The national bank system was formed to provide a uniform bank note currency, and this purpose has been thoroughly realized. By conferring the printing, issue, and redemption of the bank notes upon the Comptroller of the Currency, requiring the ample pledge of government bonds as security and requiring every national bank to accept the bank notes of every other national bank, the system provides a currency uniform in style, issue, redemption, security, and acceptability. The notes are national in a geographical sense, for they circulate freely at par in any part of the Union, however far from their issuing bank, and travel and domestic exchange are thereby greatly facilitated. Their uniformity also makes counterfeiting more easy to detect and cheaper to prosecute.
Again, the safety of national bank notes up to the present has been unquestioned. The security is twofold. Certain government bonds, among the best of the assets of the bank, are segregated and pledged specifically to secure the notes. The government guarantees the redemption of the notes, retaining a prior lien on all the assets of the issuing bank. The ultimate security is therefore the government credit, represented both in the bonds and in the guaranty of redemption, and only to a small degree does that security lie in the strength of the commercial banks. The 10 per cent margin of security required until 1900 between the par value of the bonds and the amount of notes issued to the banks, the present limitation that the amount of notes may not exceed the par value or, in the discretion of the Comptroller of the Currency, the market value of the bonds, and the confidence of the people in the financial omnipotence and fair dealing of our government, have sufficed to give the bank notes an unquestioned safety.
Secretary Chase and others holding the Hamiltonian idea of the political value of a public debt, believed that banks would have a more favorable attitude toward the government and would support it more willingly and fully if the value of their assets and the acceptability of their note issues depended upon the financial prosperity of the government - a theory which has since been borne out by the facts.