Bank notes were of uniform design and, in fact, were printed by the government. The legislation also placed a tax on notes issued by state banks, effectively driving them out of circulation. Under the legislation, newly created national banks were empowered to issue national bank notes backed by a deposit of US Treasury securities with their chartering agency, the Department of the Treasury’s Comptroller of the Currency. The confusion was such as to lead to the publication of magazines that specialized in printing pictures, descriptions, and prices of various bank notes, along with information on whether or not the issuing bank was still in existence. In fact, bank notes frequently traded at a discount, so that a one-dollar note of a smaller, less well-known bank (or, for that matter, of a bank at some distance) would likely have been valued at less than one dollar by someone receiving it in a transaction. Notes of sound banks circulated side-by-side with notes of banks in financial trouble, as well as those of banks that had failed (not to mention forgeries).
Prior to the establishment of the national banking system, the national currency supply consisted of a confusing patchwork of bank notes issued under a variety of rules by banks chartered under different state laws. Provision of a Uniform National CurrencyĪs its original title suggests, one of the main objectives of the legislation was to provide a uniform national currency. The Acts marked a decisive change in the monetary system, confirmed a quarter-century-old trend in bank chartering arrangements, and also played a role in financing the Civil War. The National Banking era was ushered in by the passage of the National Currency (later renamed the National Banking) Acts of 18. Grossman, Wesleyan University The National Banking Era Begins, 1863 The National Banking Acts of 18 US Banking History, Civil War to World War II
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