1. the present banking system was established by an act of congress in 1863. the plan is quite different from any before in use, and commends itself to the whole country by the stability it gives to the currency in use in the transaction of its business, and the security it furnishes against loss of values common under the old systems. they are managed by private parties and corporations, apart from the government, but under a certain degree of supervision, and by its authority. by the act referred to any number of persons not less than five may associate themselves together for the purpose of banking, by compliance with the following conditions:
2. first: they must, under their hands and seals, make a certificate which shall specify—
1. the name assumed by such association.
2. the place where its business is to be conducted.
3. the amount of its capital stock (which cannot be less than $50,000), and the number of its shares.
4. the names of its shareholders, and the number of shares held by each.
5. the time when such association shall commence business.
6. a declaration that said certificate is made to enable such persons to avail themselves of the advantages of this act.
3. this certificate must be properly acknowledged before some competent person, and must be sent to the comptroller of the currency in the treasury department, to be recorded and kept by him. when this, and all other acts which the law[284] requires, has been done by the association, the comptroller of the currency gives them a certificate under his hand and official seal, to that effect, and that they are authorized to commence business. this constitutes the association a corporation. they have the right to make and use a common seal, and have all the rights, and are liable to all the responsibilities of ordinary legalized corporations; and may exist not to exceed twenty years from the passage of this act. every shareholder is made personally liable for the debts of the association or bank, to the amount of the par value of his stock.
4. in order to secure the holders of bills issued by these banks, they must deposit with the treasurer of the united states, united states bonds bearing interest to an amount not less than one-third of the capital stock paid in. these bonds are safely kept by the treasurer. the comptroller of the currency then issues to the bank an amount of bank notes equal to the amount of bonds thus deposited, less ten per cent. in case the bank should fail to redeem its circulating bills, its bonds are sold, and with the proceeds the comptroller of the currency redeems them, or orders them to be paid at the united states treasury. the bonds held by the treasurer as security for the redemption of the bills issued by the association, must be transferred to him in trust; thus giving him entire control of them in case it becomes necessary to sell them in order to redeem the bills of any association which may have failed to pay them on demand.
5. this act has brought a great number of banks into existence, besides organizing most of the banks formerly existing under state laws under this system; so that we have a nearly uniform system of banking all over the united states. the bills of these banks pass in any part of the country, which was not often the case formerly. in case the bank should be mismanaged, or fail to pay for any cause, there is ample security for their redemption deposited in the united states treasury, where they will be paid on presentation.
6. the bill-holder is also better protected against counterfeits[285] than he was under the old system; for all the bills issued by these associations are engraved by the government, and the plates and dies on which they are printed are kept by the comptroller of the currency in the treasury department. the engraving is done in the best possible manner, and it is exceedingly difficult to counterfeit them. besides this, they all have the imprint of the seal of the treasury on their face, and are numbered and countersigned by the treasurer and register. with all these guards and precautions, we have the best paper currency ever used since the establishment of the government.
7. this act necessarily threw upon the treasury department a great increase of labor, and in order to provide for it a separate bureau was created, which is denominated the bureau of currency, the chief officer of which is called the comptroller of currency. he acts under the general direction of the secretary of the treasury. this bureau is charged with the execution of this and all other laws that may be passed by congress respecting the national currency. the comptroller of the currency is appointed by the president and senate, has a deputy, receives a salary of $5,000 per year, holds his office five years, has an official seal, gives bonds to the amount of $100,000, and takes and subscribes the oath of office prescribed by the constitution and the laws. his duties are numerous and very responsible, he having hundreds of millions under his care.
the term national banks, given to these institutions, and national currency to the bills they issue, were given from the fact that they were organized by an act of congress, and that the security for the redemption of their bills consists exclusively of national bonds; no other securities will be taken.
