeding the par value
thereof, if bearing interest at the rate of six per centum,
or of equivalent United States bonds bearing a less rate of
interest; and at no time shall the total amount of such
notes, issued to any such association, exceed the amount
at such time actually paid in of its capital stock.
SEC. 17. And be it further enacted, That, in order to
furnish suitable notes for circulation, the Comptroller of
the Currency is hereby authorized and required, under the
direction of the Secretary of the Treasury, to cause plates
to be engraved, in the best manner to guard against counterfeiting and fraudulent alterations, and to be printed
therefrom and numbered, such quantity of circulating
notes, in blank, of the denominations of five dollars, ten
dollars, twenty dollars, fifty dollars, one hundred dollars,
five hundred dollars, and one thousand dollars, as may be
required to supply, under this act, the banks and associations entitled to receive the same; which notes shall
express upon their face that they are secured by United
States bonds, deposited with the Treasurer of the United
States and issued under the provisions of this act, which
statement shall be attested by the written or engraved
signatures of the Treasurer and Register, and by the
imprint of the seal of the treasury; and shall also express
upon their face the promise of the association receiving
the same, to pay on demand, attested by the signatures




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of t h e president and cashier; and the said notes shall bear
such devices and such other statements, and shall be in
such form, as t h e Secretary of the Treasury shall, by regulation, direct.
SEC. I 8 . And be it further enacted, T h a t t h e plates and
special dies to be procured by the Comptroller of t h e Currency for t h e printing of such circulating notes, shall
remain under his control and direction, and the expenses
necessarily incurred, in executing the provisions of this act
respecting t h e procuring of such notes, shall be audited
and paid as contingent expenses of t h e Treasury Departm e n t ; and for t h e purpose of reimbursing the same, and all
other expenses incurred under this act, and in lieu of all
taxes upon t h e circulation authorized by this act, or upon
t h e bonds deposited for security of the same, the Treasurer
of t h e United States is hereby authorized to reserve and
retain one per centum on the amount of said bonds so
deposited, at each semi-annual payment of interest thereon;
and all sums so reserved and retained shall be paid into
t h e treasury under t h e direction of t h e Secretary, and
every bank, banking association, or corporation not organized under t h e provisions of this act, issuing notes calculated or intended to circulate as money, shall, on the first
day of July next, and regularly on the first days of January and July thereafter, make and deliver to t h e Comptroller of t h e Currency a true and accurate return of the
gross a m o u n t of notes issued by it. whether in circulation,
or in its vaults, or on deposit elsewhere, specifying the
amount of t h e several denominations; and shall pay to t h e
Comptroller of the Currency, semi-annually and at t h e




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time of making each return, in lawful money of the United
States one per centum upon the gross amount of notes
issued, according to such return; and in default of any
such return, the bank, banking association, or corporation
so failing to make return shall pay to the United States a
penalty of two per centum upon its entire capital stock,
to be recovered, for the use of the United States, in any
court of competent jurisdiction.
SEC. 19. And be it further enacted, That after any such
association shall have caused its promise to pay such notes
on demand to be signed by the president or vice-president
or cashier thereof, in such manner as to make them obligatory promissory notes, payable on demand, at its place
of business, such association is hereby authorized to issue
and circulate the same as money; and the same shall be
received at par in all parts of the United States in payment
of taxes, excises, public lands, and all other dues to the
United States, except for duties on imports, and also for
all salaries and other debts and demands owing by the
United States to individuals, corporations, and associations within the United States, except interest on public
debt; and no such association shall issue post notes or
any other notes to circulate as money than such as are
authorized by the foregoing provisions of this act.
SEC. 20. And be it further enacted, That all transfers of
United States bonds which shall be made by any bank or
banking association as security for circulating notes under
the provisions of this act, shall be made to the Treasurer of
the United States, with a memorandum written or printed
on the certificate of such bonds, and signed by the cashier




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or some other officer of the association making the deposit,
stating that it is held in trust for the association on whose
behalf such transfer is made, and as security for the redemption and payment of the circulating notes delivered
to such bank or association; and no tranfser of any such
bonds by the Treasurer shall be deemed valid or of binding
force and effect, unless sanctioned by the order or request
of the Comptroller of the Currency upon the Treasurer. It
shall be the duty of the Comptroller of the Currency to
keep in his office a book in which shall be entered the name
of every bank or banking association, from whose accounts
such transfer of bonds is made by the Treasurer, and the
name of the party to whom such transfer is made, unless
such transfer is made in blank, in which case the fact shall
be stated in said book, and in either case the par value of
the bonds so transferred shall be entered therein; and it
shall be the duty of the Comptroller, immediately upon
countersigning and entering the same, to advise by mail
the bank or association, from whose account such transfer
was made, the kind of bonds and the amount thereof so
transferred.
SEC. 21. And be it further enacted, That it shall be the
duty of the Comptroller of the Currency to countersign
and enter in the book, in the manner aforesaid, every
transfer or assignment of any bonds held by the Treasurer
presented for his signature; and the Comptroller shall
have at all times during office hours access to the books of
the Treasurer, for the purpose of ascertaining the correctness of the transfer or assignment presented to him to
countersign; and the Treasurer shall have the like access




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to the book above mentioned, kept by the Comptroller,
during office hours, to ascertain the correctness of the
entries in the same.
SEC. 22. And be it further enacted, That it shall be the
duty of either the president or cashier of every banking
association having stocks deposited in the office of the
Treasurer of the United States, once or more in each fiscal
year, and at such time or times during the ordinary business hours as said officer or officers may select, to examine
and compare the bonds so pledged with the books of said
department, and, if found correct, to execute to the said
Treasurer a certificate setting forth the different kinds and
the amounts thereof, and that the same are in the possession and custody of the Treasurer at the date of such
certificate. Such examination may be made by an agent
of such bank or association, duly appointed in writing for
that purpose, whose certificate before mentioned shall be
of like force and validity as if executed by such president
or cashier.
SEC. 23. And be it further enacted, That every association issuing circulating notes under the provisions of this
act shall make a quarterly report to the Comptroller of the
Currency, commencing on the first day of the quarter of
the year next succeeding the organization of such association, and continuing on the first days of each succeeding
quarter in every year thereafter, which report shall be
verified by the president and cashier, and all wilful false
swearing in respect to such report shall be perjury, and
subject to the punishment prescribed by law for such
offence. The report hereby required shall be in the form




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prescribed b y the Comptroller, and shall contain a true
statement of t h e condition of t h e association making such
report, before t h e transaction of any business on the
morning of t h e day specified, next preceding the date of
such report, in respect of the following items and particulars, to wit: Loans and discounts, overdrafts due from
banks, a m o u n t due from t h e directors of the association,
real estate, specie, cash items, stocks, bonds, and promissory notes, bills of solvent banks, bills of suspended
banks, loss and expense account, capital, circulation,
profits, amount due to banks, a m o u n t due to individuals
and corporations other t h a n banks, amount due the
Treasurer of t h e United States, amount due to depositors
on demand, a m o u n t due not included under either of the
above heads. And it shall be the d u t y of t h e Comptroller
to publish full abstracts of such reports together in two
newspapers, to be designated by him for t h a t purpose—
one in the city of Washington and the other in the city of
New York—exhibiting the items of capital, circulation,
and deposits, specie and cash items, public securities and
private securities; and the separate report of each association shall be published in a newspaper published in the
place where such association is established, or, if there be
no newspaper at such place, then in a newspaper published
at the capital of the State, at t h e expense of t h e association
making such report. In addition to the quarterly reports
required by this section, every association located and
doing business in the cities of Boston, New York, Philadelphia, Baltimore, Cincinnati, and New Orleans, and
issuing circulating notes under the provisions of this act,
29582—10




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shall publish, or cause to be published, on the morning of
the first Tuesday in each month, in a newspaper printed
in the city in which the association making such" report is
located, to be designated by the Comptroller of the
Currency, a statement, under the oath of the president or
cashier, showing the condition of the association making
such statement, on the morning of the day next preceding
the date of such statement, in respect to the following
items and particulars, to wit: average amount of loans
and discounts, specie, deposits, and circulation.
SEC. 24. And be it further enacted, That if any such association shall at any time fail to redeem, in the lawful
money of the United States, any of its circulating notes,
when payment thereof shall be lawfully demanded, during
the usual hours of business, at the office of such association, the holder may cause the same to be protested, in
one package, by a notary public, unless the president,
cashier, or teller of the association shall offer to waive demand and notice of the protest, and shall, in pursuance of
such offer, make, sign, and deliver to the party making such
demand an admission in writing, stating the time of the demand, the amount demanded, and the fact of the non-payment thereof; and such notary public, on making such
protest, or upon receiving such admission, shall forthwith
forward such admission or notice of protest to the Comptroller of the Currency; and after such default it shall not
be lawful for the association suffering the same to pay out
any of its notes, discount any notes or bills, or otherwise
prosecute the business of banking, except to receive and
safely keep money belonging to it, and to deliver special




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deposits: Provided, however, That if satisfactory proof be
produced to such notary public that the payment of any
such notes is restrained by order of any court of competent jurisdiction, such notary public shall not protest the
same; and when the holder of such notes shall cause
more than one note or package to be protested on the
same day, he shall not receive pay for more than one
protest.
SEC. 25. And be it further enacted, That on receiving notice that any such association has failed to redeem any of
its circulating notes, as specified in the next preceding
section, the Comptroller of the Currency, with the concurrence of the Secretary of the Treasury, shall appoint a
special agent, (of whose appointment immediate notice
shall be given to such association,) who shall immediately
proceed to ascertain whether such association has refused
to pay its circulating notes, in the lawful money of the
United States, when demanded as aforesaid, and report to
the Comptroller the facts so ascertained; and if, from the
reports so made, the Comptroller shall be satisfied that
such association has refused to pay its circulating notes as
aforesaid, and is in default, he shall, within thirty days
after he shall have received notice of such failure, declare
the United States bonds and securities pledged by such
association forfeited to the United States, and the same
shall thereupon be forfeited accordingly; and thereupon
the Comptroller shall immediately give notice in such
manner as the Secretary of the Treasury shall, by general
rules or otherwise, direct, to the holders of the circulating
notes of such association to present them for payment at




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the treasury of the United States; and the same shall be
paid as presented, whereupon said Comptroller may, in
his discretion, cancel an equal amount of bonds pledged
by such association, equal at current market rates, not exceeding par, to the notes paid; and it shall be lawful for
the Secretary of the Treasury, from time to time, to make
such regulations respecting the disposition to be made of
such circulating notes after presentation thereof for payment as aforesaid, and respecting the perpetuation of the
evidence of the payment thereof, as may seem to him
proper; but all such notes, on being paid, shall be cancelled; and for any deficiency in the proceeds of the
bonds pledged by such association, when disposed of as
hereinafter specified, to reimburse to the United States
the amount so expended in paying the circulating notes of
such association, the United States shall have a first and
paramount lien upon all the assets of such association,
and such deficiency shall be made good out of such assets
in preference to any and all other claims whatsoever, except the necessary costs and expenses of administering the
same.
SEC. 26. And be it further enacted, That whenever the
Comptroller shall become satisfied, as in the last preceding
section specified, that any such association has refused to
pay its circulating notes as therein mentioned, he may, instead of cancelling the United States bonds pledged by
such association, as provided in the next preceding section,
cause so much of them as may be necessary to redeem the
outstanding circulating notes of such association, to be
sold at public auction in the city of New York, after giving




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notice of such sale to such association, and also advertising t h e time a n d place of sale, with a pertinent description of t h e bonds to be offered for sale, in two or more
newspapers published in t h e city of New York, for not less
t h a n ten days next preceding t h e day of sale.
SEC. 27. And be it further enacted, T h a t the Comptroller
of t h e Currency may, if he shall be of opinion t h a t t h e
interests of t h e United States will be best promoted
thereby, sell a t private sale any of t h e stock so transferred
to him by such association, and receive therefor either
money or t h e circulating notes of such failing association:
Provided, T h a t no such bonds shall be sold by private sale
for less t h a n t h e par nor less t h a n t h e market value thereof
at t h e time of sale: And provided, further, T h a t no sales of
any such stock, either public or private, shall be complete
until t h e transfer thereof shall have been made with the
formalities prescribed in section twenty two of this act.
SEC. 28. And be it further enacted, T h a t on becoming
satisfied, as specified in section twenty-six of this act, t h a t
any such association has refused to pay its circulating
notes as therein mentioned, and is in default, t h e Comptroller of t h e Currency m a y forthwith appoint a receiver,
and require of him such bond and security as he shall
deem proper, who, under t h e direction of t h e Comptroller,
shall t a k e possession of t h e books, records, and assets of
every description of such association, collect all debts,
dues, and claims belonging to such association, and, upon
the order of a court of record of competent jurisdiction,
may sell or compound all bad or doubtful debts, and, on a
like order, sell all the real and personal property of such




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association, on such terms as the court shall direct, and
such receiver shall pay over all moneys so made to the
Treasurer of the United States, and also make report to
the Comptroller of the Currency of all his acts and proceedings. The Comptroller shall thereupon cause notice
to be given, by advertisement in one or more newspapers
published in the city in which such association is located,
if the same be in a city, and if not, then in one or more
newspapers published in the county where the same is located, for three consecutive months, calling on all persons
who may have claims against such association to present
the same, and to make legal proof thereof; and after the
end of one year from the first publication of such notice,
the Comptroller, after full provision shall have been first
made for refunding to the United States any such deficiency as is mentioned in the twenty-seventh section of
this act, shall make a ratable dividend of the moneys so
paid over to him by such receiver on all such claims as
may have been so proved or adjudicated in a court of
competent jurisdiction, and from time to time, as the proceeds of the assets of such association shall be paid over
to him, he shall make further dividends, as aforesaid, on
all claims previously proved or adjudicated; and the
remainder of such proceeds, if anything, shall be paid
over to the shareholders of such association, or their legal
representatives, in proportion to the stock by them
respectively held: Provided, however, That if any such association against which proceedings have been so instituted
on account of any alleged refusal to redeem its circulating
notes as aforesaid, shall deny having failed to do so, such




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association may, at any time within ten days after such
association shall have been notified of the appointment of
an agent, as provided in the twenty-seventh section of
this act, apply to the nearest circuit, or district, or territorial court of the United States, to enjoin further proceeding in the premises; and such court, after citing the
Comptroller of the Currency to show cause why further
proceedings should not be enjoined, and after the decision
of the court or finding of a jury that such association has
not refused to redeem its circulating notes, when legally
presented, in the lawful money of the United States, shall
make an order enjoining the Comptroller, and any receiver acting under his direction, from all further proceedings on account of such alleged refusal.
SEC. 29. And be it further enacted, That the bonds transferred to the Treasurer of the United* States, as hereinbefore provided, by any banking association for the security
of its circulating notes, shall be held exclusively for that
purpose, until such notes shall be redeemed, except as
provided in this act; but the Comptroller of the Currency
may give to any such banking association powers of attorney to receive and appropriate to its own use the interest
on the bonds which shall have been so transferred to the
Treasurer by it; but such powers shall become inoperative whenever such banking association shall fail to redeem its circulating notes as aforesaid; and said Comptroller may direct the return of any of said bonds to the
banking association which transferred the same, upon the
surrender to him and the cancellation of a proportionate
amount of such circulating notes: Provided, That ninety




