Five Mile Beach weekly journal., 1914-01-09
DIED, SUDDENLY, OLD
NATIONAL BANKING ACT
Congress Cuts Short Existence
of Measure Born During
Civil War
From the Brooklyn Eagle.

OH MG0SuEE DVEH U1aEAAHA
Civil War
From the Brooklyn Eagle.
After a useful existence OF more than
half a century-useful despite the fact
that in recent years 1t became made
quate to serve the financial needs of the
country-the national banking act be-
comes a dead letter and will live here
after only in history. It has not, of
course, absolutely ceased to operate as
yet, even with the signing Of the new
currency law, because the transition
from one system to the other will oc-
cupy at least a year or two, but 10 all
intents and purposes the national bank
ing law has been laid aside on the
shelf.
Essentially a civil war measure, the
national banking act assumed a per-
manency among the statutes of the
United States that the trainers of it
probably never contemplated. It was
written into law in the period midway
between the opening and closing Of
the struggle between the North and
South, at q time when there were only
about l 800 banks Of all kinds In the
whole country, as against nearly
10000 today. Frequently under fire,
subjected to political and financial at
tack, criticised because 1t did not meet
the modern banking and currency
needs of the nation, it nevertheless
stood for fifty years, during which
time a development of industry and
wealth took place in the United States
such as never was known in the his
tory Of the world.
ACT SIGNED IN 1853
President Lincoln signed Intentional
banking act on February 25, 1853. It's
title was ian act to provide a nation
al currency secured by a pledge of Uni
ted States bonds and to provide for
the circulation and redemption there
off, A comparison of this title with
that OF the new currency law indicates
at a glance how the lapse of half a GEN.
fury has changed the theory of the re-
latlon of the Government to banking
in this country. The new law is
briefly known as the Federal Reserve
Act, but its full title is IAN act to pro-
vide for the establishment OF federal
reserve banks, to furnish an elastic cur
rency, to afford means of rediscount-
ing cial paper, to establish a
more effective supervision of banking
In the United States and for other pur-
poses.
When President Lincoln signed the
national banking bill the United States,
involved in a costly war, was under the
necessity of providing a market for emo
rmous loans which the Government
had to secure IN order to meet the ex-
penses Of the civil strife. 1t was also
imperative to furnish q circulating
medium to supplement the old green
backs and to take the place of the Of
ten unsatisfactory State banknote is
sues which were then In circulation.
While in many States these notes were
properly safeguarded, in others there
existed a great number of SO called
wildcat banks, whose notes were scarce
ly worth the papero on which they were
printed. State bank issues as a result
came into general discredit and losses
ran into millions.
VAR RETIRED GOLD AND sILvER
At the beginning of the Civil War
IN 1861 approximately two-thirds ofthe
money in the country was In gold and
silver, but two years later, as a result
of the hostilities, practically all coin
had disappeared from circulation with
the exception of about $25 5000, 900 of
gold, which was in use on the Pacific
Coast. There was in 1868 1915, 600, 900
of currency in circulation, of which all
but $25, 600, 000consisted of United States
demand notes, fractional currency and
State bank issues. Checks and other in
struments of credit were little used, ex-
cept in the cities, and the Clearing
House transactions for 1858 were lees
than $15, 600 900, 900, as against nearly
Sta, 600, 0O0,0 900 fifty years later. The
population of the country was 80, 000,-
900, and In half a century 1t has trebled.
There was but n bank for every TO-
600 inhabitants in 1868, while today
there is a bank for every $500.
During the first few years Of its life
there was much opposition to the ma
tional banking law and the system
which it was intended to create grew
but slowly. The number of national
banks organized In 1853 was only 1874.
In 1854 458 represented the total, and
i l865 there were LOLA. By January /,
1855, the number organized was 1925,