Page:A History of Banking in the United States.djvu/485

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THE NATIONAL BANK SYSTEM.
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bonds, as therein suggested, would still further facilitate loans, by increasing the present and causing a future demand for such bonds." In short, the motives of the legislation which established the national bank system were political. It was desired to change the currency in a way to make it more useful in the financial exigencies of the government, and to borrow all the banking capital of the country as a further financial resource. There was no consideration of favoritism to the banks and they, almost without exception, opposed the change. The arrangement might also be regarded as a compromise by which the government, instead of depriving the banks of the privilege of circulation, shared it with them. The first national bank act was passed February 25, 1863, but it was superseded by the act of June 3, 1864. The associations were to be organized for twenty years, with a minimum capital of $50,000; the smallest deposit for circulation, $30,000; on such deposits of United States bonds, 90 cents on $1 of market value, not exceeding par, were to be furnished in circulating notes by an officer of the Treasury Department. The lowest denomination of notes was to be $1 until after resumption; then $5. The notes were to be a legal tender to and from the government and to be received at par by all the banks in the system. The banks in the sixteen leading cities were required to maintain a reserve of lawful money equal to twenty-five per cent. of their circulation and deposits, and all others fifteen per cent.; three-fifths of the fifteen per cent. in the latter case might be kept on deposit as a redemption fund in one of the sixteen large cities, and one-half of the reserve of the large cities might be kept in New York. Quarterly reports were required to be published in the newspapers, but this was changed in 1869 to the requirement that five reports should be made annually, at any time when the Comptroller of the Currency might call for them. A tax of one per cent. per annum was laid on the average amount of the circulation, and one-half of one per cent. on the deposits, and the same rate on the capital stock not invested in United States bonds. The two last were repealed March 3, 1883. The act of March 3, 1865, allowed only a smaller proportion of circulation to capital for large banks, so that a bank with more than $3 millions capital could have only sixty per cent. The total amount of national bank circulation was fixed at $300 millions, of which half was to be apportioned amongst the States and Territories, according to population, and half according to existing banking capital and business. This apportionment proved impracticable, and after the close of the war there was complaint that national banks could not be formed in the Southern States. The limit was therefore increased by $54 millions, July 12, 1870; this amount to be apportioned to the States and Territories which had less than their quota. The act contemplated a withdrawal and redistribution of the surpluses; but this also proved impracticable.

Power was expressly reserved to Congress "at any time to alter, amend, or repeal" the national bank act. We have the testimony of Amasa Walker that the bill was passed against great opposition, without discussion, by the