US Congress Passes a Banking System

150 years ago the United States Congress passed the National Banking Act. It established a system of chartered national banks and required the currency that the banks issued to be backed by government securities. The act was to create a national paper currency that the government printed and controlled, rather than many different state or private banks printing the bank notes. It established the Comptroller of the Currency, who inspected the national banks and was responsible for the printing of bank notes. These new bank notes would help finance the Civil War, because the banks had to buy Treasury securities to issue the national bank notes. This banking system was the foundation of the modern Federal Reserve.