Evening journal., 1913-12-30
HOW THE OLD
SYSTEM BEGAN
Banks Brought Into National
System in Two
Years
PHILADELPHIA WAS
TIE FIRST In

Now that tic, curenc, bil f. absui
become d law. giving TIE laiicl
Statcs a new banking and currency sy--
tenn it s interesting to look back to
1868 when the old national bank system
under which we have been operating fer
a generation was created. The country
wn- n the midst Of the Civil War ana
the currency feature Mn- based On gov
eminent bonds which vcrs issued D, the
hundred millions 80 carry ua he war
fhc bll, which '.e,noo .,u fchsuiy
-. sO5. ereatci ius,nry lmeau n
thc Treasury lepAeti a., ~ illr loac
OF which was the run pr,ller ot Che ciu-
icne> who was given the power 10 ails
thorDc the establishment OF uatinnal
nnks With minimum clptll. except
~ -iunll towns of 100000 Not few
state banks vefo slow TO take ad,an.
tarc li che new arrangement. which
Nas devised primarily to secure the back
n. ui the banks Tor the national credit
Ia lnuupy lsU3 only 0s5 banks had
organized under the national law On
MarrA 3. 1865 law was pns-ed inn
posing a taN of 10 per cent. on the mote.
oi Stnie hmlks' to 20 into effect August
l. lNiii ihen the reorganization pro-
cecdcd rapidly and by October. SG0.
there We're .di4 banks in the national
system The charter, under the law oi
lt'j vc'e to lapse after 20 years. but in
1852 Congress authorized the recharicr
Of banks for terms OF equal length
Hugh NoCulloch of indirna, who was
made comptfullor OF the licu-urN. tells
in his "Mcn and Measures of Half a
Century how the system hegan;
Summer hnd come before the first ma
ticnal bank was authorized Co commence
bi- mess The First National. uf l'lia-
derlia. took the lead. with u capital pf
Sla0oa0. It's organization certificate was
rsucd ON the .Oth ut dune. On the -nirs
daN certificates were issued 10 the First
National of Now llayen, with capital
of s3OO000' 10 the First National o.
Youngstown. o.. with tdlitul of Sl50,
O00 TO the First National of Stamford.
Coun., with capiinl oi S3O0030 On
the 22l ceriiicatc WIS ISSUED to the
First National ot Chicaso lwllosc pres
cn business /, larger than that OF amy
otier bank in the country with a CAPT.
tai OF 500 OOn onlyi on tine 18th cf
july. TO tho First National OF Cncin-
natl with n capital of 81 ,0u0DD0. The
organizations thcn increased rapidly. but
mainly 30 the Middle and Western
Static Most of The bankers in the large
conWcscitl citic~ of iue fast regarded
the system witt, distgust Il did not
take at the start. either IA Boston, Phil
adelhm ar Now York
"'fhe First National Bank of New
York the richest banking mine ever
opened in that city. was chartered on the
2lsl Of July. with a capital OF SzoUOuo,
the Second on the 18th of August. With
n capital of 5000 900; the Third. on the
2l~t day of September, with q capital 81
$aOan00 No mere wcrc organized IN
Now York until February 21 lsoi. Wncn
tho Fourth National was organized viii
a capim of s5,00O,00n None OF tht
largo State hanks were converted into
national banks until nearly 700 new
mnk> had been organized.
WHY Banks We're Unwilling.
"Thcre were four causes for the un.
willingness of the stat, banks to become
natioim banks.
The Apprehension that the nation.
al system might prove to bc ~ repetition
iuf me frce.hans system at the West
80 The opinion that in becoming ma
tiond banks and issuing notes secured
ibv government bonds thcir interests
would be 80 identified with the interest
of the government. their credit 80 depcn
dent upon. SO interviewer with the pub
lie credit. thnt they would be ruined !
the integrity f the union should moi
be prcscrved
- Tho Danger oi hostile legislation
hv Congress. or the annovanccs to Whicl
they might be exposed by Congressionn
interference with their business for par
tison purposes
~ rhe requirement that in order G
lbecomc national banks they must rcliu
uuish the nantes 60 which they had be
comic attached and bc known 10y numer
sAs
~.Do vou expect that the Bank O
lyon.merce' said its president TO me. 'wil
telinuuish H. nonorcd name ana b.
known as the Tenth or the Iwcntiet
National Bank OF New ork II yon DC
INon win find yourself mistakcn. On thi
point the leading State banks were
unit. When it was Welded by the sec
rdarV and they were permitted to retail
tlirit old names. with the word nationu
urotixed or affixed. they came into TN
national <vstem it'll rush Boston. a
4. her wont in all public enterprise
taking the lead. Within less than tw
venrs the state banks were supersede
il, the national, and their notes, tl'
imo.t ot which had at best merely 7,
. cal and uncertain credit. were withdraw
. from circulation. and their place was iil
ed hy notes OF perfect solvency and cui
rent through the Union. All TINS wa
accomplished without a ripple OF dlstm
( hancc 20 the current business OF th
country