The effect of the bank act of 1868 upon the public credit was speedily apparent. Within a week after its passage the bonds of the United States, for which a new market had thus been created, advanced from 93 to par in currency. The sale of the 5-20 bonds proceeded so rapidly that,within two months after the adjournment of Congress, the whole mass of suspended requisitions had been paid, all current demands had been promptly met, and full provision had been made for the payment of the army and navy. During the remainder of the year no serious difficulty was found in providing for the enormous expenditures of the government. The treasury report in December declared that the bank act had "at once inspired faith in the securities of the government, and, more than any other one cause, enabled the Secretary to provide for the prompt payment of the soldiers and the public creditors."

The financial policy of the government was at last established in all its main features. Nothing more was needed, except the correction of some matters of detail. The revenue from customs was all that had been expected. The machinery for collecting internal revenue was still new; the results were not satisfactory; and the law needed revision. No change was desired in the character of the loans authorized by Congress, unless perhaps permission should be granted to borrow money for forty years instead of twenty. The Secretary thought it clearly inexpedient to increase the amount of United States notes beyond the limit of $400,000,000, already established. "Additional loans in this mode," he said, "would almost certainly prove illusory; for diminished value could hardly fail to neutralize increased amount." If proper means should be adopted to induce the prompt conversion of the State banks into national banking associations, the Secretary thought that all the money needed for the prosecution of the war could be borrowed on reasonable terms, while the ordinary expenses and interest on the public debt would be more than covered by the revenue.

The bank act had not gone into full operation. The printing of the bills had only just begun in November, and none had been delivered. The whole number of associations organized under the act prior to the 29th of November was only 134. with a little over $16,000,000 capital, though many others were in process of organization. But credit is confidence, and confidence is only another word for faith-the evidence of things not seen. The government had shown a purpose to put a limit to the paper inflation, and to call upon the banks to support the treasury with their collective capital; and the manifestation of this purpose had instantly strengthened the public credit.

The Comptroller of the Currency. Mr. Mc-Culloch afterward Secretary of the Treasury, found the act of 1863 not altogether symmetrical in its arrangement, and obscure if not inconsistent in some of its provisions.

He therefore recommended many changes in detail, and to this work of revision Congress, in March, 1864, addressed itself. The result, after more than two months of deliberation, was the act of June 3d, 1864, which remains upon the statute book substantially unchanged since that date.

Many of the banks were still unreconciled to the change. The New York bankers, belonging to the Clearing-house Association, had a long hearing before the committee on ways and means. They were opposed to the law from the beginning, they said, but if it was to stand, they wanted it as free from objection as possible. They thought, in the first place, that the office of the comptroller of the currency should be removed from Washington to New York, and that the comptroller, instead of remaining a subordinate officer under the secretary of the treasury, should be made the head of an independent department. Mr. Pruyn, of New York, afterward made the same suggestion in the House, but it was disregarded. The bankers also desired to have the law so modified as to admit existing banks, with their outstanding circulation, and no others. When this plan was mentioned in the Senate, Mr. Sherman showed that it was practically a proposition to give the existing banks a monopoly of the banking business. It was also a proposition to recognize and authorize their extravagant issues of suspended paper. Mr. Hooper, in the House, gave a list of 25 banks in New York, New Jersey, Pennsylvania, Delaware, Indiana and Ohio, with a combined capital of $1,932,968, and a circulation of $5,998,688. Under the national law, this circulation would have to come down to less than $1,800,000.

Mr. James Gallatin brought the influence of an honored name to the support of these propositions. His father, Albert Gallatin, had been secretary of the treasury under the third and fourth Presidents,and the son had inherited a reputation for financial wisdom. He had suggested, when Secretary Chase offered the 7.30 bonds to the New York banks, in 1861, that Congress should be called together to authorize a higher rate of interest. It was by his advice that the New York banks suspended specie payments, in order, as he argued, to save the specie which would otherwise be borrowed and spent by the government. He had afterward endeavored to persuade Secretary Chase to receive for government loans the depreciated paper of the suspended banks. Failing in this attempt, he had thrown himself into opposition to the whole policy of the government, and had written a pamphlet contending that it would have been possible, if the finances had been wisely administered, to have carried on the war on a specie basis. This was, no doubt, true; but the die had then been cast, and the banks themselves had set the example of suspension.

The most strenuous opposition was made to the imposition of a national tax upon the circulation of the State banks. The protest of Mr. Andrews, President of the State Bank of Ohio, was read in the House. Mr. Andrews argued that the tax was unjust and oppressive, since it imposed a penalty for doing what was lawful to be done, and could not be undone save by the slow process of retiring the notes in the course of business. He therefore asked that the tax should be imposed only on no: led under State authority after the passage of the law, or at least be postponed, so as to allow them to be withdrawn from circulation.