—Mr. Garrett Davis, avowing himself an advocate of the old United- States Bank which President Jackson destroyed, was opposed to the pending bill because "it does not provide for the convertibility of its paper into coin." The "system is based on government bonds, and they sold in New York yesterday at a discount of fifty-three percent."
—Mr. Chandler of Michigan corrected Mr. Davis. "Gold sold at fifty-three per cent. premium, but that did not mean a discount of fifty-three per cent. on the bonds."
—Mr. Wilson of Massachusetts pertinently asked Mr. Davis "if the credit of the government is not good enough, where is there left in the country any thing good enough to bank on? If the government goes down, there is not a considerable bank in America that does not go down with it."
—Mr. Doolittle of Wisconsin regarded it as "a necessity that the government should take control of the paper currency of the country. In some way we must restrain the issues of State banks. If we permit these banks to flood the channels of circulation, we destroy ourselves."
—Mr. Collamer of Vermont denied the right to tax the State banks out of existence, and to establish corporations in the State and Territories. Independently of the power of visitation by those States and Territories, he objected to making the government responsible for the ultimate redemption of the bills by the securities deposited. He inquired in what respect the promises of the National banks would be better than the notes of the government, and why should they be substituted for them?
—Mr. Chandler of Michigan claimed that when the whole system was in operation the government would borrow $300,000,000 at four per cent. per annum, because, while the bonds deposited with the banks would draw six per cent., the tax would bring back two per cent. He did not know how far the bill would go, but "all that is in it is good."
The bill came to a vote in the Senate on the 12th of February, and narrowly escaped defeat. The yeas were twenty-three, the nays twenty-one. The senators from Oregon, Nesmith and Harding, were the only Democrats who voted in the affirmative. Nine Republican senators voted against it.
The House of Representatives received the bill on the 19th. Mr. Spaulding of New York advocated it very earnestly. He stated that its principle was based on the free banking law of New York, which had been in successful operation since 1838. He dwelt upon the national character of the proposed notes, on their use in payment of taxes, and on the advantage to accrue from the exemption of the banking associations from State and United-States taxation.
—Mr. Fenton of New York expressed the belief that the measure would aid in extricating the government from the financial difficulties in which it was involved, and pronounced it "one of the most potent means by which the representatives could strengthen the government and the people in the struggle to put down the enemies of the country, and give hope and courage to the hearts of those brave men who have gone forth to battle." Considerable opposition was offered, chiefly on details and by amendments. But the House sustained the measure as it came from the Senate, and passed it on the 20th of February, by the close vote of 78 to 64, on the call of the ayes and noes. It was approved by the President on the 25th.
The Currency Bureau of the Treasury Department provided for in the National Banking Act was organized by the appointment of Hugh McCulloch, who was then at the head of one of the largest State banking institutions in Indiana. He was recognized as possessing executive capacity and large experience in financial affairs. He had originally been opposed, as were many others interested in State banks, to the National Banking Act, but, as he says, the more he examined "the system" the more it "grew into favor with him day by day." This appears to have been the result with all who gave the question a fair and candid consideration, even when biased by personal interests or political prejudice. The law was defective in many particulars and some of its provisions made it difficult for existing State banks to accept charters under it. The first annual report of the comptroller of the currency shows that by Nov. 28, 1863, 134 banks had been organized under the Act. Fourteen of these were in the New-England States, sixteen in New York, twenty in Pennsylvania, twenty in Indiana, thirty-eight in Ohio; New Jersey, the District of Columbia, and Kentucky each had one; Illinois seven, Iowa six, Michigan and Wisconsin four each, and Missouri two. Their total capital was $7,184,715. The bonds deposited with the Treasurer of the United States were $3,925,275, their deposits $7,467,059, and their loans and discounts $5,413,963.