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per centum of t h e current market value of t h e remaining
bonds which shall have been transferred b y t h e banking
association offering to surrender such circulating notes
shall be equal t o t h e a m o u n t of all t h e circulating notes
retained b y such banking association: And provided, further, T h a t there shall have been no failure b y such association to redeem its circulating notes, and t h a t there
shall have been no other violation 'by such association
of any of t h e provisions of this act for t h e security of
t h e creditors of such association; nor shall t h e Treasurer
be required t o surrender such bonds in fractional sums of
less t h a n one thousand dollars; and if, at any time after
said bonds shall be deposited with the Treasurer of t h e
United States, as aforesaid, t h e market or cash value
shall be reduced, t h e Comptroller of t h e Treasury is hereby
authorized to demand and receive t h e a m o u n t of such
depreciation in other United States bonds a t cash value,
or in money, from t h e association receiving said bills,
to be deposited with t h e Treasurer of t h e United States,
as long as such depreciation continues.
SEC 30. And be it further enacted, T h a t whenever t h e
price of any of t h e bonds pledged as aforesaid for t h e
redemption of t h e circulating notes of any such banking
association shall be at the stock exchange in t h e city
of New York for four consecutive weeks, at a r a t e less
t h a n t h a t at which they shall have been estimated when
so pledged, and such depreciation shall not have been
m a d e good b y a deposit of other bonds of money, it
shall be t h e d u t y of the Comptroller of t h e Currency
t o notify t h e Treasurer of t h e United States of such fact,




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and the payment of interest upon such depreciated bonds
shall be suspended, and such interest shall be retained
by said Treasurer until the same, when added to the
current market value of the bonds so pledged, to be
ascertained as before provided, shall be equal to the
amount for which such bonds were pledged: Provided,
That it shall be the duty of the Comptroller of the Currency, at the expiration of every period of three months,
to cause the whole of the sums so retained, and then
remaining in the treasury of the United States, to be
invested in United States bonds, in the name of the
Comptroller of the Currency, in trust for the respective
associations by which the bonds on which such interest
shall have accrued shall have been pledged; and whenever
the price of such depreciated bonds at the stock exchange
in New York shall rise to the price at which they were
pledged, and so remain for four consecutive weeks,
such investment shall be assigned to such association,
and all accruing interest on such pledged bonds shall
thereafter be paid to such association on demand thereof.
SEC. 31. And be it further enacted, That whenever any
such banking association, being desirous of relinquishing
its banking business, shall have paid at least ninety per
centum of its circulating notes, and shall have delivered
the same to the Comptroller of the Currency to be cancelled, and shall have provided means and given security,
to the satisfaction of the Comptroller, for the redemption
of its outstanding notes of circulation at the place where
such association is located, and shall have given notice
thereof by advertisement for six consecutive months




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in two newspapers of general circulation, published, one
at the capital of the State in which such association shall
be located, and one in the city, town, village,, or county
in which the same is located, if there be one published
therein, it shall be lawful for the Comptroller to authorize
and for the Treasurer of the United States to retransfer
and deliver to such banking association all the bonds
pledged by it; and thereupon all the corporate powers
of such association, except such as shall be necessary
to close up its affairs, shall cease.
SEC. 32. And be it further enacted, That it shall be the
duty of the Comptroller of the Currency to receive wornout or mutilated circulating notes issued by any such
banking association, and to deliver in place thereof to
such association other blank circulating notes to an
equal amount; and such worn-out or mutilated notes,
after a memorandum shall have been entered in the
proper books, in accordance with such regulations as
may be established by the Comptroller, as well as all
circulating notes which shall have been paid or surrendered
to be cancelled, shall be burned to ashes in presence of
three persons, one to be appointed by the Secretary of
the Treasury, one by the Comptroller of the Currency,
and one by the Treasurer of the United States, under
such regulations as the Secretary of the Treasury may
prescribe; and in case such notes shall have been delivered to the Comptroller by an officer or agent of such
association, then in the presence, also, of such officer or
agent; and a certificate of such burning, signed by the
parties so appointed, shall be made in the books of




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t h e Comptroller, a n d a duplicate thereof given t o such
officer or agent.
SBC. 33. And be it further enacted, T h a t it shall be
unlawful for any officer acting under the provisions of
this act to countersign or deliver to any such association,
or to any other company or person, any circulating
notes contemplated b y this act, except as hereinbefore
provided, and in accordance with the true intent and
meaning of this act; and any officer who shall violate
the provisions of this section shall be deemed guilty of
a high misdemeanor, and on conviction thereof shall
be punished b y fine not exceeding double t h e a m o u n t
so countersigned and delivered, and imprisonment not
exceeding fifteen years, at the discretion of t h e court
in which he shall be tried.
SEC. 34. And be it further enacted, T h a t all fees for
protesting t h e notes issued b y any such banking association shall be paid b y t h e person procuring t h e protest
to be made, and such banking association shall be liable
therefor; b u t no p a r t of t h e stock pledged b y such banking association, as aforesaid, shall be applied to t h e
p a y m e n t of such fees; and all expenses of any preliminary or other examinations into the condition of any association shall be paid b y such association; and all expenses
of any receivership shall be paid out of t h e assets of such
association before distribution of t h e proceeds thereof.
SEC. 35. And be it further enacted, T h a t t h e stockholders, collectively, of any such association shall at no
time be liable t o such association, either as principal
debtors or sureties, or both, t o an amount greater t h a n




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three-fifths of the capital stock actually paid in and
remaining undiminished by losses or otherwise; nor shall
the directors be so liable, except to such amount and in
such manner as shall be prescribed by the by-laws of
such association, adopted by its stock-holders to regulate
such liabilities.
SEC. 36. And be it further enacted, That the capital
stock of any association formed under this act shall be
divided into shares of one hundred dollars each, and
shall be assignable on the books of the association in
such manner as its by-laws shall prescribe; but no shareholder in any association under this act shall have power
to sell or transfer any share held in his own right so long
as he shall be liable, either as principal, debtor, surety,
or otherwise, to the association for any debt which
shall have become due and remain unpaid, nor in any
case shall such shareholder be entitled to receive any
dividend, interest, or profit on such shares so long as
such liabilities shall continue, but all such dividends,
interests, and profits shall be retained by the association,
and applied to the discharge of such liabilities; and no
stock shall be transferred without the consent of a majority of the directors while the holder thereof is thus
indebted to the association.
SEC. 37. And be it further enacted, That no banking
association shall take, as security for any loan or discount, a lien upon any part of its capital stock; but the
same security, both in kind and amount, shall be required
of shareholders as of other persons; and no such banking association shall be the purchaser or holder of any




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portion of its capital stock, or of the capital stock of any
other incorporated company, unless such purchase shall
be necessary to prevent loss upon a debt previously contracted in good faith, on security which, at the time,
was deemed adequate to insure the payment of such
debt, independent of any lien upon such stock; or in
case of forfeiture of stock for the non-payment of instalments due thereon, and stock so purchased and acquired,
shall in no case be held by such association so purchasing
for a longer period of time than six months, if the same
can, within that time, be sold for what the stock cost.
SEC. 38. And be it further enacted, That in all elections
of directors, and in deciding all questions at meetings
of shareholders, each shareholder shall be entitled to
one vote on each share of stock held by him; shareholders
may vote by proxies duly authorized in writing; but no
officer, clerk, teller, or bookkeeper of such association
shall act as proxy; and no stockholder whose liability
is past due and unpaid shall be allowed to vote.
SEC. 39. And be it further enacted, That the affairs of
every such association shall be managed by not less
than five nor more than nine directors, one of whom
shall be president of the association. Every director
shall, during his whole term of service, be a citizen of
the United States and a resident of the State in which
such association is located. At least three-fourths of
the directors shall have resided in the State in which
such association is located one year next preceding their
election as directors; and each director shall own, in
his own right, at least one per centum of the capital




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stock of such association up to two hundred thousand
dollars, and the half of one per centum of its capital
over two hundred thousand dollars. Each director
shall take an oath that he will, so far as the duty devolves
on him, diligently and honestly administer the affairs
of such association, and will not knowingly violate, or
willingly permit to be violated, any of the provisions of
this act, and that he is the bona fide owner, in his own
right, of the shares qf stock standing in his name on
the books of the association, and that the same is not
hypothecated, or in any way pledged, as security for
any loan obtained or debt owing to the association of
which he is a director, which oath, subscribed by himself, and certified by the officer before whom it is taken,
shall be immediately transmitted to the Comptroller of
the Currency, and by him filed and preserved in his
office.
SEC 40. And be it further enacted, That the directors
of any such association first elected shall hold their places
until their successors* shall be elected and qualified. All
subsequent elections shall be held annually, on such day
in the month of January as the stockholders of said association may prescribe; and the directors so elected shall
hold their places for one year, and until their successors
are elected and qualified. But any director removing
from the State, or ceasing to be the owner of the requisite
amount of stock, shall thereby vacate his place. Any
vacancy in the board shall be filled by appointment by the
remaining directors. The director so appointed shall hold
his place until the next annual election; and if, from any




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cause, an election of directors shall not be made at the
time appointed, the association shall not for that cause
be dissolved, but an election may be held on any subsequent day, thirty days' notice thereof having been given
in a newspaper printed, or of general circulation, in the
city, town, or county in which the association is located.
SEC. 41. And be it further enacted, That every such association shall at all times have on hand, in lawful money
of the United States, an amount equal to at least twentyfive per centum of the aggregate amount of its outstanding
notes of circulation and deposits; and whenever the amount
of its outstanding notes of circulation and deposits shall
exceed the above-named proportion for the space of
twelve days, or whenever such lawful money of the United
States shall at any time fall below the amount of twentyfive per centum of its circulation and deposits, such association shall not increase its liabilities by making any new
loans or discounts otherwise than by discounting or purchasing bills of exchange, payable at sight, nor make any
dividend of its profits, until the required proportion
between the aggregate amount of its outstanding notes of
circulation and deposits and lawful money of the United
States shall be restored: Provided, however, That clearing house certificates, representing specie or lawful money
specially deposited for the purpose of any clearing-house
association, shall be deemed to be lawful money in the possession of any association belonging to such clearing house
holding and owning such certificates, and considered to be a
part of the lawful money which such association is required
to have, under the foregoing provisions of this section:




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Provided, further, T h a t any balance due t o any association organized under this act in other places from any
banking association in t h e cities of Boston, New York,
Philadelphia, Baltimore, Cincinnati, or New Orleans, in
good credit, subject t o be drawn for at sight and available
to redeem their circulating notes and deposits, m a y be
deemed t o be a p a r t of t h e lawful money which such association in other places t h a n t h e cities of Boston, New York,
Philadelphia, Baltimore, Cincinnati, and New Orleans,
are required to have b y t h e foregoing provisions of this
section t o t h e extent of three-fifths of t h e said a m o u n t of
twenty-five per centum required. And it shall be competent for t h e Comptroller of t h e Currency t o notify any
such association whose lawful money reserve, as aforesaid,
shall fall below said proportion of twenty-five per centum,
t o m a k e good such reserve, and if such association shall
fail for thirty days thereafter so t o m a k e good its reserve of
lawful money of t h e United States, t h e Comptroller m a y ,
with t h e concurrence of t h e Secretary of t h e Treasury,
appoint a receiver t o wind u p t h e business of such association, as provided in t h e thirtieth section of this act.
SEC. 42. And be it further enacted, T h a t no association
shall at any time be indebted, or in any way liable, t o an
a m o u n t exceeding t h e a m o u n t of its capital stock a t such
time actually paid in, and remaining undiminished b y
losses or otherwise, except on t h e following accounts, t h a t
is t o say:
First. On account of its notes of circulation.
Second. On account of moneys deposited with, or collected by, such association.




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Third. On account of bills of exchange or drafts drawn
against money actually on deposit to the credit of such
association, or due thereto.
Fourth. On account of liabilities to its stockholders, for
money paid in on capital stock, and dividends thereon.
SEC. 43. And be it further enacted, That no association
shall, either directly or indirectly, pledge or hypothecate
any of its notes of circulation, for the purpose of procuring
money, to be paid in on its capital stock, or to be used in
its banking operations, or otherwise.
SEC. 44. And be it further enacted, That no association
or any member thereof shall, during the time it shall continue its banking operations, withdraw or permit to be
withdrawn, either in form of dividends, loans to stockholders for a longer time than six months, or in any other
manner, any portion of its capital; and if losses shall at
any time have been sustained by any such association
equal to or exceeding its undivided profits then on hand,
no dividend shall be made; and no dividend shall ever be
made by any association, while it shall continue its banking operations, to an amount greater than its net profits
then on hand, deducting therefrom its losses and bad
debts; and all debts due to any association, on which interest is past due and unpaid for a period of six months,
unless the same shall be well secured, and shall be in process of collection, shall be considered bad debts within
the meaning of this act.
SEC. 45. And be it further enactedf That the directors of
every association shall, semi-annually, in the months of
May and November, declare a dividend of so much of the
29582—10




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profits of such association as they shall judge expedient;
and, on each dividend day, the cashier shall make, and
verify by his oath, a full, clear, and accurate statement of
the condition of the association, as it shall be on that day
after declaring the dividend; which statement shall
contain—
First. The amount of the capital stock actually paid
in and then remaining, as the capital stock of such bank
or association.
Secondly. The amount of the circulating notes of such
bank or association then in circulation.
Thirdly. The greatest amount in circulation at any
time since the making of the last previous statement, as
shall have been exhibited by the weekly statements of the
cashier, specifiying the times when the same occurred.
Fourthly. The amount of balances and debts of every
kind due to other banks and banking associations.
Fifthly. The amount due to depositors.
Sixthly. The total amount of debts and liabilities of
every description, and the greatest amount since the
making of the last previous statement, specifiying the
time when the same accrued.
Seventhly. The total amount of dividend declared on
the day of making the statement.
Eighthly. The amount of lawful money of the United
States belonging to the association, and in its possession
at the time of making the statement.
Ninthly. The amount subject to be drawn at sight, in
lawful money of the United States, then remaining on
deposit with any banks or bankers; specifying the amounts




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so on deposit in the cities of Boston, New York, Philadelphia, Baltimore, Cincinnati, and New Orleans.
Tenthly. The amount then on hand of bills or notes,
issued by other associations, formed and doing business
under this act, and the amounts issued by other banks and
banking associations.
Eleventhly. The amount of balances due from other
associations doing business under this act, and the amount
due from other banks, bankers, and banking associations,
excluding deposits subject to be drawn at sight as aforesaid.
Twelfthly. The amount on hand of bills, bonds, stocks,
notes, and other evidences of debts, discounted or purchased
by the association, specifying particularly the amount of
suspended debt, the amount considered bad, the amount
considered doubtful, and the amount in suit or judgment.
Thirteenthly. The value of the real and personal property held for the convenience of the association, specifying
the amount of each.
Fourteenthly. The amount of real estate taken in payment of debts due to the association.
Fifteenthly. The amount of the undivided profits of
the association.
Sixteenthly. The total amount of the liability to the
association by the directors thereof, collectively, specifying
the gross amount of such liabilities as principal debtors,
and the gross amount as indorsers or sureties.
The statement thus made shall forthwith be transmitted
to the Comptroller of the Currency.
SEC. 46. And be it further enacted, That every association
may take, reserve, receive, and charge on any loan or dis-




