Thursday, February 26, 2009

The Creation Of Banks

The National Bank Act was signed into law by Abraham Lincoln on February 25th 1863.

The National Bank Act created a system for chartering banks, and encouraging a national currency. This Act also established the Federal Office of the Comptroller of the Currency as a branch of the Department of the Treasury. The idea behind the Act was to raise money to fund the Union Army’s fight against the Confederacy by getting banks to buy Federal Bond and taxing the State issued bonds. The act just passed on a Senate vote of 23 to 21.

Another banking act was passed in 1865 that imposed a tax on the money issued from State banks. This tax effectively did away with all non-federal money and increased National Banks to 1,644 by 1866.

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