uring the autumn of 1862 the bank question was subjected to a
thorough discussion among the people. The legal-tender notes had
already become popular, and were evidently preferred by the public
to the notes of local banks. The depression naturally incident to
continued reverses in the field led to the defeat of the Administration
in many of the State elections, but despite the operation of all
adverse causes the general trade of the country was good. The
crops had been abundant and prices were remunerative. All that
had been claimed for the legal-tender bill by its most sanguine
advocates had been realized in the business of the country. The
one disappointment was their failure to keep at par with gold; but
even this, in the general prosperity among the people, did not
create discouragement. The Internal-revenue system had but just
gone into operation, and the only feature embarrassing to the people
was the requirement that the taxes should be paid in the legal-
tender paper of the government. No provision of law could have
operated so powerfully for a system of National banks. The people
were subjected to annoyance and often to expense in exchanging the
notes of their local banks for the government medium. The internal
fiscal machinery of the government evidently required places of
deposit. The tax-collectors could not intrust the funds in their
hands to State banks except at their own risk. The money of the
government was thus liable to loss from the absence of responsible
agencies under the control of National power. The fact that the
bills of State banks were not receivable for taxes tended constantly
to bring them into disrepute. The refusal of the government to
trust its funds in the keeping of the State banks was nothing less
than the requirement of the Sub-treasury Act, but to the popular
apprehension it was a manifestation of distrust which did the banks
great harm. The total revenue of the National Government had before
the war been collected at a few custom-houses on the coast, and
the public had not been generally familiar with the mode of its
safe-keeping. The system of internal taxes now reached the interior,
and the people were made daily witnesses of the fact that the
government would not trust a dollar of its money in the vaults of
a State bank.

Under the influences thus at work, the friends of the State banks
plainly saw that the National system was growing in favor, and they
began to