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count made, or upon any note, bill of exchange, or other
evidence of debt, such rate of interest or discount as is for
the time the established rate of interest for delay in the
payment of money, in the absence of contract between
the parties, by the laws of the several States in which the
associations are respectively located, and no more: Provided, however, That interest may be reserved or taken in
advance, at the time of making the loan or discount,
according to the usual rules of banking; and the knowingly taking, reserving, or charging of a rate of interest
greater than that allowed by this section shall be held and
adjudged a forfeiture of the debt or demand on which the
same is taken, reserved, or charged; but the purchase,
discount, or sale of a bill of exchange, drawn on actually
existing values, and payable at another place than the
place of such purchase, discount, or sale, at the current
discount or premium, shall not be considered as taking,
reserving, or charging interest.
SBC. 47. And be it further enacted, That the total liabilities of any person, or of any company or firm, (including
in the liabilities of a company or firm the liabilities of the
several members thereof,) to any association, including
liabilities as acceptor of bona fide bills of exchange, payable out of the State where the association is located, shall
at no time exceed one-third; exclusive of liabilities as
acceptor, one-fifth; and exclusive of liabilities on such bills
of exchange, one-tenth part of the amount of the capital
stock of such association actually paid in.
SEC 48. And be it further enacted, That no association
shall, at any time, pay out on loans or discounts, or in pur-




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chasing drafts or bills of exchange, or in payment of
deposits, nor shall it in any other mode put in circulation
the notes of any bank or banking association, which
notes shall not, at any such time, be receivable, at par, on
deposit, and in payment of debts by the association so paying out or circulating such notes; nor shall it knowingly
pay out or put in circulation any notes issued by any
bank or banking association which at the time of such
paying out or putting in circulation is not redeeming its
circulating notes in lawful money of the United States.
SEC. 49. And be it further enacted, That all transfer of
the notes, bonds, bills of exchange, and other evidences of
debt owing to any association, or of deposits to its credit;
all assignments of mprtgages, sureties on real estate, or of
judgments or decrees in its favor; all deposits of money,
bullion, or other valuable thing for its use, or for the use
of any of its shareholders or creditors; all payments of
money to either, made after the commission of an act of
insolvency, or in contemplation thereof, with a view to
prevent the application of its assets in the manner prescribed by this act, or with a view to the preference of one
creditor to another, except in payment of its circulating
notes, shall be utterly null and void.
SEC 50. And be it further enacted, That if the directors
of any association shall knowingly violate, or knowingly
permit any of the officers, agents, or servants of the association to violate, any of the provisions of this act, all the
rights, privileges, and franchises of the association,
derived from this act, shall be thereby forfeited. Such
violation shall, however, be determined and adjudged by




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a proper circuit, district, or territorial court of the United
States, before the association shall be declared dissolved.
And in cases of such violation, every director who participated in or assented to the same shall be held liable in
his personal and individual capacity for all damages which
the association, its shareholders, or any other person,
shall have sustained in consequence of such violation.
SEC. 51. And be it further enacted, That the Comptroller
of the Currency, with the approbation of the Secretary of
the Treasury, as often as shall be deemed necessary or
proper, shall appoint a suitable person or persons to make
an examination of the affairs of every banking association,
which person shall not be a director or other officer in any
association whose affairs he shall be appointed to examine,
and who shall have power to make a thorough examination into all the affairs of the association, and, in doing so,
to examine any of the officers or agents thereof on oath,
and shall make a full and detailed report of the condition
of the association to the Comptroller; and the association
shall not be subject to any other visitorial powers than
such as are authorized by this act, except such as are
vested in the several courts of law and chancery. And
every person appointed to make such examination shall
receive for his services at the rate of five dollars for each
day by him employed in such examination, and two dollars for every twenty-five miles he shall necessarily travel
in the performance of his duty, which shall be paid by the
association by him examined.
SEC. 52. And be it further enacted, That every president,
director, cashier, teller, clerk, or agent of any association,




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who shall embezzle, abstract, or wilfully misapply any of
the moneys, funds, or credits of the association, or shall,
without authority from the directors, issue or put in circulation any of the notes of the association, or shall,
without such authority, issue or put forth any certificate
of deposit, draw any order or bill of exchange, make any
acceptance, assign any note, bond, draft, bill of exchange,
mortgage, judgment, or decree, or shall make any false
entry in any book, report, or statement of the association,
with intent, in either case, to injure or defraud any other
company, body politic or corporate, or any individual
person, or to deceive any officer or agent appointed to
examine the affairs of any such association, shall be
deemed guilty of a misdemeanor, and upon conviction
thereof shall be punished by imprisonment not less than
five nor more than ten years.
SEC. 53. And be it further enacted, That the president
and cashier of every such association shall cause to be
kept at all times a full and correct list of the names
and residences of all the shareholders in the association,
in the office where its business is transacted; and such
list shall be subject to the inspection of all the shareholders and creditors of the association during business
hours of each day in which business may be legally
transacted; and a copy of such list, verified by the oath
of such president or cashier, shall, at the beginning of
every quarter of a year, be transmitted to the Comptroller
of the Currency, commencing on the first day of the
first quarter after the passage of this act.




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SEC. 54. And be it further enacted, That the Secretary
of the Treasury is hereby authorized, whenever, in his
judgment, the public interest will be promoted thereby,
to employ any of such associations, doing business under
this act, as depositaries of the public moneys, except
receipts from customs.
SEC. 55. And be it further enacted, That all suits and
proceedings arising out of the provisions of this act,
in which the United States or its officers or agents shall
be parties, shall be conducted by the district attorneys
of the several districts, under the direction and supervision of the Solicitor of the Treasury.
SEC. 56. And be it further enacted, That every person
who shall mutilate, cut, deface, disfigure, or perforate
with holes, or shall unite or cement together, or do any
other thing to any bank bill, draft, note, or other evidence of debt issued by any such association, or shall
cause or procure the same to be done, with intent to
render such bank bill, draft, note, or other evidence
of debt unfit to be reissued by said association, shall upon
conviction forfeit fifty dollars to the association who
shall be injured thereby, to be recovered by action in
any court having jurisdiction.
SEC. 57. And be it further enacted, That if any person
shall falsely make, forge, or counterfeit, or cause or
procure to be made, forged, or counterfeited, or willingly aid or assist in falsely making, forging, or counterfeiting, any note in imitation of, or purporting to be in
imitation of, the circulating notes issued under the provisions of this act, or shall pass, utter, or publish, or




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attempt to pass, utter, or publish, any false, forged,
or counterfeited note, purporting to be issued by any
association doing a banking business under the provisions
of this act, knowing the same to be falsely made, forged,
or counterfeited, or shall falsely alter, or cause or procure
to be falsely altered, or willingly aid or assist in falsely
altering, any such circulating notes, issued as aforesaid,
or shall pass, utter, or publish, or attempt to pass, utter,
or publish as true, any falsely altered or spurious circulating note issued, or purporting to have been issued,
as aforesaid, knowing the same to be falsely altered or
spurious, every such person shall be deemed and adjudged
guilty of felony, and being thereof convicted by due
course of law, shall be sentenced to be imprisoned and
kept at hard labor for a period not less than five years
nor more than fifteen years, and to be fined in a sum not
exceeding one thousand dollars.
SEC. 58. And be it further enacted, That if any person
shall make or engrave, or cause or procure to be made
or engraved, or shall have in his custody and possession
any engraved plate or block after the similitude of any
plate from which any circulating notes issued as aforesaid shall have been printed, with intent to use such
plate or block, or cause or suffer the same to be used,
in forging or counterfeiting any of the notes issued as
aforesaid, or shall have in his custody or possession
any blank note or notes engraved and printed after
the similitude of any notes issued as aforesaid, with
intent to use such blanks, or cause or suffer the same
to be used, in forging or counterfeiting any of the notes




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issued as aforesaid, or shall have in his custody or possession any paper adapted t o t h e making of such notes, a n d
similar to t h e paper upon which any such notes shall h a v e
been issued, with intent t o use such paper, or cause or
suffer t h e same t o be used, in forging or counterfeiting
any of t h e notes issued as aforesaid, every such person,
being thereof convicted by due course of law, shall be
sentenced to be imprisoned and kept to h a r d labor for
a t e r m not less t h a n five nor more t h a n fifteen years,
and fined in a sum not exceeding one thousand dollars.
SEC. 59. And be it further enacted, T h a t suits, actions,
a n d proceedings by and against any association under
this act, m a y be h a d in any circuit, district, or territorial
court of t h e United States held within t h e district in which
such association m a y be established.
SEC. 60. And be it further enacted, T h a t it shall be t h e
d u t y of t h e Comptroller of t h e Currency t o report annually
t o Congress, at t h e commencement of its session—
First. A summary of t h e state and condition of every
association from whom reports have been received t h e
preceding year, at t h e several dates t o which such reports
refer, with an abstract of t h e whole a m o u n t of banking
capital returned b y them, of t h e whole a m o u n t of their
debts and liabilities, t h e a m o u n t of circulating notes outstanding, and t h e total a m o u n t of means and resources,
specifying t h e a m o u n t of specie held b y t h e m a t t h e times
of their several returns, and such other information in relation t o said associations as, in his judgment, m a y be
useful.




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Second. A statement of the associations whose business
has been closed during the year, with the amount of their
circulation redeemed, and the amount outstanding.
Third. To suggest any amendment to the laws relative
to banking by which the system may be improved, and
the security of the billholders and depositors may be increased.
Fourth. To report the names and compensation of the
clerks employed by him, and the whole amount of the
expenses of the banking department during the year; and
such report shall be made by or before the first day of
December in each year, and the usual number of copies
for the use of the Senate and House, and one thousand
copies for the use of the department, shall be printed by
the public printer and in readiness for distribution on the
first meeting of Congress.
SEC. 6 I . And be it further enacted, That the sums necessary to defray the expenses to be incurred in the execution of this act be, and the same are hereby, appropriated
out of any moneys in the treasury not otherwise appropriated.




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APPENDIX

B.

THE SHERMAN ACT.
AN ACT To provide a National Currency, secured by a pledge of United
States stocks, and to provide for the circulation and redemption thereof.

Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled. That
there shall be established in the Treasury Department a
separate bureau, which shall be charged with the execution
of this and all other laws that may be passed by Congress
respecting the issue and regulation of a national currency
secured by United States bonds. The chief officer of the
said bureau shall be denominated the comptroller of the
currency, and shall be under the general direction of the
Secretary of the Treasury. He shall be appointed by the
President, on the nomination of the Secretary of the Treasury, by and with the advice and consent of the Senate,
and shall hold his office for the term of five years unless
sooner removed by the President, by and with the advice
and consent of the Senate; he shall receive an annual
salary of five thousand dollars; he shall have a competent
deputy, appointed by the Secretary, whose salary shall
be two thousand five hundred dollars, and who shall
possess the power and perform the duties attached by law
to the office of comptroller during a vacancy in such office,
and during his absence and inability; he shall employ,
from time to time, the necessary clerks to discharge such
duties as he shall direct, which clerks shall be appointed
and classified by the Secretary of the Treasury in the man-




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ner now provided by law. Within fifteen days from the
time of notice of his appointment, the comptroller shall
take and subscribe the oath of office prescribed by the
Constitution and laws of the United States; and he shall
give to the United States a bond in penalty of one hundred
thousand dollars, with not less than two responsible freeholders as sureties, to be approved by the Secretary of the
Treasury, conditioned for the faithful discharge of the
duties of his office. The deputy comptroller so appointed
shall also take the oath of office prescribed by the Constitution and laws of the United States, and shall give a
like bond in the penalty of fifty thousand dollars. The
comptroller and deputy comptroller shall not, either
directly or indirectly, be interested in any association
issuing national currency under the provisions of this act.
SEC. 2. And be it further enacted, That the comptroller
of the currency, with the approval of the Secretary of the
Treasury, shall devise a seal with suitable inscriptions, for
his office, a description of which, with a certificate of approval by the Secretary of the Treasury, shall be filed in the
office of the Secretary of State with an impression thereof,
wliich shall thereupon become the seal of office of the
comptroller of the currency, and the same may be renewed
when necessary. Every certificate, assignment, and conveyance executed by the comptroller, in pursuance of any
authority conferred on him by law, and sealed with his
seal of office, shall be received in evidence in all places and
courts whatsoever; and all copies of papers in the office
of the comptroller, certified by him and authenticated by
the said seal, shall in all cases be evidence equally and in




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like manner as the original. An impression of such seal
directly on the paper shall be as valid as if made on wax
or wafer.
SEC. 3. And be it further enacted, That there shall be
assigned to the comptroller of the currency by the Secretary of the Treasury suitable rooms in the treasury building for conducting the business of the currency bureau,
in which shall be safe and secure fire-proof vaults, in which
it shall be the duty of the comptroller to deposit and safely
keep all the plates and other valuable things belonging to
his department; and the comptroller shall from time to
time furnish the necessary furniture, stationery, fuel,
lights, and other proper conveniences for the transaction
of the said business.
SEC. 4. And be it further enacted, That the term " United
States bonds," as used in this act, shall be construed to
mean all coupon and registered bonds now issued or that
may hereafter be issued on the faith of the United States
by the Secretary of the Treasury in pursuance of law.
SEC. 5. And be it further enacted, That associations for
carrying on the business of banking may be formed by any
number of persons, not less in any case than five.
SEC. 6. And be it further enacted, That persons uniting
to form such an association shall, under their hands and
seals, make a certificate which shall specify—
First. The name assumed by such association.
Second. The place where its operations of discount and
deposite are to be carried on, designating the State, Territory, or district, and also the particular city, town, or
village.




