Page:The American Cyclopædia (1879) Volume II.djvu/301

 BANK 281 was the ".Suffolk bank system," through which the notes of all New England hanks were col- lected and redeemed at the Suffolk bank in Boston, each bank making a stipulated deposit for that purpose, amounting in the aggregate to $300,000. National Banks. The exigen- cies of the civil war, 1861-'o, requiring that the government of the United States should have other than the ordinary demand among the people for the absorption of the bonds which it was from time to time issuing, led to the law of 1864 entitled "An act to provide a national currency, secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof." This act was approved June 3, 1864, and provides among other things for a separate bureau in the treasury depart- ment, the chief officer of which shall be de- nominated the comptroller of the currency, and it shall be under the general direction of the secretary of the treasury ; that associations for carrying on the business of banking may be formed, consisting of not less than five persons ; that no association shall be organized under this act with a less capital than $100,000, nor in a city whose population exceeds 50,000 with a less capital than $200,000, but that hanks with a capital of not less than $50,000 may, with the approval of the secretary of the treasury, be established in any place the popu- lation of which does not exceed 6,000 ; that such associations shall have existence for 20 years, and may exercise the general powers of banking companies ; the capital shall be divided into shares of $100 each ; that stockholders shall be equally and ratably liable to the ex- tent of the stock for the debts and contracts of the bank; that every association, prelimi- nary to the commencement of banking business, shall transfer United States bonds to an amount not less than $30,000, and not less than one third of the capital stock paid in ; that upon the proper examination being made into the af- fairs of the proposed institution, it shall be en- titled to receive from the comptroller of the currency circulating notes equal in amount to 90 per cent, of the current market value of the bonds transferred, but not exceeding 90 per cent, of the par value of said bonds ; that notes to an amount not exceeding $300,000,000 may be issued under this act ; that these notes 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 sala- ries and other debts and demands owing by the United States to individuals, corporations, and associations within the United States, except interest on the public debt, and in redemption of the national currency ; that the rate of in- terest to be charged shall be that allowed by the laws of the state or territory where the bank is located, or in the absence of any such rate, not exceeding 7 per cent. ; that each of the banks in St. Louis, Louisville, Chicago, De- troit, Milwaukee, New Orleans, Cincinnati, Cleveland, Pittsburgh, Baltimore, Philadelphia, Boston, New York, Albany, Leavenworth, San Francisco, and Washington city shall at all times have on hand in lawful money of the United States an amount equal to at least 25 per cent, of the amount of its notes in circula- tion and its deposits, and that all others shall keep a reserve of not less than 15 per cent. ; that every association shall pay to the treasurer of the United States in the months of January and July | per cent, each half year on the average amount of its notes in circulation, and a duty of J per cent, each half year upon the average amount of its deposits, and a duty of J per cent, each half year on the average amount of its capital stock beyond the amount invested in United States bonds ; that any state bank may become a national bank under this act. By an act amending the foregoing act, approv- ed March 3, 1865, it was provided that notes shall be issued to associations according to cap- ital as follows : to each not exceeding $500,- 000, 90 per cent. ; to each whose capital ex- ceeds $500,000, but does not exceed $1,000,000, 80 per cent. ; to each whose capital exceeds $1,000,000, but does not exceed $3,000,000, 75 per cent. ; to each whose capital exceeds $3,- 000,000, 60 per cent. ; and that $150,000,000 of the entire amount of circulating notes au- thorized to be issued shall be appropriated 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 sev- eral states, in the District of Columbia, and in the territories, having due regard to the exist- ing banking capital, resources, and business of such state, district, or territory. By an act to provide ways and means for the payment of compound-interest notes, approved March 2, 1867, it was provided that temporary loan cer- tificates, bearing 3 per cent, per annum inter- est, may be issued to an amount not exceeding $50,000,000, and used for this purpose; and further, that said certificates may constitute for any national bank a part of the reserve provided for by law, provided that not less than three fifths of the reserve of such bank shall consist of lawful money of the United States. By a further act approved July 25, 1868, pro- vision was made for the issue of an additional amount of $25,000,000 of temporary loan cer- tificates. By an act approved July 12, 1870, it was provided that $54,000,000 additional cir- culation may be issued to national banks ; that the circulation of no bank thereafter organized shall exceed $500,000 ; that at the end of each month an amount of certificates of indebtedness equal to the amount of notes issued during that month shall be called in, paid, and cancelled. This act also provides for the issue of circula- ting notes redeemable in coin to such banks as may be instituted, the circulation of no such bank under said act to exceed $1,000,000, these notes to be secured by pledge of United