of those
to whom all States and all generations are debtors,--the Father of
his Country, the author of the Declaration of Independence, the
chief projector of the National Constitution.

CHAPTER XXII.

National Currency and State Bank Currency.--In Competition.--Legal-
tender Bill tended to expand State Bank Circulation.--Secretary
Chase's Recommendation.--Favorably received.--State Bank Circulation,
$150,000,000.--Preliminary Bill to establish National Banks.--
Fessenden.--Sherman.--Hooper.--National Bank System in 1862.--
Discussed among the People.--Recommended by the President.--Mr.
Chase urges it.--Bill introduced and discussed in Senate.--Discussion
in the House.--Bill passed.--Hugh McCulloch of Indiana appointed
Comptroller of the Currency.--Amended Bank Act.--To remedy Defects,
Circulation limited to $500,000,000.--National Power.--State Rights.
--Taxation.--Renewed Debate in Senate and House.--Bill passed.--
Merits of the System.--Former Systems.--First Bank of the United
States.--Charters of United-States banks, 1791-1816.--National
Banks compared with United-States Banks.--One Defective Element.--
Founded on National Debt.

The Secretary of the Treasury had not failed to see that a constant
conflict and damaging competition must ensue between the currency
of the Nation and the currency of the State banks. It was the
course of the banks more than any other agency that had discredited
the "demand notes" and demonstrated to the Treasury Department and
to Congress the absolute necessity of imparting the legal-tender
quality to the paper issued by the government. As this paper took
the place of gold and silver in the payment of every obligation,
both corporate and individual,--except duties on imports and interest
on the National debt,--it was made easy for the State banks to
extend their circulation. It was quite practicable for them to
keep a sufficient amount of legal-tender paper in their vaults to
meet all the probable requirements of redemption, and they were
thus tempted to expand their loans and issue their own bills to a
dangerous extent. It was indeed hardly necessary to provide legal-
tender notes to redeem their own bills. One kind of paper money,
to a large proportion of the public, was practically as good as
another. Coin redemption being abandoned, the banks in a certain
sense lost all moral and legal restraint. The enactment of the
Legal-tender Bill had not therefore given the control