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Third. The amount of its capital stock, and the number of shares into which the same shall be divided; which
capital stock shall not be less than fifty thousand dollars;
and in cities whose population is over ten thousand persons, the capital stock shall not be less than one hundred
thousand dollars.
Fourth. The names and places of residence of the shareholders, and the number of shares held by each of them.
Fifth. The time when such association shall commence.
Sixth. A declaration that said certificate is made to
enable such persons to avail themselves of the advantages
of this act.
The said certificate shall be acknowledged before a
judge of some court of record or a notary public, and the
acknowledgement thereof certified under the seal of such
court or notary, and shall be transmitted, together with
a copy of the articles of association which shall have been
adopted, to the comptroller of the currency, who shall
record and carefully preserve the same in his office.
Copies of such certificate, duly certified by the comptroller,
and authenticated by his seal of office, shall be legal and
sufficient evidence in all courts and places within the
United States, or the jurisdiction of the Government
thereof, of the existence of such association, and of every
other matter or thing which could be proved by the production of the original certificate.
SEC. 7. And be it further enacted, That at least thirty
per centum of the capital stock of such association shall
be paid in at the time of the commencement of its banking
business, and the remainder of the capital stock of such




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association shall be paid in instalments of at least ten per
centum each on the whole amount to which the association shall be limited, as frequently as one instalment at
the end of each succeeding two months from the time of
the commencement of its banking operations, until the
whole of the capital stock shall be paid in.
SEC. 8. And be it further enacted, That if any shareholder, or his assignee, shall fail to pay any instalment
on the stock when the same is required by the foregoing
section to be paid, the directors of such association may
sell the stock held by such delinquent shareholder, at
public auction, having given three weeks' previous notice
thereof in a newspaper published and of general circulation in the city where the association is located, if the
same be located in .a city, and if not so located, then in a
newspaper printed, or of general circulation, in the county
where the same is located, to any person who will pay the
highest price therefor, and not less than the amount then
due thereon, with the expenses of advertisement and sale;
and the excess, if any, shall be paid to the delinquent
shareholder. If no bidder can be found who will pay for
such stock the amount due thereon to the association,
and the costs of advertisement and sale, the amount previously paid shall be forfeited to the association, and such
stock may subsequently be sold as the directors may order.
SEC. 9. And be it further enacted, That whenever a certificate shall have been transmitted to the comptroller of
the currency, as provided in this act, and the association
transmitting the same shall notify the comptroller that at
least thirty per centum of its capital stock has been paid
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as aforesaid, and that such association has complied with
all the provisions of this act required to be complied
with before such association shall be authorized to commence the business of banking, and that such association
is desirous of commencing such business, the comptroller
shall immediately proceed, in such manner as he shall by
general rules prescribe, to examine the condition of such
association; to ascertain especially the amount of money
paid in on account of its capital stock; the name and place
of residence of each of the directors of such association,
and the amount of the capital stock of which each is the
bona fide owner, and generally whether such association has
complied with all the requirements of this act to entitle
it to engage in the business of banking; and shall cause to
be made, and attested by the oaths of a majority of the
directors and by the president or cashier of such association, a statement of all the facts necessary to enable the
comptroller to determine whether such association is lawfully entitled to commence the business of banking under
this act.
SEC. IO. And be it further enacted, That if, upon a careful examination of the facts so reported, and of any other
facts which may come to the knowledge of the comptroller,
whether by means of a special commission appointed by
him for the purpose of inquiring into the condition of such
association, or otherwise, it shall appear that such association is lawfully entitled to commence the business of
banking, the comptroller shall give to such association a
certificate under his hand and official seal, showing that
such association has complied with all the provisions of




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this act required to be complied with before being entitled
to commence the business of banking under it, and that
such association is authorized to commence said business
accordingly; and it shall be the duty of such association
to cause said certificate to be published in some newspaper,
published in the city or county where such association is
located, for at least sixty days next after the issuing thereof:
Provided, That if no newspaper is published in such city
or county, such certificate shall be published as the comptroller of the currency shall direct.
SEC. I I . And be it further enacted, That every association formed pursuant to the provisions of this act
may make and use a common seal, and shall have succession by the name designated in its articles of association and for the period limited therein, not, however,
exceeding twenty years from the passage of this act;
by such name may make contracts, sue and be sued,
complain and defend in any court of law or equity as
fully as natural persons, and may make by-laws, approved by the comptroller of the currency, not inconsistent with the laws of the United States or the provisions of this act, for the election of directors, the management of its property, the regulation of its affairs,
and for the transfer of its stock; and shall have power
to carry on the business of banking by obtaining and
issuing circulating notes in accordance with the provisions of this act; by discounting bills, notes, and other
evidences of debt; by receiving deposits; by buying
and selling gold and silver bullion, foreign coins, and
bills of exchange; by loaning money on real and per-




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sonal security, in the manner specified in their articles
of association, for the purposes authorized by this act,
and by exercising such incidental powers as shall be
necessary to carry on such business; to choose one of
their number as president of such association, and to
appoint a cashier and such other officers and agents as
their business may require; and to remove such president, cashier, officers, and agents at pleasure, and appoint
others in their place; and their usual business shall be
transacted in banking offices located at the places specified respectively in its certificate of association, and not
elsewhere.
SBC. 12. And be it further enacted, That the shares of
associations formed under this act shall be deemed personal property, and shall be transferable on the books
of the association in such manner as may be prescribed
in the by-laws or articles of association; and every
person becoming a shareholder by such transfer shall,
in proportion to his shares, succeed to all the rights and
liabilities of the prior holder of such shares; and no
change shall be made in the articles of association by
which the rights, remedies, or security of the existing
creditors of the association shall be impaired. For all
debts, contracted by such association for circulation,
deposit, or otherwise, each shareholder shall be liable
to the amount, at their par value, of the shares held by
him in addition to the amount invested in such shares.
SEC. 13. And be it further enacted, That it shall be lawful for any association formed under this act, by its articles of association, to provide for an increase of its




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capital from time to time as may be deemed expedient,
subject to the limitations of this act; but no such increase shall be valid until the increased capital shall be
paid in, and notice thereof shall have been transmitted
to the comptroller of the currency, and his certificate
obtained, specifying the amount of such increase of capital
stock, and that the same has been duly paid to such
association.
SEC. 14. And be it further enacted, That it shall be lawful for any such association to purchase, hold, and convey
real estate as follows:
First. Such as shall be necessary for its immediate
accommodation in the transaction of its business.
Second. Such as shall be mortgaged to it in good faith
by way of security for loans made by such association,
or for moneys due thereto.
Third. Such as shall be conveyed to it in satisfaction
of debts previously contracted in the course of its dealings.
Fourth. Such as it shall purchase at sales under judgments, decrees, or mortgages held by such association.
Such association shall not purchase or hold real estate
in any other case or for any other purpose than as specified in this section.
SEC. 15. And be it further enacted, That every association, after having complied with the provisions of this act
preliminary to the commencement of banking business
under its provisions, shall transfer and deliver to the
treasurer of the United States any United States bonds
bearing interest to an amount not less than one third




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of the capital stock paid in; which bonds shall be deposited
with the treasurer of the United States, and by him
safely kept in his office until the same shall be otherwise
disposed of, in pursuance of the provisions of this act.
SEC. I6. And be it further enacted, That upon the making of any such transfer and delivery, the association
making the same shall be entitled to receive from the
comptroller of the currency circulating notes of different
denominations, in blank, registered and countersigned
as hereinafter provided, equal in amount to ninety per
centum of the current market value of the United States
bonds so transferred and delivered, but not exceeding
the par value thereof, if bearing interest at the rate
of six per centum, or of equivalent United States bonds
bearing a less rate of interest; and at no time shall the
total amount of such notes, issued to any such association, exceed the amount at such time actually paid in
of its capital stock.
SEC. 17. And be it further enacted, That the entire
amount of circulating notes to be issued under this act
shall not exceed three hundred millions of dollars. One
hundred and fifty millions of which sum shall be apportioned to associations in the States, in the District of
Columbia, and in the Territories, according to representative population, and the remainder shall be apportioned by the Secretary of the Treasury among associations formed in the several States, in the District of
Columbia, and in the Territories, having due regard
to the existing banking capital, resources, and business,
of such States, District, and Territories.




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SEC. I8. And be it further enacted, That, in order to
furnish suitable notes for circulation, the comptroller
of the currency is hereby authorized and required,
under the direction of the Secretary of the Treasury,
to cause plates to be engraved in the best manner to
guard against counterfeiting and fraudulent alterations,
and to have printed therefrom, and numbered, such
quantity of circulating notes, in blank, of the denominations of five dollars, ten dollars, twenty dollars, fifty
dollars, one hundred dollars, five hundred dollars, and
one thousand dollars, as may be required to supply,
under this act, the associations entitled to receive the
same; which notes shall express upon their face that
they are secured by United States bonds, deposited
with the treasurer of the United States, and issued under
the provisions of this act, which statement shall be
attested by the written or engraved signatures of the
treasurer and register, and by the imprint of the seal of
the treasury; and shall also express upon their face the
promise of the association receiving the same, to pay
on demand, attested by the signatures of the president,
or vice-president, and cashier; and the said notes shall
bear such devices and such other statements, and shall
be in such form, as the Secretary of the Treasury shall,
by regulation, direct.
SEC. 19. And be it further enacted, That the plates and
special dies to be procured by the comptroller of the
currency for the printing of such circulating notes shall
remain under his control and direction, and the expenses
necessarily incurred in executing the provisions of this




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act respecting the procuring of such notes, shall be
audited and paid as contingent expenses of the Treasury
Department; and for the purpose of reimbursing the
same, and all other expenses incurred under this act,
and in lieu of all taxes upon the circulation authorized
by this act, or upon the bonds deposited for the security
of the same, such association organized under this act
shall semi-annually, on the first days of January and
July, after its organization, pay to the comptroller of
the currency, in lawful money of the United States,
one per centum on the amount of circulating notes received
by such association, and in default thereof, the treasurer
of the United States is hereby authorized to reserve and
retain one per centum on the amount of said bonds
so deposited, at each semi-annual payment of interest
thereon; and all sums so reserved and retained shall
be paid into the treasury under the direction of the
Secretary, and every bank, banking association, or
corporation, not organized under the provisions of this
act, issuing notes calculated or intended to circulate as
money, shall, on the first day of July next, and regularly
on the first days of January and July thereafter, make
and deliver to the comptroller of the currency a true
and accurate return of the gross amount of notes issued
by it, whether in circulation, or in its vaults, or on deposit
elsewhere; and in default of any such return, the bank,
banking association, or corporation so failing to make
return, shall pay to the United States a penalty of two
per centum upon its entire capital stock, to be recovered,
for the use of the United States, in any court of competent
jurisdiction.




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SEC. 20. And be it further enacted, That after any such
association shall have caused its promise to pay such notes
on demand to be signed by the president or vice-president
and cashier thereof, in such manner as to make them
obligatory promissory notes, payable on demand, at its
place of business, such association is hereby authorized to
issue and circulate the same as money; and the same
shall be received at par in all parts of the United States in
payment of taxes, excises, public lands, and all other dues
to the United States, except for duties on imports, and
also for all salaries and other debts and demands owing by
the United States to individuals, corporations, and asso. ciations within the United States, except interest on
public debt; and no such association shall issue post
notes, or any other notes to circulate as money, than such
as are authorized by the foregoing provisions of this act.
SEC. 21. And be it further enacted, That all transfers of
United States bonds which shall be made by any association as security for circulating notes under the provisions
of this act, shall be made to the treasurer of the United
States, with a memorandum written or printed on the
certificate of such bonds, and signed by the cashier, or
some other officer of the association making the deposit,
stating that it is held in trust for the association on whose
behalf such transfer is made, and as security for the redemption and payment of the circulating notes delivered
to such association; and no transfer of any such bonds
by the treasurer shall be deemed valid, or of binding force
and effect, unless sanctioned by the order or request of
the comptroller of the currency upon the treasurer It




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shall be the duty of the comptroller of the currency to
keep in his office a book in which shall be entered the
name of every association from whose accounts such
transfer of bonds is made by the treasurer, and the name
of the party to whom such transfer is made, unless such
transfer is made in blank, in which case the fact shall be
stated in said book, and in either case the par value of the
bonds so transferred shall be entered therein; and it shall
be the duty of the comptroller, immediately upon countersigning and entering the same, to advise by mail the
association from whose account such transfer was made,
the kind of bonds and the amount thereof so transferred.
SEC. 22. And be it further enacted, That it shall be the .
duty of the comptroller of the currency to countersign
and enter in the book, in the manner aforesaid, every
transfer or assignment of any bonds held by the treasurer' presented for his signature; and the comptroller
shall have at all times during office hours access to the
books of the treasurer, for the purpose of ascertaining
the correctness of the transfer or assignment presented to
him to countersign; and the treasurer shall have the like
access to the book above mentioned, kept by the comptroller, during office hours to ascertain the correctness
of the entries in the same.
SEC. 23. And be it further enacted. That it shall be the
duty of either the president or cashier of every banking
association having stocks deposited in the office of the
treasurer of the United States, once or more in each
fiscal year, and at such time or times during the ordinary
business hours as said officer or officers may select, to ex-




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amine and compare the bonds so pledged with the books
of said Department, and, if found correct, to execute to
the said treasurer a certificate setting forth the different
kinds and the amounts thereof, and that the same are in
the possession and custody of the treasurer at the date of
such certificate. Such examination may be made by an
agent of such association, duly appointed in writing for
that purpose, whose certificate before mentioned shall be
of like force and validity as if executed by such president
or cashier.
SEC. 24. And be it further enacted, That every association issuing circulating notes under the provision of this
act, shall make a quarterly report to the comptroller of the
currency commencing on the first day of the quarter of
the year next succeeding the organization of such association, and continuing on the first days of each succeeding
quarter in every year thereafter, which report shall be
verified by the oath or affirmation of the president and
cashier, and all wilful false swearing in respect to such
report shall be perjury, and subject to the punishment
prescribed by law for such offence. The report hereby
required shall be in the form prescribed by the comptroller,
and shall contain a true statement of the condition of the
association making such report, before the transaction of
any business on the morning of the day specified, next preceding the date of such report, in respect of the following
items and particulars, to wit: Loans and discounts, overdrafts due from banks, amount" due from the directors of
the association, real estate, specie, cash items, stocks,
bonds, and promissory notes, bills of solvent banks, bills




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of suspended banks, loss and expense account, capital,
circulation, profits, amount due to banks, amount due to
individuals and corporations other than banks, amount
due the treasurer of the United States, amount due to
depositors on demand, amount due, not included under
either of the above heads. And it shall be the duty of the
comptroller to publish full abstracts of such reports
together in two newspapers to be designated by him for
that purpose, one in the city of Washington and the other
in the city of New York, exhibiting the items of capital,
circulation, and deposits, specie and cash items, public
securities and private securities; and the separate report
of each association shall be published in a newspaper published in the place where such association is established,
or, if there be no newspaper at such place, then in a newspaper published at the capital of the State, at the expense
of the association making such report. In addition to
the quarterly reports required by this section, every association located and doing business in the cities of
Boston, Providence, New York, Philadelphia, Baltimore,
Cincinnati, Chicago, St. Louis, and New Orleans, shall publish, or cause to be published, on the morning of the first
Tuesday in each month, in a newspaper printed in the city
in which the association making such report is located, to
be designated by the comptroller of the currency, a statement, under the oath of the president or cashier, showing
the condition of the association making such statement,
on the morning of the day next preceding the date of such
statement, in respect to the following items and particulars, to wit: average, amount of loans and discounts,
specie, deposits, and circulation.




