PRESIDENT LINCOLN SIGNS NATIONAL BANKING ACT OF 1863
Washington, D.C. (JFK+50) 153 years ago today, February 26, 1863, President Abraham Lincoln signed into law the National Banking Act of 1863. The legislation, originally known as the National Currency Act, had passed in the U.S. Senate by only 2 votes.
The bill, which was proposed to bring financial stability to the nation and fund the Civil War, was supported by Treasury Secretary Salmon P. Chase and Senator John Sherman of Ohio. It was opposed by Senator Thaddeus Stevens of Pennsylvania.
Just as the name suggests, the legislation set up national banks authorized to issue notes backed by the Treasury of the United States and printed by the national government. Each national bank was limited to a total value of notes "proportional to the bank's level of capital deposited with the Comptroller of the Currency*."
The Office of the Comptroller in the United States Treasury Department today suggests..."the law was a response to the mismash of local banks, local money and conflicting regulatory standards that prevailed before the Civil War," and that the National Banking Act of 1863 increased citizen perception of national loyalty over state and local loyalty.
Also, by taxing paper notes issued by state and local banks, The National Banking Act of 1863 virtually eliminated non-federal paper money.
President Lincoln "took pride" in signing the bill into law believing that it would provide "great benefit" to the people of the United States as well as the country.
The legacy of this legislation is the federal-state banking structure created by the act continues to be a basic characteristic of the financial system and economy of the United States today.
*The first Comptroller of the Currency was Hugh McCulloch of Indiana.
"Lincoln and the Founding of the National Banking System," Office of the Comptroller of the Currency, Department of Treasury, www.occ.gov./
"National Bank Act of 1863," www.encyclopedia.com/