The evils were more especially evident in connection with excessive issues of bank notes.
Sec.3.

#National Banking Associations, 1863-1913#.

The next step in federal legislation was taken in 1863 in the midst of the Civil War by chartering local "national banking associations." The purpose was in part to provide banks under national charters for banking purposes (both of deposit and of issue), and in part it was to make a wider market for United States bonds at a time when government credit was at low ebb.

The plan adopted followed the experience of New York state (1829 on) with a system of bond-secured bank notes.

Congress provided that every bank taking out a national charter must purchase bonds of the United States and deposit them with the treasurer of the United States, in return for which it would receive bank notes to the amount of 90 per cent of the denomination or of the market value of the bonds.[1] Bank notes issued on this plan, being secured by the bonds, rest ultimately on the credit of the government, not on the credit of the bank.