Jackson vetoed It. The bank became a great political issue, and President Jackson ordered the public funds to be removed from the bank and deposited in state banks. In 1836 the bank's charter expired, but a few days before this occurred Pennsylvania gave it a state charter and it became the United States Bank of Pennsylvania. Between 1836 and 1863 only state banks existed in the United States.
The several state banking-systems, no two alike, caused great dissatisfaction and losses. Each state had its own banking laws and under them the state banks issued currency. The laws were so loosely drawn that suspensions and failures were frequent. In many instances the privilege of issuing notes to circulate as currency was grossly abused. This led Secretary Chase in 1861 to suggest a national-bank act, and in 1863 such an act was passed by Congress and became the basis of the present national banking laws. Congress in 1865 levied a tax of 10 per cent, on all circulating notes other than those issued by national banks, and this prohibitive tax put an end to state-bank currency.
National banks can issue their own banknotes to circulate as currency by depositing ,. United States bonds with the Comptroller of the Currency. The bank can issue notes to an amount equal to the bonds so deposited but not to exceed the amount of the bank's capital stock. Thus a national bank, having a capital of $1,000,000, can issue $1,000,000 national bank-notes, provided it deposits $1,000,000 United States bonds.
Any five citizens of the United States can organize a national bank. In towns or cities of less than 3,000 population a national bank with but $25,000 capital can be organized; where the population is between 3,poo and 6,000 the capital stock must be at least $50,000; between 6,000 and 50,000 population the capital stock must be at least $100,000 and over 50,000 population the capital stock must be at least $200,000.
In May of 1908 Congress enacted what is known as the Emergency-Currency Law. Under the provisions of this law ten or more national banks, each having an unimpaired capital and surplus of not less than 20 per cent, of its capital stock, all of the banks having a total capital and surplus of at least $5,000,000, may form themselves into a National Currency Association for the purpose of providing for an issue of emergency currency in times of financial stress or panics. Any bank belonging to a National Currency Association can use stocks, bonds or commercial paper (the notes of commercial houses) which have been approved by the association as a basis for additional circulation. To secure this emergency currency from the government through the currency association, the bank must meet certain requirements and do certain things laid down in the emergency currency law but always under the direction and control of the Secretary of the Treasury.
The law also provides for the issuance of emergency circulation to the banks direct without compelling the bank to secure such circulation through the medium of a currency association. A special tax on emergency circulation is provided for; it amounts to five per cent, a year for the first month such circulation is outstanding and one per cent a year for each additional month until the tax reaches 10 per cent, a year. This tax is levied to make it unprofitable for a bank to issue emergency circulation, the idea being that such circulation should only be used when the emergency is so great as to imperil the banks. The law also carries a provision for a currency commission of eighteen members, the Speaker of the national House of Representatives to name nine and the presiding officer of the United States Senate to name nine. This commission is to inquire into the entire subject relating to currency and make a report to Congress. The emergency currency law expires by limitation on June 30, 1914.
France claims the credit of being the mother of savings banks, basing this claim on a savings bank said to have been established in 1765 in the town of Brumuth, but it is of record that the savings bank idea was suggested in England as early as 1697. There was a savings bank in Hamburg, Germany, in 1778 and in Berne, Switzerland, in 1787. The first English savings bank was established in 1799, and postal savings banks were started in England in 1861.
The first chartered savings bank in the United States was the Boston Provident Savings Institution, incorporated December 13, 1816. The Philadelphia Savings Fund Society began business the same year, but was not incorporated until 1819. In 1818 banks for savings were incorporated in Baltimore and Salem, and in 1819 in New York, Hartford, Newport and Providence.
Savings banks are organized and maintained for the conveniences of the person of small means who by making small deposits can in time accumulate a comfortable sum of money. Such banks differ widely in the conduct of their business from commercial banks. Deposits in commercial banks are subject to withdrawal without notice, but savings banks reserve the right to require from 30 to 60 days—and in some instances six months'—notice of withdrawal of funds. Interest ranging from three to five per cent, per annum is paid on savings deposits, but such deposits must remain in the bank for a certain period—the time varying according to the rules of the banks—before interest is allowed
