BANKS; BANKS, FEDERAL RESERVE; SAV INGS BANKS; etc.
The following tables, compiled from the report of the Comptroller of the (Dec. 1, 1919), give a com prehensive view of the development of the National banking system in recent years: The charters were sometimes fraudu lently obtained and currency issued to three times the amount of their capital, and, in 1814, 1837, and 1857, many of them suspended payment. A reform movement in bank currency was inaugu rated in Massachusetts in 1825, and a "safety-fund" system, recommended by Mr. Van Buren, adopted in 1829. In 1838 the Free Bank Act passed the New York Legislature, which authorized any History.—The first bank in the United States was organized in Philadelphia in 1780, and a bank of North America was planned in 1781 and opened in 1782. The Massachusetts Bank was incorporated in 1784; that of New York was chartered in 1791, although since 1784, under Alex ander Hamilton's "Articles of Associ ation," it had been doing business. Alex ander Hamilton also originated a plan for a United States bank, with a capital of $10,000,000, three-fourths to be paid in United States stock, at 6 per cent., which plan was adopted and approved by Washington in 1791. The bank was re organized in 1816 with a capital of $35, 000.000, the United States subscribing $7,000,000, with interest at 6 per cent., but in consequence of a general financial depression, was, the next year, in great danger of failure. Congress refusing to renew the charter, a State bank, called the United States Bank, was chartered in Pennsylvania, and eventually failing, the whole account was settled in 1856. The $28,000,000 deposited by sharehold ers was totally lost, while the Govern ment realized $6,093,167 upon its invest ments of stock. State banks were after ward chartered in the interest of indi viduals and dominant political parties.
number of persons to form a banking association, subject to certain specified conditions and liabilities.
On Feb. 25, 1863, the National banking system was organized, but the act estab lishing it was modified by that of June 3, 1864. This provided for a National Bank Bureau in the Treasury Depart ment, whose chief officer is the Comp troller of the Currency. Under it Na tional banks. could be organized by any number of individuals, not less than five, the capital to be not less than $100,000 except in cities of a population not ex ceeding 6,000; in these banks could be es tablished with a capital of not less than $50,000. In cities having a population of 50,000 the capital stock could not be less than $100,000. One-third of the capital was required to be invested in United States bonds, which were de posited in the Treasury for security, upon which notes were issued equal in amount to 90 per cent, of the current market value, but not exceeding 90 per cent. of the par value; and these notes
were receivable at par in the United States for all payments to and from the Government, except for duties on im ports, interest on the public debt, and in redemption of the national currency. On March 3, 1865, an act was passed by which the circulation of the State banks was taxed 10 per cent., which drove their notes out of existence. The original act authorized the issue of $300,000,000 of circulation; that of May 12, 1870, in creased it to $354,000,000.
The act of Jan. 14, 1875, authorized the unlimited issue of circulating notes, subject to the terms of the law, but made it the duty of the Secretary of the Treas ury to retire legal tender notes to the extent of 80 per cent. of the additional circulating notes until the legal tender notes should be reduced to $300,000,000. The banks were required to pay annually 1 per cent. tax on their circulation, and % per cent. on their average deposits and on their average capital not invested in United States bonds. By act passed March 3, 1883, the taxes on capital and deposits of banks, bankers and National banking associations, except such as were already due and payable, were repealed, and also the stamp tax on bank checks, drafts, orders, and vouchers after July 1, 1883. The original act of Feb. 25, 1863, limited the period of existence of the National banks to 20 years; but, on July 10, 1882, an act was passed, ap proved by the President July 12, which provided for the extension of the cor porate existence of all National banks upon compliance with certain conditions, for 20 years. Many of the banks took advantage of the law, and reorganized under the act, though some of them under a different name. By the act of June 3, 1864, each association was en titled to an existence of 20 years from date of organization. The War Rev enue Act of 1898 imposed a stamp tax of two cents on every bank check.
Currency Act of 1900.—On March 14, 1900, President McKinley approved a new currency act, which, among other things, established the gold dollar as the standard unit of value, and placed at a parity with that standard all forms of money issued or coined by the United States. The bill also made a number of important changes in the regulations governing National banks. The law per mitted National banks, with $25,000 capi tal, to be organized in places of 3,000 in habitants or less, whereas the mini mum capital previously was $50,000. It also permitted banks to issue circula tion on all classes of bonds deposited up to the par value of the bonds in stead of 90 per cent. of their face, as before.