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SEC. 25. And be it further enacted, That if any such
association shall, at any time fail to redeem, in the lawful
money of the United States, any of its circulating notes,
when payment thereof shall be lawfully demanded,
during the usual hours of business, at the office of such
association, the holder may cause the same to be protested, in one package, by a notary public, unless the
president or cashier of the association shall offer to waive
demand and notice of the protest, and shall, in pursuance
of such offer, make, sign, and deliver to the party making
such demand an admission in writing, stating the time
of the demand, the amount demanded, and the fact of
the non-payment thereof; and such notary public, on
making such protest, or upon receiving such admission,
shall forthwith forward such admission or notice of protest to the comptroller of the currency; and after such
default it shall not be lawful for the association suffering
the same to pay out any of its notes, discount any notes
or bills, or otherwise prosecute the business of banking,
except to receive and safely keep money belonging to it,
and to deliver special deposits: Provided, however. That if
satisfactory proof be produced to such notary public that
the payment of any such notes is restrained by order of
any court of competent jurisdiction, such notary public
shall not protest the same; and when the holder of such
notes shall cause more than one note or package to be
protested on the same day, he shall not receive pay for
more than one protest.
SEC 26. And be it further enacted, That on receiving
notice that any such association has failed to redeem any




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of its circulating notes, as specified in the next preceding
section, the comptroller of the currency, with the concurrence of the Secretary of the Treasury, may appoint
a special agent, (of whose appointment immediate notice
shall be given to such association,) who shall immediately
proceed to ascertain whether such association has refused to
pay its circulating notes, in the lawful money of the United
States, when demanded as aforesaid, and report to the
comptroller the facts so ascertained; and if, from such
protest or the report so made, the comptroller shall be
satisfied that such association has refused to pay its cir• culating notes as aforesaid, and is in default, he shall,
within thirty days after he shall have received notice
of such failure, declare the United States bonds and
securities pledged by such association forfeited to the
United States, and the same shall thereupon be forfeited
accordingly; and thereupon the comptroller shall immediately give notice, in su*h manner as the Secretary of the
Treasury shall, by general rules or otherwise, direct, to
the holders of the circulating notes of such association
to present them for payment at the treasury of the
United States; and the same shall be paid as presented,
whereupon said comptroller may, in his discretion,
cancel an equal amount of bonds pledged by such association, equal at current market rates, not exceeding par,
to the notes paid; and it shall be lawful for the Secretary
of the Treasury, from time to time, to make such regulations respecting the disposition to be made of such circulating notes after presentation thereof for payment
as aforesaid, and respecting the perpetuation of the




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evidence of the payment thereof, as may seem to him
proper; but all such notes, on being paid, shall be cancelled; and for any deficiency in the proceeds of the bonds
pledged by such association, when disposed of as hereinafter specified, to reimburse to the United States the
amount so expended in paying the circulating notes of
such association, the United States shall have a first
and paramount lien upon all the assets of such association, and such deficiency shall be made good out of such
assets in preference to any and all other claims whatsoever, except the necessary costs and expenses of administering the same.
SEC. 27. And be it further enacted, That whenever the
comptroller shall become satisfied, as in the last preceding
section specified, that any such association has refused
to pay its circulating notes as therein mentioned, he may,
instead of cancelling the United States bonds pledged
by such association, as provided in the next preceding
section, cause so much of them as may be necessary to
redeem the outstanding circulating notes of such association to be sold at public auction in the city of New
York, after giving thirty days' notice of such sale to
such association.
SEC. 28. And be it further enacted. That the comptroller of the currency may, if he shall be of opinion
that the interests of the United States will be best promoted thereby, sell at private sale any of the stock so
transferred to him by such association, and receive therefor either money or the circulating notes of such failing
association: Provided, That no such bonds shall be sold by




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private sale for less than the par, nor less than the market
value thereof at the time of sale. And provided further,
That no sales of any such stock, either public or private,
shall be complete until the transfer thereof shall have
been made with the formalities prescribed in this act.
SEC. 29. And be it further enacted, That on becoming
satisfied, as specified in this act, that any such association
has refused to pay its circulating notes as therein mentioned, and is in default, the comptroller of the currency
may forthwith appoint a receiver, and require of him such
bond and security as he shall deem proper, who, under the
direction of the comptroller, shall take possession of the
books, records, and assets of every description of such
association, collect all debts, dues, and claims belonging
to such association, and, upon the order of a court of
record of competent jurisdiction, may sell or compound all
bad or doubtful debts, and, on a like order, sell all the real
and personal property of such association, on such terms
as the court shall direct; and such receiver shall pay over
all moneys so made to the treasurer of the United States,
and also make report to the comptroller of the currency
of all his acts and proceedings. The comptroller shall
thereupon cause notice to be given, by advertisement in
such newspapers as he may direct, for three consecutive
months, calling on all persons who may have claims against
such association to present the same, and to make legal
proof thereof; and from time to time the comptroller,
after full provision shall have been first made for refunding
to the United States any such deficiency in redeeming the
notes of such association as is mentioned in this act, shall




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make a ratable dividend of the moneys so paid over to him
by such receiver on all such claims as may have been so
proved and adjudicated in a court of competent jurisdiction; and from time to time, as the proceeds of the assets of
such association shall be paid over to him, he shall make
further dividends, as aforesaid, on all claims previously
proved or adjudicated; and the remainder of such proceeds, if any, shall be paid over to the shareholders of such
association, or their legal representatives, in proportion
to the stock by them respectively held: Provided, however, That if any such association, against which proceedings have been so instituted on account of any alleged
refusal to redeem its circulating notes as aforesaid, shall
deny having failed to do so, such association may at any
time within ten days after such association shall have been
notified of the appointment of an agent, as provided in
this act, apply to the nearest circuit, or district, or territorial court of the United States, to enjoin further proceeding in the premises; and such court, after citing the
comptroller of the currency to show cause why further
proceedings should not be enjoined, and after the decision
of the court or finding of a jury that such association has
not refused to redeem its circulating notes, when legally
presented, in the lawful money of the United States, shall
make an order enjoining the comptroller, and any receiver
acting under his direction, from all further proceedings on
account of such alleged refusal.
SKC. 30. And be it further enacted. That the bonds transferred to the treasurer of the United States, as hereinbefore provided, by any banking association for the security
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of its circulating notes, shall be held exclusively for that
purpose, until such notes shall be redeemed, except as provided in this act; but the comptroller of the currency may
give to any such banking association powers of attorney
to receive and appropriate to its own use the interest on the
bonds which shall have been so transferred to the treasurer by it; but such powers shall become inoperative whenever such banking association shall fail to redeem its circulating notes as aforesaid; and said comptroller may
direct the return of any of said bonds to the banking association which transferred the same, upon the surrender to
him and the cancellation of a proportionate amount of such
circulating notes: Provided, That ninety per centum of the
current market value of the remaining bonds which shall
have been transferred by the banking association offering
to surrender such circulating notes shall be equal to the
amount of all the circulating notes retained by such banking association: And provided, further, That there shall
have been no failure by such association to redeem its circulating notes, and that there shall have been no other
violation by such association of any of the provisions of
this act for the security of the creditors of such association; nor shall the treasurer be required to surrender such
bonds in fractional sums of less than one thousand dollars;
and if, at any time after said bonds shall be deposited
with the treasurer of the United States, as aforesaid, the
market or cash value shall be reduced, the comptroller of
the currency is hereby authorized to demand and receive
the amount of such depreciation in other United States
bonds at cash value, or in money, from the association




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receiving said bills, to be deposited with the treasurer of
the United States, as long as such depreciation continues.
SEC. 31. And be it further enacted, That whenever the
price of any of the bonds pledged as aforesaid for the
redemption of the circulating notes of any such banking
association shall be, at the stock exchange in the city of
New York, for four consecutive weeks, at a rate less than
that at which they shall have been estimated when so
pledged, and such depreciation shall not have been made
good by a deposit of other bonds or money, it shall be the
duty of the comptroller of the currency to notify the
treasurer of the United States of such fact, and the payment of interest upon such depreciated bonds shall be
suspended, and such interest shall be retained by said
treasurer until the same, when added to the current
market value of the bonds so pledged, to be ascertained
as before provided, shall be equal to the amount for
which such bonds were pledged: Provided, That it shall
be the duty of the comptroller of the currency, at the expiration of every period of three months, to cause the
whole of the sums so retained, and then remaining in the
treasury of the United States, to be invested in United
States bonds, in the name of the comptroller of the currency, in trust for the respective associations by which
the bonds on which such interest shall have accrued shall
have been pledged; and whenever the price of such depreciated bonds at the stock exchange in New York shall
rise to the price at which they were pledged, and so remain
for four consecutive weeks, such investment shall be
assigned to such association, and all accruing interest on




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such pledged bonds shall thereafter be paid to such association on demand thereof.
SBC. 32. And be it further enacted, That it shall be the
duty of the comptroller of the currency to receive wornout or mutilated circulating notes issued by any such
banking association, and to deliver in place thereof to
such association other blank circulating notes to an equal
amount; and such worn-out or mutilated notes, after
a memorandum shall have been entered in the proper
books, in accordance with such regulations as may be
established by the comptroller, as well as all circulating
notes which shall have been paid or surrendered to be
cancelled, shall be burned to ashes in presence of three
persons, one to be appointed by the Secretary of the
Treasury, one by the comptroller of the currency, and
one by the treasurer of the United States, under such
regulations as the Secretary of the Treasury may prescribe; and in case such notes shall have been delivered
to the comptroller by an officer or agent of such association, then in the presence, also, of such officer or agent;
and a certificate of such burning, signed by the parties
so appointed, shall be made in the books of the comptroller, and a duplicate thereof given to such officer or
agent.
SEC. 33. And be it further enacted, That it shall be unlawful for any officer acting under the provisions of this
act to countersign or deliver to any such association, or
to any other company or person, any circulating notes
contemplated by this act, except as hereinbefore provided, and in accordance with the true intent and meaning




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of this act; and any officer who shall violate the provisions of this section shall be deemed guilty of a high
misdemeanor, and on conviction thereof shall be punished by fine not exceeding double the amount so countersigned and delivered, and imprisonment not exceeding
fifteen years, at the discretion of the court in which he
shall be tried.
SKC. 34. And be it further enacted, That all fees for
protesting the notes issued by any such banking association shall be paid by the person procuring the protest
to be made, and such banking association shall be liable
therefor; but no part of the stock pledged by such banking association, as aforesaid, shall be applied to the
payment of such fees; and all expenses of any preliminary or other examinations into the condition of
any association shall be paid by such association; and
all expenses of any receivership shall be paid out of
the assets of such association before distribution of the
proceeds thereof.
SEC. 35. And be it further enacted, That the stockholders, collectively, of any such association shall at
no time be liable to such association, either as principal
debtors or sureties, or both, to an amount greater than
three fifths of the capital stock actually paid in and
remaining undiminished by losses or otherwise; nor
shall the directors be so liable, except to such amount
and in such manner as shall be prescribed by the by-laws
of such association, adopted by its stockholders to regulate such liabilities.
SEC. 36. And be it further enacted, That the capital
stock of any association formed under this act shall




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be divided into shares of one hundred dollars each, and
shall be assignable on the books of the association in
such manner as its by-laws shall prescribe; but no shareholder in any association under this act shall have power
to sell or transfer any share held in his own right so
long as he shall be liable, either as principal, debtor,
surety, or otherwise, to the association for any debt
which shall have become due and remain unpaid, nor
in any case shall such shareholder be entitled to receive
any dividend, interest, or profit on such shares so long
as such liabilities shall continue; but all such dividends,
interests, and profits shall be retained by the association,
and applied to the discharge of such liabilities; and
no stock shall be transferred without the consent of a
majority of the directors while the holder thereof is
thus indebted to the association.
SEC. 37. And be it further enacted, That no banking
association shall take, as security for any loan or discount, a lien upon any part of its capital stock; but the
same security, both in kind and amount, shall be required of shareholders as of other persons; and no such
banking association shall be the purchaser or holder of
any portion of its capital stock, or of the capital stock
of any other incorporated company, unless such purchase shall be necessary to prevent loss upon a debt
previously contracted in good faith, on security which,
at the time, was deemed adequate to insure the payment
of such debt, independent of any lien upon such stock;
or in case of forfeiture of stock for the non-payment
of instalments due thereon, and stock so purchased
or acquired, shall in no case be held by such association




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so purchasing for a longer period of time than six months,
if the same can, within that time, be sold for what the
stock cost.
SEC. 38. And be it further enacted, That in all elections
of directors, and in deciding all questions at meetings
of shareholders, each shareholder shall be entitled to
one vote on each share of stock held by him; shareholders may vote by proxies duly authorized in writing;
but no officer, clerk, teller, or book-keeper of such association shall act as proxy; and no stockholder whose
liability is past due and unpaid shall be allowed to vote.
SEC. 39. And be it further enacted. That the affairs of
every such association shall be managed by not less than
five nor more than nine directors, one of whom shall be
president of the association; every director shall, during
his whole term of service, be a citizen of the United
States and a resident of the state in which such association is located. At least three fourths of the directors
shall have resided in the state in which such association
is located one year next preceding th>eir election as directors; and each director shall own in his own right,
at least one per centum of the capital stock of such
association not exceeding two hundred thousand dollars,
and the half of one per centum of its capital if over two
hundred thousand dollars. Each director shall take
an oath that he will, so far as the duty devolves on him,
diligently and honestly administer the affairs of such
association, and will not knowingly violate, or willingly
permit to be violated, any of the provisions of this act,
and that he is the bond fide owner, in his own right, of




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the shares of stock standing in his name on the books
of the association, and that the same is not hypothecated,
or in any way pledged, as security for any loan obtained
or debt owing to the association of which he is a director,
which oath, subscribed by himself, and certified by the
officer before whom it is taken, shall be immediately
transmitted to the comptroller of the currency, and by
him filed and preserved in his office.
SEC. 40. And be it further enacted, That the directors of
any such association first elected shall hold their places
until their successors shall be elected and qualified. All
subsequent elections shall be held annually, on such day
in the month of January as the stockholders of said association may prescribe; and the directors so elected shall
hold their places for one year, and until their successors
are elected and qualified. But any director removing
from the state, or ceasing to be the owner of the requisite
amount of stock, shall thereby vacate his place. Any
vacancy in the board shall be filled by appointment by
the remaining directors. The director so appointed shall
hold his place until the next annual election; and if, from
any cause, an election of directors shall not be made at
the time appointed, the association shall not for that cause
be dissolved, but an election may be held on any subsequent day, thirty days' notice thereof having been given
in a newspaper printed, or of general circulation, in the
city, town, or county in which the association is located,
and if no newspaper is published in such city, town, or
county, such notice shall be published in a newspaper in
the county adjoining.




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SEC. 41. And be it further enacted, That every such association shall at all times have on hand, in lawful money of
the United States, an amount equal to at least twentyfive per centum of the aggregate amount of its outstanding notes of circulation and its deposits; and whenever the
amount of its outstanding notes of circulation and its deposits shall exceed the above-named proportion for the
space of twelve days, or whenever such lawful money of
the United States shall at any time fall below the amount
of twenty-five per centum of its circulation and deposits,
such association shall not increase its liabilities by making any new loans or discounts otherwise than by discounting or purchasing bills of exchange, payable at sight,
nor make any dividend of its profits, until the required
proportion between the aggregate amount of its outstanding notes of circulation and its deposits and lawful money
of the United States shall be restored: Provided, however,
That clearing-house certificates, representing specie or
lawful money specially deposited for the purpose of any
clearing-house association, shall be deemed to be lawful
money in the possession of any association belonging to
such clearing-house holding and owning such certificates,
and considered to be a part of the lawful money which
such association is required to have, under the foregoing
provisions of this section: Provided, further, That any balance due to any association organized under this act in
other places from any association in the cities of Boston,
Providence, New York, Philadelphia, Baltimore, Cincinnati, Chicago, St Louis, or New Orleans, in good credit,
subject to be drawn for at sight, and available to redeem




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their circulating notes and deposits, may be deemed to be
a part of the lawful money which such association in
other places than the cities of Boston, Providence, New
York, Philadelphia, Baltimore, Cincinnati, Chicago, St.
Louis, and New Orleans, are required to have by the foregoing provisions of this section to the extent of three fifths
of the said amount of twenty-five per centum required.
And it shall be competent for the comptroller of the currency to notify any such association whose lawful money
reserve, as aforesaid, shall fall below said proportion of
twenty-five per centum, to make good such reserve; and
if such association shall fail for thirty days thereafter so
to make good its reserve of lawful money of the United
States, the comptroller may, with the concurrence of the
Secretary of the Treasury, appoint a receiver to wind up
the business of such association, as provided in this act.
SEC 42. And be it further enacted, That no association
shall at any time be indebted, or in any way liable, to an
amount exceeding the amount of its capital stock at such
time actually paid in, and remaining undiminished by
losses or otherwise, except on the following accounts, that
is to say:
First. On account of its notes of circulation.
Second. On account of moneys deposited with, or collected by, such association.
Third. On account of bills of exchange or drafts drawn
against money actually on deposit to the credit of such
association, or due thereto.
Fourth. On account of its liabilities to its stockholders,
for money paid in on capital stock, and dividends thereon,
and reserved profits.




