efforts of the Secretary of the Treasury, and by party tactics, and that it would not have been passed without the last-mentioned provision.[1]
In 1874 the New England States had $70.3 millions and the Middle States $8.7 millions of circulation in excess of their quotas in a distribution of $354 millions. The only other surpluses were small ones in the District of Columbia, Colorado, and Montana.
The number of national banks established before November 28, 1863, was 135. A year later the number was 584. It was in 1865 that the banks went over almost in a body to the new system. Amongst the reasons of the Philadelphia banks for changing, it was said that "the city banks, which are considered the fat goose at Harrisburg, to be plucked at pleasure, will be removed from that body forever."[2]
The national bank system had no sooner gone into operation than a necessity was experienced for some system of assorting, redeeming, and exchanging the issues. An Assorting House was planned by bank officers, at New York, in July, 1865.[3]
An act of March 3, 1865, levied a tax of ten per cent. upon any bank notes paid out by any bank, not being national bank notes, after July 1, 1866. This measure was carried in the House by only one majority.
The Secretary of the Treasury desired, in 1864, that the national banks should be reserved for federal taxation only. The loan bill of June 30, 1864, contained a provision that the interest-bearing notes of the government should not be legal tender for the redemption of bank notes. Gold banks were provided for by the act of July 13, 1870. They were to deposit bonds of the United States, bearing interest, payable in gold, and to obtain notes for not less than $5 to the amount of eighty per cent. of the par value of the bonds. The notes were to bear a promise to pay, on presentation, in gold coin of the United States.
It is evident that the national bank system is a product of the history of American banking. Every important point in it stands out as the result of some long and important line of experience during the previous seventy or eighty years. It was built upon the model of the New York free banking law, but it contained the mature judgment of the leading public men of the time in regard to the good and bad features of that system, and the guarantees that were necessary under it. Its first great feature was that it was national and federal,—a thing which in the days of misery under the local bank system people had sighed for again and again as an unattainable hope. It is a great point which must be put to the credit of the civil war that it brought about what was otherwise a political impossibility. The federal laws and the federal administration of justice had not always stood up unflinchingly in defense of sound doctrine and the integrity of institutions; but they had proved on many occasions the safeguards of these things against State laws and State courts. It was a tremendous gain,—one which people
