Though the original system of bank note redemption aided in effecting resumption by forcing the state banks to improve the standing of their notes and created a good national currency accepted everywhere, it was nevertheless defective. The parent bank agreed to redeem its own notes and those of the branches north of Charleston, without distinction, at any branch. One result was that the parent bank did not know where or when notes were likely to be presented. Loans were also created freely by certain branches, for the loaning branch knew that its notes would be presented elsewhere for redemption. In consequence, sudden and great demands were made, varying with the balance of trade, and it became useless for any one branch to be conservative.

For these reasons the system broke down in 1818, and the bank resolved that no branch should take the notes of other branches except in payments due to the United States. It further resolved that no branch should reissue notes of the parent bank or other branches except when it was a creditor of the other bank, and then only when the exchanges indicated that such reissue was for the interest of the parent bank. By making notes of $5 denomination issued by any branch or by the parent bank acceptable at the others, however, a good currency was provided. But the burden of signing these notes of small denomination was so great that the bank officers sought relief from Congress; failing to secure this relief the bank in 1827 invented "branch drafts," in $5 and $10 denominations. These drafts were signed by the branch president and cashier, and drawn upon the parent bank; they resembled bank notes in form, were indorsed payable to bearer, and circulated freely, supplanting the notes in certain areas. Their issue, however, was a leading cause of complaint against the parent bank, because such drafts were held to be contrary to the provisions of the bank's charter and harmful because they contracted the circulation of the state banks.