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SEC. 43. And be it further enacted. That no association
shall, either directly or indirectly, pledge or hypothecate
any of its notes of circulation, for the purpose of procuring money to be paid in on its capital stock, or to be
used in its banking operations, or otherwise.
SEC. 44. And be it further enacted, That no association,
or any member thereof, shall, during the time it shall continue its banking operations, withdraw, or permit to be
withdrawn, either in form of dividends, loans to stockholders for a longer time than six months or in any other
maimer, any portion of its capital; and if losses shall
at any time have been sustained by any such association
equal to or exceeding its undivided profits then on hand,
no dividend shall be made; and no dividend shall ever be
made by any association, while it shall continue its banking operations, to an amount greater than its nett profits
then on hand, deducting therefrom its losses and bad
debts; and all debts due to any association, on which
interest is past due and unpaid for a period of six months,
unless the same shall be well secured, and shall be in process of collection, shall be considered bad debts within the
meaning of this act.
SEC. 45. And be it further enacted, That the directors
of every association shall semi-annually in the months
of May and November, declare a dividend of so much of the
profits of such association as they shall judge expedient;
and on each dividend day, the cashier shall make, and
verify by his oath, a full, clear, and accurate statement
of the condition of the association, as it shall be on that




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day after declaring the dividend; which statement shall
contain—
First. The amount of the capital stock actually paid in
and then remaining, as the capital stock of such association.
Secondly. The amount of the circulating notes of such
association then in circulation.
Thirdly. The greatest amount in circulation at any
time since the making of the last previous statement, as
shall have been exhibited by the weekly statements of the
cashier, specifying the times when the same occurred.
Fourthly. The amount of balances and debts of every
kind due to other banks and banking associations.
Fifthly. The amount due to depositors.
Sixthly. The total amount of debts and liabilities of
every description, and the greatest amount since the making of the last previous statement, specifying the time when
the same accrued.
Seventhly. The total amount of dividend declared on the
day of making the statement.
Eighthly. The amount of lawful money of the United
States belonging to the association, and in its possession
at the time of making the statement.
Ninthly. The amount subject to be drawn at sight, in
lawful money of the United States, then remaining on
deposit with any associations, banks, or bankers; specifying the amount so on deposit in the cities of Boston,
Providence, New York, Philadelphia, Baltimore, Cincinnati, Chicago, St. Louis, and New Orleans.
Tenthly. The amount then on hand of bills or notes,
issued by other banks and banking associations.




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Eleventhly. The amount of balances due from other
banks, bankers, and banking associations, excluding
deposits subject to be drawn at sight as aforesaid.
Twelfthly. The amount on hand of bills, bonds, stocks,
notes, and other evidences of debts, discounted or purchased by the association, specifying particularly the
amount of suspended debt, the amount considered bad,
the amount considered doubtful, and the amount in suit
or judgment.
Thirteenthly. The value of the real and personal property held for the convenience of the association, specifying
the amount of each.
Fourteenthly. The amount of real estate taken in payment of debts due to the association.
Fifteenthly. The amount of the undivided profits of
the association.
Sixteenthly. The total amount of the liability to the
association by the directors thereof collectively, specifying the gross amount of such liabilities as principal debtors,
and the gross amount of indorsers or sureties.
The statement thus made shall forthwith be transmitted
to the comptroller of the currency.
SEC. 46. And be it further enacted, That every association
may take, reserve, receive, and charge on any loan, or discount made, or upon any note, bill of exchange, or other
evidence of debt, such rate of interest or discount as is for
the time the established rate of interest for delay in the
payment of money, in the absence of contract between the
parties, by the laws of the several States in which the
associations are respectively located, and no more: Pro-




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vided, however, That interest may be reserved or taken,
in advance, at the time of making the loan or discount,
according to the usual rules of banking; and the knowingly taking, reserving, or charging of a rate of interest
greater than that allowed by this section shall be held and
adjudged a forfeiture of the debt or demand on which the
same is taken, reserved, or charged; but the purchase,
discount, or sale of a bill of exchange, drawn on actually
existing values, and payable at another place than the
place of such purchase, discount, or sale, at the current
discount or premium, shall not be considered as taking,
reserving, or charging interest.
SEC. 47. And be it further enacted, That the total liabilities of any person, or of any company or firm, (including in the liabilities of a company or firm the liabilities of
the several members thereof,) to any association, including
liabilities as acceptor of bona fide bills of exchange, payable out of the state where the association is located,
shall at no time exceed one third; exclusive of liabilities
as acceptor, one fifth; and exclusive of liabilities on such
bills of exchange, one tenth part of the amount of the
capital stock of such association actually paid in.
SEC. 48. And be it further enacted, That no association
shall, at any time, pay out on loans or discounts, or in
purchasing drafts or bills of exchange, or in payment of
deposits, nor shall it in any other mode put in circulation
the notes of any bank or banking association, which
notes shall not, at any such time, be receivable, at par,
on deposit, and in payment of debts by the association so
paying out or circulating such notes; nor shall it know-




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ingly pay out or put in circulation any notes issued by
any bank or banking association which at the time of
such paying out or putting in circulation is not redeeming
its circulating notes in lawful money of the United States.
SEC. 49. And be it further enacted, That all transfer of
the notes, bonds, bills of exchange, and other evidences of
debt owing to any association, or of deposits to its credit;
all assignments of mortgages, sureties on real estate, or of
judgments or decrees in its favor; all deposits of money,
bullion, or other valuable things for its use, or for the use
of any of its shareholders or creditors; and all payments
of money to either, made after the commission of an
act of insolvency, or in contemplation thereof, with a view
to prevent the application of its assets in the manner
prescribed by this act, or with a view to the preference
of one creditor to another, except in payment of its
circulating notes, shall be utterly null and void.
SEC. 50. And be it further enacted, That if the directors
of any association shall knowingly violate, or knowingly
permit any of the officers, agents, or servants of the association to violate any of the provisions of this act, all
the rights, privileges, and franchises of the association,
derived from this act shall be thereby forfeited; such
violation shall, however, be determined and adjudged
by a proper circuit, district, or territorial court of the
United States, before the association shall be declared
dissolved; and in cases of such violation, every director
who participated in or assented to the same shall be
held liable in his personal and individual capacity for all
damages which the association, its shareholders, or any




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Commission

other person, shall have sustained in consequence of
such violation.
SEC 51. And be it further enacted, That the comptroller
of the currency, with the approbation of the Secretary of
the Treasury, as often as shall be deemed necessary or
proper, shall appoint a suitable person or persons to make
an examination of the affairs of every banking association,
which person shall not be a director or other officer in
any association whose affairs he shall be appointed to
examine, and who shall have power to make a thorough
examination into all the affairs of the association, and, in
doing so, to examine any of the officers and agents thereof
on oath, and shall make a full and detailed report of the
condition of the association to the comptroller; and the
association shall not be subject to any other visitorial
powers than such as are authorized by this act, except
such as are vested in the several courts of law and chancery.
And every person appointed to make such examination
shall receive for his services at the rate of five dollars for
each day by him employed in such examinatiorf, and two
dollars for every twenty-five miles he shall necessarily
travel in the performance of his duty, which shall be
paid by the association by him examined.
SEC. 52. And be it further enacted, That every president,
director, cashier, teller, clerk, or agent of any association,
who shall embezzle, abstract, or wilfully misapply any of
the moneys, funds, or credits of the association, or shall,
without authority from the directors, issue or put in circulation any of the notes of the association, or shall,
without such authority, issue or put forth any certificate




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of deposit, draw any order or bill of exchange, make any
acceptance, assign any note, bond, draft, bill of exchange,
mortgage, judgment, or decree, or shall make any false
entry in any book, report, or statement of the association,
with intent, in either case, to injure or defraud any other
company, body politic, or corporate, or any individual person, or to deceive any officer or agent appointed to examine
%
the affairs of any such association, shall be deemed guilty
of a misdemeanor, and upon conviction thereof shall be
punished by imprisonment not less than five nor more
than ten years.
SEC. 53. And be it further enacted, That the president
and cashier of every such association shall cause to be
kept at all times a full and correct list of the names and
residences of all the shareholders in the association in
the office where its business is transacted; and such list
shall be subject to the inspection of all the shareholders
and creditors of the association during business hours
of each day in which business may be legally transacted;
and a copy of such list, verified by the oath of such president or cashier, shall, at the beginning of every year, be
transmitted to the comptroller of the currency, commencing on the first day of the first quarter after the
organization of the association.
SEC. 54. And be it further enacted, That the Secretary
of the Treasury is hereby authorized, whenever., in his
judgment, the public interests will be promoted thereby,
to employ any of such associations doing business under
this act as depositaries of the public moneys, except
receipts from customs.
29582—-io




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SEC. 55. And be it further enacted, That all suits and proceedings arising out of the provisions of this act, in which
the United States or its officers or agents shall be parties,
shall be conducted by the district attorneys of the several districts, under the direction and supervision of the
solicitor of the treasury.
SEC. 56. And be it further enacted, That every person
who shall mutilate, cut, deface, disfigure, or perforate
with holes, or shall unite or cement together, or do any
other thing to any bank bill, draft, note, or other evidence
of debt issued by any such association, or shall cause or
procure the same to be done, with intent to render such
bank bill, draft, note, or other evidence of debt, unfit to
be reissued by said association, shall upon conviction
forfeit fifty dollars to the association who shall be injured thereby, to be recovered by action in any court
having jurisdiction.
SEC. 57. And be it further enacted, That if any person
shall falsely make, forge, or counterfeit, or cause or procure to be made, forged, or counterfeited, or willingly
aid or assist in falsely making, forging, or counterfeiting,
any note in imitation of, or purporting to be in imitation
of, the circulating notes issued under the provisions of
this act, or shall pass, utter, or publish, or attempt to
pass, utter, or publish any false, forged, or counterfeited
note, purporting to be issued by any association doing
a banking business under the provisions of this act, knowing the same to be falsely made, forged, or counterfeited,
or shall falsely alter, or cause or procure to be falsely
altered, or willingly aid or assist in falsely altering, any




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such circulating notes, issued as aforesaid, or shall pass,
utter or publish, or attempt to pass, utter or publish
as true, any falsely altered or spurious circulating note,
issued or purporting to have been issued as aforesaid,
knowing the same to be falsely altered or spurious, every
such person shall be deemed and adjudged guilty of
felony, and being thereof convicted by due course of
law, shall be sentenced to be imprisoned and kept at
hard labor for a period not less than five years nor more
than fifteen years, and to be fined a sum not exceeding
one thousand dollars.
SEC. 58. And be it further enacted. That if any person
shall make or engrave, or cause or procure to be made
or engraved, or shall have in his custody or possession
any engraved plate or block after the similitude of any
plate from which any circulating notes issued as aforesaid
shall have been printed, with intent to use such plate
or block, or cause or suffer the same to be used, in forging
or counterfeiting any of the notes issued as aforesaid,
or shall have in his custody or possession any blank note
or notes engraved and printed after the similitude of
any notes issued as aforesaid, with intent to use such
blanks, or cause or suffer the same to be used, in forging
or counterfeiting any of the notes issued as aforesaid,
or shall have in his custody or possession any paper
adapted to the making of such notes, and similar to the
paper upon which any such notes shall have been issued,
with intent to use such paper, or cause or suffer the
same to be used, in forging or counterfeiting any of the
notes issued as aforesaid, every such person, being thereof




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convicted by due course of law, shall be sentenced to
be imprisoned and kept to hard labor for a term not
less than five nor more than fifteen years, and fined in a
sum not exceeding one thousand dollars.
SEC. 59. And be it further enacted, That suits, actions,
and proceedings by and against any association under
this act may be had in any circuit, district, or territorial
court of the United States held within the district in
which such association may be established.
SEC. 60. And be it further enacted. That it shall be
the duty of the comptroller of the currency to report
annually to Congress, at the commencement of its sessionFirst. A summary of the state and condition of every
association from whom reports have been received the
preceding year, at the several dates to which such reports
refer, with an abstract of the whole amount of banking
capital returned by them, of the whole amount of their
debts and liabilities, the amount of circulating notes
outstanding, and the total amount of means and resources,
specifying the amount of specie held by them at the times
of their several returns, and such other information in
relation to said associations as, in his judgment, may be
useful.
Second. A statement of the associations whose business
has been closed during the year, with the amount of
their circulation redeemed, and the amount outstanding.
Third. To suggest any amendment to the laws relative
to banking by which the system may be improved, and
the security of the bill-holders and depositors may be
increased,,




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Fourth. To report the names and compensation of
the clerks employed by him, and the whole amount of
the expenses of the banking department during the
year; and such report shall be made by or before the
first day of December in each year, and the usual number
of copies for the use of the Senate and House, and one
thousand copies for the use of the Department, shall
be printed by the public printer and in readiness for
distribution on the first meeting of congress.
SEC. 6 I . And be it further enacted, That any banking
association or corporation lawfully in existence as a bank
of circulation on the first day of January, anno Domini
eighteen hundred and sixty-three, organized in any state,
either under a special act of incorporation or a general
banking lawT, may, at any time within
years after the
passage of this act become an association under the provisions of this act; that in such case the certificate of
association provided for by this act shall be signed by
the directors of such banking association or corporation,
and in addition to the specifications required by this
act, shall specify that such directors are authorized by
the owners of two thirds of the capital stock of such
banking association or corporation, to make such certificate of association, and such certificate of association
shall thereafter have the same effect, and the same proceedings shall be had thereon, as is provided for as to
other associations organized under this act. And such
association or corporation thereafter shall have the same
powers and privileges, and shall be subject to the same
duties, responsibilities, and rules, in all respects, as is [are]




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prescribed in this act for other associations organized
under it, and shall be held and regarded as an association
under this act.
SEC. 62. And be it further enacted, That any bank or
banking association, authorized by any State law to
engage in the business of banking, and duly organized
under such State law at the time of the passage of this act,
and which shall be the holder and owner of United States
bonds to the amount of fifty per centum of its capital
stock, may transfer and deliver to the treasurer of the
United States such bonds, or any part thereof, in the
manner provided by this act; and upon making such
transfer and delivery, such bank or banking association
shall be entitled to receive from the comptroller of the
currency, circulating notes, as herein provided, equal in
amount to eighty per centum of the amount of the bonds
so transferred and delivered.
SEC. 63. And be it further enacted. That upon the failure
of any such State bank or banking association, to redeem
any of its circulating notes issued under the provisions
of the preceding section, the comptroller of the currency
shall, when satisfied that such default has been made,
and within thirty days after notice of such default, proceed to declare the bonds transferred and delivered to
the treasurer, forfeited to the United States, .and the
same shall thereupon be forfeited accordingly. And
thereupon the circulating notes which have been issued
by such bank or banking association shall be redeemed
and paid at the treasury of the United States, in the same
manner as other circulating notes issued under the provisions of this act are redeemed and paid




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SEC. 64. And be it further enacted, That the bonds forfeited, as provided in the last preceding section, may be
cancelled to an amount equal to the circulating notes
redeemed and paid, or such bonds may be sold, under the
direction of the Secretary of the Treasury, and after retaining out of the proceeds a sum sufficient to pay the whole
amount of circulating notes, for the redemption of which
such bonds are held, the surplus, if any remains, shall be
paid to the bank, or banking association from which such
bonds were received.
S E C 65. And be it further enacted, That Congress reserves the right, at any time, to amend, alter, or repeal
this act.
' APPROVED, February 25, 1863.




