National Bank Act
provided for the federal charter and supervision of national banks; they were to circulate a stable, uniform national currency secured by federal bonds deposited by each bank with the comptroller of the currency (often called the national banking administrator). The Act regulated the minimum capital requirements of national banks, the kinds of loans they could make, and the reserves that were to be held against notes and deposits; it also provided for the supervision and examination of banks and for the protection of note holders. While the Act did not prohibit state banks from issuing their own currency, Congress did impose a 10 percent tax on state bank notes that effectively eliminated such a rival currency. The Act was repealed in 1864 by the enactment of the National Bank Act of 1864, 12 U.S.C. § 38 et seq., which reserved the rights of the associations organized under the 1863 act. The inflexibility of national bank-note supplies and a lack of reserves led to the formation of the Federal Reserve System in 1913.
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