Questions about National Bank Act
Short answers, pulled from the story.
What did the National Banking Acts of 1863 and 1864 establish?
The National Banking Acts of 1863 and 1864 established a system of federally chartered banks and created the Office of the Comptroller of the Currency within the Treasury Department. They introduced a national currency backed by U.S. Treasury securities and replaced a fragmented state-by-state banking system with a unified federal framework. The 1863 act, originally called the National Currency Act, passed the Senate by a margin of 23 to 21 on the 25th of February, 1863.
What bank received the first national charter under the National Bank Act?
The First National Bank of Philadelphia, Pennsylvania received Charter Number 1, the first national charter issued under the National Bank Act. The first entirely new national bank to open for business was the First National Bank of Davenport, Iowa, with Charter Number 15. More than 1,500 existing state banks converted themselves to national status under the acts.
What were greenbacks and how were they connected to the National Bank Act?
Greenbacks were paper notes authorized by the Legal Tender Act of 1862, named for the green ink printed on one side, and backed only by the federal government's promise rather than gold or silver. Congress authorized $150 million initially and later expanded the total to $450 million, with the largest amount outstanding at any one time reaching $447,300,203.10. The inability of greenbacks to address the banking system's structural fragmentation helped push Congress toward the National Banking Acts.
What did the Supreme Court rule in Veazie Bank v. Fenno about the National Bank Act's tax?
The Supreme Court ruled seven to two in favor of the federal government in Veazie Bank v. Fenno. The case was brought by a state-chartered Maine bank challenging the constitutionality of the ten-percent federal tax on non-national bank notes. The ruling upheld Congress's authority to use taxation to drive state-issued currency out of circulation.
What happened to state banks after the National Banking Acts passed?
State banks fell from 1,466 in 1863 to just 247 in 1868, driven down by federal taxes on non-national bank notes. They eventually rebounded because state charters required as little as $10,000 in capital, far less than the $50,000 to $200,000 required for a national charter. By 1913, state banks had grown to 15,526, outnumbering the 7,473 national banks.
How was the National Bank Act used in 2004 by the Comptroller of the Currency?
In 2004, Comptroller of the Currency John D. Hawke, Jr. invoked the National Bank Act to bar state attorneys general from oversight and regulatory roles over national banks. Many blame the resulting gap in oversight for contributing to the late-2000s recession, the bailout of the U.S. financial system, and the subprime mortgage crisis.