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APPENDIX C.

Section seven of "An Act to provide Ways and Means for
the Support of the Government", approved March 3, 1863.
SEC. 7. And be it further enacted, That all banks, associations, corporations, or individuals, issuing notes or bills
for circulation as currency, shall be subject to and pay a
duty of one per centum each half year from and after
April first, eighteen hundred and sixty-three, upon the
average amount of circulation of notes or bills as currency
issued beyond the amount hereinafter named, that is to
say: banks, associations, corporations, or individuals, having a capital of not over one hundred thousand dollars,
ninety per centum thereof; over one hundred thousand
and not over two hundred thousand dollars, eighty per
centum thereof; over two hundred thousand and not ovlr
three hundred thousand dollars, seventy per centum
thereof; over three hundred thousand and not over five
hundred thousand dollars, sixty per centum thereof; over
five hundred thousand and not over one million of dollars,
fifty per centum thereof; over one million and not over one
million and a half of dollars, forty per centum thereof;
over one million and a half, and not over two millions of
dollars, thirty per centum thereof; over two millions of
dollars, twenty-five per centum thereof. In the case of
banks with branches, the duty herein provided for shall be
imposed upon the circulation of the notes or bills of such
branches severally, and not upon the aggregate circulation




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of all; and the amount of capital of each branch shall be
considered to be the amount allotted to or used by such
branch; and all such banks, banking associations, corporations, and individuals shall also be subject to and pay a
duty of one half of one per centum each half year from
and after April first, eighteen hundred and sixty-three,
upon the average amount of notes or bills not otherwise
herein taxed and outstanding as currency during the six
months next preceding the return hereinafter provided for;
and the rates of tax or duty imposed on the circulation
of associations which may be organized under the act
" t o provide a national currency, secured by a pledge of
United States stocks, and to provide for the circulation
and redemption thereof," approved February twentyfifth, eighteen hundred and sixty-three, shall be the same
as that hereby imposed on the circulation and deposits
of all banks, associations, corporations, or individuals,
but shall be assessed and collected as required by said
act; all banks, associations, or corporations, and individuals issuing or reissuing notes or bills for circulation
as currency after April first, eighteen hundred and sixtythree, in sums representing any fractional part of a dollar,
shall be subject to and pay a duty of five per centum each
half year thereafter upon the amount of such fractional
notes or bills so issued. And all banks, associations, corporations, and individuals receiving deposits of money
subject to payment on check or draft, except savings institutions, shall be subject to a duty of one eighth of one per
centum each half year from and after April first, eighteen
hundred and sixty-three, upon the average amount of such




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Banking

System

deposits beyond the average amount of their circulating
notes or bills lawfully issued and outstanding as currency.
And a list or return shall be made and rendered within
thirty days after the first day of October, eighteen hundred
and sixty-three, and each six months thereafter, to the
commissioner of internal revenue, which shall contain a
true and faithful account of the amount of duties accrued,
or which should accrue, on the full amount of the fractional note circulation and on the average amount of all
other circulation and of all such deposits, for the six
months next preceding. And there shall be annexed to
every such list or return a declaration, under oath or affirmation, to be made in form and manner as shall be prescribed by the commissioner of internal revenue, of the
president, or some other proper officer of said bank, association, corporation, or individual, respectively, that the same
contains a true and faithful account of the duties which
have accrued, or which should accrue, and not accounted
for; and for any default in the delivery of such list or return,
with such declaration annexed, the bank, association, corporation, or individual making such default, shall forfeit,
as a penalty, the sum of five hundred dollars. And such
bank, association, corporation, or individual shall, upon
rendering the list or return as aforesaid, pay to the commissioner of internal revenue the amount of the duties
due on such list or return, and in default thereof shall forfeit, as a penalty, the sum of five hundred dollars; and in
case of neglect or refusal to make such list or return as
aforesaid, or to pay the duties as aforesaid, for the space
of thirty days after the time when said list should have




20I

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Monetary

"Commission

been made or rendered, or when said duties shall have
become due and payable, the assessment and collection
shall be made according to the general provisions prescribed in an act entitled " An act to provide internal revenue to support the Government and to pay interest on
the public debt", approved July one, eighteen hundred
and sixty-two.




202

INDEX.
A.
Account of the private life and public service of Salmon Portland Chase, by
R. B. Warden, 65, 98.
Act to provide internal revenue to support the Government, 43, 202.
Act to provide ways and means for the support of the Government, 84, 85,
101, 199.

Advantage of the national banking system, etc., by George Walker, 105.
Alburtis, E. K., favors legal-tender emissions, 52.
Alley, John B., Member of Congress, favored the bill, 82.
Analectic Magazine, 9, 11.
Andrew, John A., governor of Massachusetts, letter from Mr. Hooper, 89.
Antietam, battle of, settles invasion of Pennsylvania, 88.
Appletons' Cyclopaedia, 59.
Aspinwall, William H., letter from Mr. Chase stopping negotiation of
loan, 89.
Assignats of French Republic, 4, 18.
B.
Baker, Stephen, Member of Congress, said the bill would do no immediate
good, 82.
Baltimore, 54, 127, 142, 145, 170, 183, 184, 186.
Bank of England, 66.
Bank of the United States, 28, 46.
Bankers' Association, 55.
Bankers' Magazine, prints " Outline of a plan to create a national currency/'
10; shows character of currency expansion, 17; quoted, 21; counterfeits
difficult to detect, 26; Amasa Walker's speech, 90; George Walker's
communication, 105.
Bayley, Rafael Arroyo, his "National loans of the United S t a t e s " quoted,
41.
Bigelow, John, letter from Mr. Chase, 65.
Bill to provide national currency secured by a pledge of United States
stocks, etc., 56, 72, 113.
Bills of state banks, cause trouble traveling, 9; some of them good, 12;
limited circulation, 13; some doubtful, 14; exchange on, 15; losses by
16; ragged and doubtful, 17; torn and greasy, 18; rates of exchange, 19;
governors protest, 20, 21; counterfeits, 23, 24, 25, 26; restriction and
inspection, 27.




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Monetary

Commission

Biography of William Cullen Bryant, etc., 70.
Bixby, William K., loans Harrington papers, 6.
Bloodgood, S. De Witt, letter from Mr. Chase, 100.
Bonnefoux, I,., originator of New York State Security Bank, 10.
Boston, 13; par currency of, 14; banks respected, 17; exchange on unsettled, 19; mentioned, 45, 69, 74, 89, 92, 127, 142, 145, 170, 183, 184, 186.
Boston Evening Transcript, 66.
Boston Public Library, 57, 60.
Brightly, Frederic Charles, his digest of the laws of the United States cited,
28.
Brooklyn, 63.
Brown, James, criticises Mr. Chase's report, 5 1 ; suggests a plan, 63.
Bryant, William Cullen, letter from Mr. Chase, 70, 103.
Buchanan, James, President, etc., 34.
Buckner, Aylett Hawes, chairman Committee on Banking and Currency,
57, 58.
Bush, Isidor, explains finance report to Germans, 53.
C.
C , J. B., signature to article in New Bedford Mercury, 11.
Caldwell, John W., wants national debt put in form of money, 49.
Cambridge, Mass., 6.
Campbell, Alexander, La Salle, favors emission of noninterest-bearing
Treasury notes, 44.
Canada, "wild-cats" of, 14.
Carson, Enoch T., expresses sympathy, 64.
Certificates of indebtedness, 42.
Chancellorsville, battle of, 88.
Chandler, Zachariah, United States Senator, would vote for prohibitory
tax, 96.
Chase, Salmon Portland, Secretary of the Treasury, 3, 5, 6, 7, 15, points
out defects of currency, 16; his inaugural address as governor, 21, 23, 26,
28, 30; his 1861 finance reports, 32, 33, 34, 35; annual finance report 1861,
37, 38; national finances, 40; estimates short, 41, 42; objects to legaltender notes, 4 3 ; his correspondence, 44, 45, 48, 49, 51, 52, 53, 54 55,
57, 58, 59, 6 2 , 6 3 , 6 4 , 65, 66; 1862 finance report, 67, 69, 70, 71, 73,
74, 75, 76, 77, 78, 79, 88, 89; speaks in Ohio and Indiana, 91, 92; 1863
report, 93, 95, 96, 97, 98, 99; insists on exclusive national currency, 100;
his opinions discussed, 103, 104, 105, 106, 107, 108, 109, n o , i n , 112.
Chicago, 13, 17, 49, 50, 63, 86, 170, 183, 184, 186.
Chicago Tribune, describes condition of currency, 17; deals with counterfeits, 25, 5 1 ; quotes R. J. Walker 64, 65, 96.
Cincinnati, 49, 51, 65, 76, 91, 100, 127, 142, 145, 170, 183, 184, 186.
Cincinnati Gazette, 100.
Cisco, John J., urged to procure support of New York bankers, 69.




204

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Banking

System

Coin certificates, 42.
Columbus, Ohio, 21.
Compilation of the messages and papers of presidents, by J. D. Richardson, 72.
Compound interest notes, 35.
Congressional Globe, -14, 35, 39, 73, 74, 79, 81, 82.
Connecticut, adops free banking, 12.
Continental bills, 4.
Cooke, Henry D., aids Mr. Chase, 71; writes that Sherman will support the
bill, 75; claims t h a t he secured Sherman, 78, 79, 85.
Cooke, Jay, his memoirs quoted, 19, 71, 75, 78, 85; writes New York Tribune, 105.
Cornell, Alonzo B., governor New York, 56.
Corning, Erastus, Member of Congress, 55.
Counterfeit detectors, 24, 25.
D.
Davis, Andrew McF., 6.
Day, Timothy C , letter from Mr. Chase, 77.
Depositories. (See Government depositories.)
District of Columbia, 164.
Doolittle, James R., United States Senator, wants banks taxed out of existence, 49; would sustain the bill, 81.
Dunbar, Charles F., his Economic Essays, 12, 24, 27.

E.
Economic Essays, by Charles F . Dunbar, 12, 24, 27.
Eggleston, Benjamin, letter from Mr. Chase, 89.
England, 45.
Europe, 4, 13, 34, 90.
Everitt, John L., of committee of New York Clearing House, 96.
E x t r a sheets from Spaulding's history of legal-tender paper money, 30.
F.
Federal Government, refuses to receive paper money, 15.
Felton, Samuel M., offers to make use of Treasury notes, 49.
Fenton, Reuben E., Member of Congress, would give the bill his support, 82.
Fessenden, William P., United States Senator, correspondence with Mr.
Chase, 65, 71, 72, 76.
Fillmore, Millard, President, etc., when comptroller of New York suggested
secured currency, 10.
Finance Committee, United States Senate, 76, 99.
Finance reports, 32, 67, 93.
Financial situation affects opinions, 40.
Fiske & Hatch, New York bankers, 91.
Five-twenty bonds, 35, 41, 68, 105.
Florida, adopts free banking, 12; mention, 47.




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Monetary

Commission

Forbes, John M., Mr. Chase stops negotiation of loan, 89.
Fort, George F., governor of New Jersey, his opinions quoted under the
name of Governor Lord, 21.
Fractional currency 42.
France, 4.
Fredericksburg, battle of, 88.
Freeman, Pliny, letter from Mr. Chase, 98.
G.
Gallagher, William D., commends finance report, 51.
Gallatin, James, 59.
Gallipolis, Ohio, 49.
Georgia, " w i l d c a t s " of, 14.
Germantown, Ohio, 49.
Goodale, S. N., favors interest-bearing Treasury notes, 44.
Gorum, G. W., has plan for nationalizing banks, 51, 55.
Government depositories, what could be received, 28, 30, 31, 60, 68, 74,
75, 78, 80, i n .
Greeley, Horace, approves the bill, 76; Mr. Chase writes him, 100.
Greenbacks, 42, 43, 53, 79.
Gunckel, William, sees United States note for the first time, 49.
Gurley, John R., Member of Congree, opposes Mr. Chase, 73.
H.
Hamilton, John C , calls attention to opposition to Mr. Chase's plan, 65.
Hart, Albert Bushnell, his life of Chase, 104.
Harrington, George, assistant treasurer, 5, 6, 91, 93, 95, 96.
Harvard University Library, 91.
Hecksher, Charles A., letters from Mr. Chase, 75, 98.
Henderson, John B., United States Senator, would vote for the bill, 81.
Historical Magazine, 9, 11.
History of the legal-tender paper money, by E. G. Spaulding, 56, 57, 91.
Hooper, Samuel, Member of Congress, his speech in 1869, 35; his speech in
J
863, 39; on Subcommittee of Ways and Means, 55; introduces a bill,
56; similar to Spaulding bill, 61, 62; incloses articles from London Globe,
66, 70; introduces another bill, 72; speech, 73; took charge of bill, 87;
letter, 89; incloses slips from London Examiner, 92; letter quoted, 95letter from Mr. Chase, 97; praise from Mr. Chase, 99; market not predominant motive, n o ; how rebellion supported, i n .
Hooper bill, analysis of, 83; no liability for stockholders, 85; section 31
dropped, 86, 97; reprint, 113; currency department established, 113;
seal of office, 114; rooms assigned, 115; United States bonds defined,
115; number of persons in association, 115; form of certificate, 115;
payment of capital, 117; failure to pay, 117; issuance of certificate, 119;




206

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Banking

System

powers of association, 119; shares, 120; increase of capital, 120; rights of
association, 121; deposit of bonds, 121; circulating notes, 122; engraved
plates, 122; payment for plates, 123; receivable for public dues, 124;
mutual checks Treasurer and Comptroller, 125; annual certificates, 126;
quarterly report, 126; failure to redeem, 128; forfeiture and cancellation
of bonds, 129; public sale of bonds, 130; private sale of bonds, 131; closure, 131; return of bonds, 133; decline of bonds, 134; voluntary closure,
135; mutilated bills, 136; illegal emissions, 137; protest fees, 137; stockholders borrowing limit, 137; shares defined, 138; association not to purchase own stock, 138; voting powers, 139; directors, 139; term of office,
140; redemption funds, 141; limit of liabilities, 142; pledge of notes forbidden, 143; dividends only from profits, 143; dividend statement, 143;
interest rates, 145; limit for borrowers, 146; use of certain bills prohibited
147; no preferences to creditors, 147; penalty for violating act, 148; examination of affairs, 148; embezzlement, 148; list of shareholders, 149;
depositories, 150; suits against government officers, 150; penalty for
mutilating bills, 150; counterfeiting, 150; intent to counterfeit, 151;
jurisdiction, 152; Comptroller's report, 152; appropriation for expense,
153H u n t ' s Merchants' Magazine, shows difficulty of travel from lack of uniform currency, 13; losses of bill holders, 16; article on counterfeits, 24, 52.
I.
Illinois, adopts free banking, 12; " not-to-be-forgotten slump tails" of, 14;
bank failures, 15; banks without capital, 18.
Inaugural address of S. P. Chase, as governor of Ohio, 21.
Independent, The, losses of merchants from lack of uniform currency, 13.
Indiana, adopts free banking, 12; "red dogs" of, 14; governor's message, 20
Indianapolis, 20, 91, 92.
Internal-revenue act, 43, 202.
Iowa, adopts free banking, 12.
jJackson, Andrew, President, etc., issues specie circular, 29.
J a y Cooke, financier of the civil wrar, etc., by E. P. Oberholtzer, 19, 71, 75, 78.
Jordan, Edward, Solicitor of the Treasury Department, 6; prepares a bill,
58, 59, 61.
K.
Kansas, 80.
Kellogg, L. U., recommends emission of noninterest-bearing treasury notes,
44Kentucky, miserably engraved notes of, 14.
Ketchum, Morris, indorses Mr. Chase, 66.
Knox, John Jay, author of article in Hunt's Merchants' Magazine, afterwards Comptroller of the Currency, 14, 52; report cited, 55.
29582—10




