the light which the experience of another year has thrown upon it, judiciously amended.

In reporting the names and compensations of the clerks employed in this bureau, I should neglect a duty to them and to the system if I did not respectfully suggest that a general increase of their salaries should be made, and that the increase of the salaries of those who occupy positions of high trust and responsibility should be liberal. This bureau is already an important one, and it is not unlikely to be one of the most important in the department. There is not a desk in it which should not be filled by a man of intelligence, character, and good business qualifications. Without such men the affairs of the bureau cannot be safely or properly administered, and expensive as living now is in Washington, it is questionable if the services required can be secured without an increase of salaries. If there were no doubt, however, on this point, it is not right that honorable and competent men should be faithfully serving the government for such compensations as leave them, with rigid economy, in no better circumstances at the close of a year than they were at its commencement. There are undoubtedly, in the different departments at Washington, a great many drones and incompetent clerks who do not earn the salaries that are paid them, whose "attendance" should be dispensed with; but my observation, since I have been in Washington, has satisfied me that there are in all the departments a body of clerks who, for intelligence, ability, and hearty devotion to their duties have no superiors anywhere.

To them is the country indebted for the accuracy with which an immense business-a business which has increased ten-fold since the commencement of the war-is transacted. The expenses of the department would be largely reduced if only such were employed, and they were paid respectable salaries. Cheap clerks are a costly article to the government-it is a poor economy that drives away or starves competent ones.

The Deputy Comptroller of this bureau holds an important and responsible position. In the absence of the Comptroller he possesses the power and performs the duties attached to the office of the Comptroller. The gentleman who has charge of the vaults and the currency holds a place of great responsibility; and two or three other clerks are performing duties requiring rare qualifications. I am under great obligations to them, and so is the country, for the prompt and able manner in which they are doing their work, and the valuable services they have rendered in the organization of the bureau and systematizing its business. Important duties are devolved upon them, while they receive but a small portion of the credit which the proper performance of their duties secures to the bureau. In my judgment, the salaries

they are receiving are wholly inadequate to the services they are rendering.

I respect fully recommend, therefore, in addition to a general increase of the salaries of the clerks, that the Deputy Comptroller be paid a salary of thirty-five hundred dollars per annum, and that the comptroller be authorized, with the approval of the Secretary of the Treasury, to employ three other clerks as heads of divisions, at salaries not exceeding twenty-five hundred dollars, respectively.

All which is respect fully submitted.

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[Source: Senate Journal, 38th Cong., 2d Sess., p. 10]

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The national banking system is proving to be acceptable to capitalists and to the people. On the twenty-fifth day of November five hundred and eighty-four national banks had been organized, a considerable number of which were conversions from State banks. Changes from State systems to the national system are rapidly taking place, and it is hoped that, very soon, there will be in the United States no banks of issue not authorized by Congress, and no banknote circulation not secured by the government. That the government and the people will derive great benefit from this change in the banking systems of the country can hardly be questioned. The national system will create a reliable and permanent influence in support of the national credit, and protect the people against losses in the use of paper money. Whether or not any further legislation is advisable for the suppression of State bank issues, it will be for Congress to determine. It seems quite clear that the treasury cannot be satisfactorily conducted unless the government can exercise a restraining power over the bank-note circulation of the country.

Act of March 3, 1865

[13 Statutes at Large 469, Thirty-Eighth Congress, Chapter 78, 2d Session Approved March 3, 1865, by Abraham Lincoln]



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SEC. 6. And be it further enacted, That every national banking association, state bank, or state banking association, shall pay a tax of ten per centum on the amount of notes of any state bank or state banking association, paid out by them after the first day of July, eighteen hundred and sixty-six.

SEC. 7. And be it further enacted, That any existing bank organized under the laws of any state, having a paid-up capital of not less than seventy-five thousand dollars, which shall apply before the first day of July next for authority to become a national bank under the act entitled "An act to provide a national currency secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof," approved June third, eighteen hundred and sixty-four, and shall comply with all the requirements of said act, shall, if such bank be found by the comptroller of the currency to be in good standing and credit, receive such authority in preference to new associations applying for the same: Provided, That it shall be lawful for any bank or banking association organized under state laws, and having branches, the capital being joint and assigned to and used by the mother bank and branches in definite proportions, to become a national banking association in conformity with existing laws, and to retain and keep in operation its branches, or such one or more of them as it may elect to retain; the amount of the circulation redeemable at the mother bank and each branch to be regulated by the amount of capital assigned to and used by each.


SEC. 14. And be it further enacted, That the capital of any state bank or banking association which has ceased, or shall cease to exist, or which has been or shall be converted into a national bank, for all the purposes of the act to which this is an amendment, shall be assumed to be the capital as it existed immediately before such bank ceased to exist or was converted as aforesaid. And whenever the outstanding circulation of any bank, association, corporation, company, or person shall be reduced to an amount not exceeding five per centum of the chartered or declared capital existing at the time the same was issued, said circulation shall be free from taxation. And whenever any state bank or banking association has been con

verted into a national banking association, and such national banking association has assumed the liabilities of such state bank or banking association, including the redemption of its bills, such national banking association shall be held to make the required return and payment on the circulation outsanding, so long as such circulation shall exceed five per centum of the capital before such conversion of such state bank or banking association.

Approved, March 3, 1865.

Annual Report, Comptroller of Currency (John Jay Knox) [Forty-third Congress, 1st Session, November 28, 1873, Pages 17-29, 31-32]


The advocates of a free-banking law are also advocates of the repeal of the chief restrictions of the national currency act, and particularly of the provision which requires the keeping of a certain amount of money as reserve against liabilities. They claim that the directors and managers of the banks, and not the legislature which enacts the law or the officer who executes it, are the best judges of the amount of money to be loaned, and the amount to be held on hand for the protection of their creditors; that the Government should be careful to protect the bill-holder from loss, but the depositor or other creditor may safely be allowed to protect himself. They further maintain that such laws prevent the banks from extending accommodations to legitimate business interests, which, consequently, suffer on account of the lack of such accommodations. In some instances this may be true, but such laws are passed not so much for the benefit of those persons who conduct their business on sound principles as for that class or association of persons which has but little experience in the method of transacting a legitimate business. If the law be correct in principle, it will be found not to interfere with the rights of those persons who understand the true theory of business, but its tendency will be to prevent abuses on the part of those who would otherwise take risks which a prudent and careful man would avoid.

Any association of persons may organize a bank under the provisions of the national currency act. If private citizens wish to transact business in accordance with their own judgment, they can avail themselves of the privilege by conducting a private business. If other citizens prefer to organize corporations under an act of Congress which imposes restrictions designed for the public good, who shall object? The privilege is open to both, and each can decide without prejudice or hindrance. A private banker solicits and obtains business on the strength of his good name, and it is well understood that the funds placed in his hands are to be used at his discretion, the depositors relying upon his business sagacity and judgment; but if corporations desire to organize under the authority and seal of a great nation, care should be exercised that the authority obtained shall not be abused.

During the past few years great corporations have been organized by authority of law, with the advantages of immense subsidies, but almost wholly without restrictions, the law-making power having been led to believe that the corporations authorized would contribute as much to the public good as to their own profit. But it has been found that overgrown corporations are conducted in defiance of the rights of the shareholders, and with little regard to the comfort, wants, and profit of the people, but chiefly for the benefit of the few officers and directors; and the whole country is now aroused to the mistaken

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