"The Bank of Commerce in the city of New York organized under the provisions of this act, January 1st, 1839, with a capital of $5,000,000, which was afterwards increased to $10,000,000, and was among the first of the Free Banks in the State. It was a bank of 'discount and deposit' mainly, and issued only a small amount of circulating notes until it came under the provisions of the National Bank Act in 1865."

"The American Exchange Bank is another of the large and prosperous banks which came early under the provisions of the free banking law of New York. Its capital is $5,000,000, and in 1865 it organized under the National Bank Act."

"The Metropolitan Bank of New York City is another among many prominent banks which, at a later period, was organized under the same law with a capital of $4,000,000, and is now doing business under the national law."

Having abolished the National Bank the difficult position the Government found itself in from time to time gave rise to a ten years' earnest discussion in Congress for and against an independent Treasury. The Secretary of the Treasury reported "that the only proper course was for the Government to keep its own money separate from all banks and bankers, in its own Treasury, whether in the Mints, Branch Mints, or other Government agencies; and to use only gold and silver coin in all receipts and disbursements." A complete divorce, in fact, was recommended from all banks and banking transactions. On this basis a Sub-Treasury Act was passed on the 6th of August, 1846, and came into operation on the 1st of January, 1847, with the proviso that Treasury notes might be resorted to if necessary, a little clause which subsequent events showed it was very necessary to add. In a year after the Sub-Treasury

Act became law very little gold was found in the Treasury. Soon after the war with Mexico difficulties were experienced in getting the gold into the Treasury, and the little clause referring to the alternative of paper was almost immediately fallen back upon. Contractors were paid in forced currency notes, and the banking policy of the Government got deeper into the mud than ever.

What a different position the Government might have been in as regards its power to raise money but for the sentimental philanthropy of President Jackson is shown in the following paragraph with reference to the breaking out of the rebellion in 1861 :

"The Government of the United States had no National institution to resort to, like the Bank of England, or the Bank of France, for aid to sustain the Union Army and Navy. It had only a barren Sub-Treasury, which in every effort of the Government to make loans was known to be antagonistic to the customary commercial operations of the State Banks. The Sub-Treasury was in no way connected with Clearing House operations, and could not check on the banks for Government disbursements, and if the Government borrowed money on its bonds from the banks, the money had to be paid into the Sub-Treasury in gold and silver coin, or treasury notes, which at once weakened the bank reserves, and tended to disturb the whole financial business of the country. The Sub-Treasury law was a positive obstacle to a successful management of the finances in the great war then in progress to maintain the Union."

In his report of December, 1861, Mr. Chase, Secretary of the Treasury, stated that the existing bank note circulation issued by about sixteen hundred local banks was governed by the laws of thirty-four states and rested upon the credit of those private corporations, the total circulation of which he estimated to be 202,000,000 dollars, of which 150,000,000 was in the loyal States and 50,000,000 in those in rebellion. The Government being without any National paper currency, Mr. Chase recommended the National Bank Act requiring that each National Bank which issue national currency shall redeem it on demand "in lawful money of the United States." After being amended in several particulars the National Currency Bank bill as prepared by Mr. Spaulding in December, 1861, was reported from the Finance Committee on the 2nd of February, 1863, and passed after a debate on the 12th. Subsequently considered by the House it passed there on the 20th. Mr. Spaulding says :

"At first the act limited the amount of currency to be issued under it, to $300,000,000. but by a subsequent act this limitation was removed. Free banking is now allowed to all the people who comply with its provisions. There is no longer a monopoly of banking under the laws of the United States. It is a system of National Banking and National Currency coextensive with the boundaries of our National Union. It requires the circulating notes to be well secured by gold-bearing Government bonds, deposited with the Treasurer of the United States; requires each bank to redeem its circulating notes in lawful money on demand, and to keep an adequate reserve for that purpose; makes them a legal tender for all taxes and other debts to the Government, except customs, and for all debts owing by the Government, except principal and interest of the funded debt; it also makes them receivable by each National Bank for all ordinary debts due to them, and each bank, designated as a depository, is also required to receive it on deposit from all public officers. These are important provisions in the law for nationalizing this currency, and it consequently obtains a wide circulation. Congress, by the Act of March 3rd, 1865, drove all State Bank circulation out of existence by the imposition of a tax upon it of ten per cent."

In concluding this sketch of the progress made in banking in the United States, and for which we must make our acknowledgments to Mr. Spaulding for having drawn so largely from his centennial address, we give the subjoined further remarks :

"The refusal of Congress to recharter the first United States Bank, and the arbitrary and illegal action of the Executive in regard to the second United States Bank, seriously retarded the progress of sound banking, under the authority of the United States. By these blunders the Government and people have been deprived of the great benefits they would have received from the stability given to business by the continuance of such an institution. In spite, however, of this incongruous and unwise action of Congress and the Executive there has been real progress made in the business of banking during the last hundred years. The Bank of North America in Philadelphia, the Bank of New York in New York City, the Massachusetts Bank in Boston, the three first banks organized in the United States, have always maintained a respectable position, and are to-day performing their duties to the public, and are favorably regarded for their high-standing and solidity. Having been reorganized, they are to-day doing a prosperous business under the present National Bank Act.

"Most of the Banks organized in the principal cities since January 1st, 1790, have maintained their existence in some form, have increased their capitals, have done a successful business, and are now highly creditable institutions, and doing as good a business as the present state of trade will admit."