14

207

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Monetary

Commission

LLa Salle, 111., 44.
Lancaster, Ohio, 53.
Latham, Alfred, governor of Bank of England, 66.
Law's Mississippi Bubble, 4.
Legal-tender treasury notes, authorized, 42; Mr. Chase's opposition, 43;
demand notes should be, 54; furnish uniform currency, 73.
Letter on (the) national currency, etc., attributed to Eleazer Lord, 50.
Levitt, Rev. Joshua, letter from Mr. Chase, 99.
Library of Congress, 6, 44, 45, 49, 51, 52, 53, 54, 59, 63, 64, 69, 74.
Life and public services of Salmon P. Chase, etc., by J. W. Schuckers, 69, 75,
76, 97, 100, 103.
Lincoln, Abraham, President, etc., 34; appeals for borrowing power, 4 1 ;
urges uniform currency, 72, 78; approves the bill, 82; letter from Mr.
Chase, 100.
Littell, Eliakim, subtreasury drafts for currency, 45, 64.
Littell's Living Age, 45.
Liverpool, England, 89.
London, England, 13, 89.
London Examiner, 92.
London Globe, 66.
London Times, 14.
Lord, Eleazar, his letter on the national currency act, etc., quoted, 50, 54.
Lord, Governor, of New Jersey, a misprint in Bankers' Magazine, should be
Ford, 21.
Louisiana, adopts free banking, 12.
Lovejoy, Owen, Member of Congress, would tax banks out of existence,
74, 96.
M.
McClellan, Gen. George B., failure of peninsula campaign, 87.
Maine, worthless issues of banks, 14; mention, 47.
Mansfield, Edward D., letter to Mr. Chase, 98.
Market for bonds, 9, 10; devices of Mr. Chase, 34; forms of securities, 35;
importance of, 38, 60, 68; not referred to in Mr. Chase's western speeches,
92; actual predominant motive, 108, 109.
Martin, John D., advocates emission of greenbacks, 53.
Massachusetts, Massachusetts Bay, 4; adopts free banking, 12; redemption
of local bills, 12; mention, 27, 82, 89, 99.
Mechanics and Farmers' Bank, Albany, 77.
Medill, Joseph, urges circulation of demand notes, 50; letter, 51, 65; letter
from Mr. Chase, 69; mention, 96, 98.
Mellen, William P., letter from Mr. Chase, 76.
Merchants' Magazine. {See H u n t ' s Merchants' Magazine.)
Metropolitan Bank, New York, 30.
Mexico, 47.




208

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Banking

System

Michigan, "shinplasters" of, 14; governor's message, 21.
Military situation influences votes, 87.
Mississippi Blatter, 53.
Missouri, miserably engraved notes of, 14; bonds used by Illinois banks, 18.
Money and banking, by Horace White, 104.
Morrill, Justin, United States Senator, opposed Mr. Chase, 73.
Mozart Hall, Cincinnati, 91.
Munich, Bavaria, 13.
Mutual Redemption Bank, Boston, redeems for country banks, 12.
N.
Nash, Simeon, wants Government to receive state bills, 49.
National bank act. (See Sherman Act.)
National banks, suggested, 36; Portland, Me, applies for one, 90; one in process in San Francisco, 90; coming on well in San Francisco and New
Orleans, 93; promote sentiment of nationality, 111; identify moneyed
institutions with Government, 112; strengthen the Union, 112.
National currency, early suggestions, 9, 10, 16; bill to provide, 56; arguments in favor, 60; act to provide power, 82; should be exclusive, 100;
new act of same name, 101, 155.
National currency, the, its origin, by O. B. Potter, 48.
National Intelligencer, Washington, D. C , troubles of travelers for lack of
uniform currency, 13; losses by failures of banks, 15.
National loans of the United States, by R. A. Bayley, 41.
Nebraska, " r e d d o g s " of, 14.
New Bedford Mercury, 11.
NewEngland, 12, 14, 17, 27.
New Jersey, adopts free banking, 12; banks a menace, 17; governor's message, 21.
New Orleans, national bank being organized, 93; mentioned, 127, 142, 145,
170, 183, 184, 186.
New York, State of, 7, 8, 9, 10; safety fund and free banking acts, 11;
secured bank notes circulate freely, 12; par currency of, 14; many
banks of same name, 26; mention, 45, 56, 82.
New YorkCity, 5, 13, 17, 19, 26, 48, 50, 51, 52, 54, 57, 58, 59, 66, 70, 89, 93,
96, 99, 100, 127, 130, 131, 134, 142, 145, 170, 177, 183, 184, 186.
New York clearing house, attacks national banks, 95.
New York Graphic, 58, 59.
New York Journal of Commerce, is satirical, 38, 69.
New York state banking department, 65.
New York State Stock Security Bank, 10.
New York Times, 64.
New York Tribune, 105, 112.
New York World, 88.
Newark, N. J., 5*1.
North Brookfield, Mass., 52.




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Monetary

Commission

North Carolina, miserably engraved notes of, 14.
Northwest Territory, 28.
Northwestern States, 15.
Notes explanatory of the system, etc., by S. M. Stilwell, 58, 59, 60.
O.
Oberholzer, Ellis Paxson, his Jay Cooke, financier of the civil war, quoted,
I9> 7i> 75, 78.
Ohio, adopts free banking, 12; banks a menace, 17; governor's inaugural,
2 1 , 3 1 ; mention, 44, 53, 91.
Olcott, Thomas W., letter to Mr. Chase, 77, 78; letter from Mr. Chase, 98.
One hundred years of banking, Mr. Spaulding's address to Banker's Association, 55.
Oregon, 46, 47.
Origin of the national-banking system, etc., by Jay Cooke, 105.
P.
Paris, France, 11, 13.
Parton, James, his life of Andrew Jackson, 2Q.
Pennsylvania, adopts free banking, 12; " w i l d c a t s " of, 14; banks a menace,
17; invasion checked, 88.
Pennsylvania Historical Society, 6, 34, 50, 51, 65, 66, 69, 76, 77, 89, 92, 93,
97, 98> 99, 100.
Pennsylvania Railroad, will cooperate in use of Treasury notes, 50.
Philadelphia, 9, 17, 19, 49, 71, 127, 142, 145, 170, 184.
Philadelphia and Reading Railroad Company will use Treasury notes, 50.
Philadelphia Bulletin, sums up advantages, 77.
Philadelphia, Wilmington and Baltimore Railroad Company, 49.
Plan for appreciating the national-bank notes to the value of coins, etc., by
O. B. Potter, 48.
Plan of the national-bank currency, etc., by O. B. Potter, 48.
Pomeroy, Samuel C , United States Senator, moved vote for the bill, 80.
Portland, Me., applies for bank, 90.
Post-Office Department, to be paid in coin, 29.
Potter, Orlando Bronson, submits a plan, 45, 46, 47, 48, 54.
Private history of the origin and purpose of the national-banking law, etc.,
by S. M. Stilwell, 57.
Providence, R. I., 86, 170, 183, 184, 186.
R.
Report of the Secretary of the Treasury, A revolution in our monetary
system, by Isidor Bush, 53.
Report on the national bank currency act; its defects and its effects,
attributed to John K. Williams, 96.
Review of our finances and of the report of Hon. S. P. Chase, by Robert J.
Walker, 70.




210

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Banking

System

Richardson, James Daniel, his compilation of the messages and papers of
presidents, etc., 72.
Ruggles, Clyde O., assists in preparation, 5.
S.
St. Louis, 13, 51, 53, 86, 170, 183, 184, 186.
St. Louis Daily Democrat, 53.
St. Paul, 52.
St. Paul Daily Press, 52, 59.
St. Petersburg, 13.
San Francisco, Cal., 44, 89, 90, 93.
Saratoga Springs, 65.
Schuckers, Jacob William, his Life of Chase, 69, 75, 76, 97, 100, 103.
Secretary of the Treasury, 8, 30, 40, 41, 42, 45, 50, 54, 55, 58, 59, 60, 67,
74, 81, 82, 94, 95, 97, 98, 99, 100, 103, 104, 106, 113, 114, 115, 122, 123,
129, 136, 150, 155, 156, 157, 164, 165, 172, 178, 184, 190, 191, 197.
Seven-thirty Treasury notes, 35, 105.
Sherman, John, speech, 14; sponsor for the bill, 73; will support the bill,
75, 76; insists on separation from supply bill, 77; his speech referred to,
78; the speech itself, 79, 8 1 ; wants apportionment, 85; passage of bill
due to him, 88; banks promote nationality, 111.
Sherman act, 56, 57, 62; four additional sections, 78; House passes it, 82;
taxation clause changed, 84; stockholders liability, 85; sections for
nationalizing state banks, 86, 88, 97; act repealed, 101, 103; reprint,
155; currency department established, 155; seal of office, 156; rooms
assigned, 157; United States bonds defined, 157; number of persons in
association, 157; form of certificate, 157; payment of capital, 158;
failure to pay, 159; issuance of certificate, 160; powers of association,
161; shares and liability, 162; increase of capital, 162; rights of
association, 163; deposit of bonds, 163; circulating notes, 164; apportionment, 164; engraved plates, 165; payment for plates, 165; receivable
for public dues, 167; mutual checks on Treasurer and Comptroller,
168; annual certificate, 168; quarterly report, 169; failure to redeem,
171; forfeiture and cancellation of bonds, 171; public sale of bonds, 173;
private sale of bonds, 173; closure, 174; return of bonds, 175; decline
of bonds, 177; mutilated bills, 178; illegal emissions, 178; protest fees,
179; stockholders' borrowing limit, 179; shares defined, 180; association
not to purchase own stock, 180; voting powers, 181; directors, 181;
term of office, 182; redemption fund, 183; limit of liabilities, 184;
pledge of notes forbidden, 185; dividends only from profits, 185;
dividend statement, 185; interest rates, 187; limit for borrowers,
188; use of certain bills prohibited, 188; no preference to creditors,
189; penalty for violating act, 189; examination of affairs, 190;
embezzlement, 190; list of shareholders, 191; depositories, 191; suits
against government officers, 192; penalty for mutilating bills, 192; coun-




211

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Monetary

Commission

terfeiters, 192; intent to counterfeit, 193; jurisdiction, 194; Comptroller's
report, 194; nationalization of state banks, 195; currency for state
banks, 196; failure of state banks to redeem, 196; cancellation of bonds,
197; amendments to, repeal, 197.
Smith, Richard, letter from Mr. Chase, 100.
Solicitor of the Treasury, 58, 150, 192.
Spaulding, Kldridge Gerry, Member of Congress, author of History of legaltender paper money, etc., 30; prepares a bill, 55; similar to Hooper bill,
57, 6 1 ; would vote for the bill, 8 1 ; his History referred to, 91.
Specie circular, issued by Jackson, 29.
Sprague, Prof. Oliver M. W., edits Dunbar's Economic Essays, 12.
Springfield, 111., 17.
Statutes at Large, 28, 29.
Stevens, Thaddeus, Member of Congress, letter from Mr. Chase, 43; reports
adversely to bill, 56, 6 1 ; letter from Mr. Chase, 7 1 ; opposes bill, 87.
Stilwell, Silas M., publishes pamphlet on Origin of banking system, 57, 58,
59, 60, 61.
Sturgis, S., & Sons, say demand notes are needed, 63.
Suffolk Bank, Boston, redeems for country banks, 12.

T.
Taft, Alphonso, father of the President, letter to Mr. Chase, 51.
Taylor, James W., calls attention to article in St. Paul Daily Press, 52.
Tennessee, adopts free banking, 12.
Thomas, William G., says Treasury notes refused, 54.
Three-sixty-five treasury notes, 35.
Treasury drafts, suggested for currency, 45, 64.
Treasury notes, 29; noninterest-bearing suggested, 44; interest-bearing
urged, 44; their emission in place of bank notes, 49; objects of curiosity,
49.
Trowbridge, John T., letter from Mr. Chase, 33, 34, 99.
U.
Uniform currency might be based on United States stocks, 9; advantages of,
13, 36, 38, 60, 67; Lincoln urges, 72; first among advantages, 77; the
only check, 80; an inestimable blessing, 82; Mr. Chase works to devise,
9J> 92» 93> 98; importance of, 100, 101, 104, 105, 106; first in Mr. Chase's
mind, 107; predominant motive, 109, 112.
Uniform National Currency, A, title of a pamphlet attributed to John J a y
Knox, 13.
United States,'Bank of the. (See Bank of the United States.)
United States bonds. (See United S t a t e s stocks.)
United States currency, 46, 47.
United States notes, 33, 53, 73.
United States Statutes at Large. (See Statutes at Large.)




212

National

Banking

System

United States stocks, uniform currency might be based on, 9, 36, 37, 39,
4 5 , 4 6 , 4 7 , 4 8 , 5 3 , 5 7 , 7 2 , 74, 80, 90, 113, 115, 121, 122, 124, 135, 155, 157,
163, 165, 167, 172, 173, 200.
United States Treasury notes. (See Treasury notes.)
V.
Van Buren, Martin, President, etc., enforces specie circular, 29.
Vermont, adopts free banking, 12.
Vienna, Austria, 15.
Virginia, adopts free banking, 12; miserably engraved notes of, 14; bonds
used by Illinois banks, 18.

W.
W., signature to magazine article, 9.
Walker, Amasa, Member of Congress, sympathizes with Mr. Chase's plans.
52; opposes bill, 74; favors bill, 90; speech, 112.
Walker, George, says sale of bonds not leading motive, 105.
Walker, Robert J., urges adoption of plan, 64; writes a brochure, 70;
praise from Mr, Chase, 99; quoted, i n .
Walley, Samuel H., Member of Congress, letter to Mr. Chase, 69; disclaims
hostility, 74.
Warden, Robert Bruce, his Life of Chase, 65, 98.
Washington, D. C , 45, 58, 59, 87, 127, 170.
Ways and means, act to provide, etc., taxes national banks, 84, 85, 101;
reprint of section seven, 199, 200, 201, 202.
Ways and Means Committee, 55; Spaulding bill hung up, 56; submitted,
58; Chase's letter, 71; bill submitted to, 87; majority hostile, 99.
Western Banker, nom de plume, H u n t ' s Merchants' Magazine, 13, 24.
White, Horace, his Money and Banking, 104, 108, 109.
Williams, John E., writes tart letter, 30, 34; attacks national banks, 96.
Winthrop, Robert C , 57.
Wisconsin, adopts free banking, 12; "not-to-be-forgotten stumptails" of,
14; bank failures, 16.




213





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102