Can someone explain in layman’s terms to me what this act did? I read about it in Rothbard’s History of Money and Banking but I don’t quite understand what the benefit/detriment is for state banks to have to keep reserves in national banks and national banks in central national banks. What is the effect of this? And the issuance of notes by central national banks is necessarily tied to the amount of treasury notes they hold right? So in order to issue more notes, they must buy more bonds?
Bump. Specifically in reference to the requirement of ‘pyramiding’ the reserves of banks like so: small banks → reserve banks → central reserve banks. It seems like doing this just makes banks weaker during a bank run. What is the expected upside of such a reform?
You mean the National Currency Bank Act of 1863
It established that a group of people may set up a bank without a charter from a State; simply using greenbacks and federal bonds as capital to bank on, and issue notes that circulated nation-wide (not just State-wide, as State banks and free banks)
The effect is: that the currency of the United States is based on national debt --no national debt, no national currency. There is NO benefit, only detriment.
Senator Sherman speaking on behalf of the national currency bank bill