The National Banking Act became a law on February 25, 1863. On October 1 the Secretary reported the organization of but 66 national banks, and these were small institutions with the foundation of which the leading financiers had nothing to do. During the early part of 1864 Chase urged a prohibitive tax on state bank notes as a means of forcing the state banks to nationalize, the argument being based on:

1. The Desirability Of An Exclusive National Currency.

2. The support which the bond sales would afford to the credit of the government.

3. The convenience and utility of the national banks to the government. On June 3, 1864, the act was amended, the new act constituting what is commonly called the National Banking Act. On March 3, 1865, an act was passed imposing a tax of 10 per cent on the amount of notes issued by state banks after July 1, 1866. Up to November 15, 1864, only 584 national banks had been organized, with $81,961,450 capital. The effect of the tax by October 1, 1865, was to raise the number of banks to 1,566, with $276,-219,450 capital. Though during the Civil War the national bank system failed to provide either a uniform currency (which seems to have been Chase's main motive), or a market for government bonds, after the amendment of March 3, 1865, the plan quickly established a safe and uniform note circulation and a permanent market for government bonds.