in round numbers, was in the loyal states, including
West Virginia, and $50,000,000 in the rebel states, the whole
constituting a loan without interest from the people to the banks,
costing the latter only the expense of issue and redemption and
the interest on the specie kept in hand for the latter purpose.
The secretary called especial attention to the organization and
nature of these banks, and questioned whether a currency of banks
issued by local institutions under state laws was not in fact
prohibited by the national constitution. He said:

"Such emissions certainly fall within the spirit, if not within
the letter, of the constitutional prohibition of the emission of
'bills of credit' by the states, and of the making by them of
anything except gold and silver coin a legal tender in payment of
debts. However this may be, it is too clear to be reasonably
disputed that Congress, under its constitutional powers to lay
taxes, to regulate commerce, and to regulate the value of coin,
possesses ample authority to control the credit circulation which
enters so largely into the transaction of commerce, and affects in
so many ways the value of coin. In the judgment of the secretary,
the time has arrived when Congress should exercise this authority."

He described with great force the weakness of the state banking
system, and the repeated losses by the people of the United States
on account of the failure of such banks. He recommended two plans
by either of which he held that these banks might be absorbed, and
a national currency be substituted in the place of their issues.
One plan proposed the gradual withdrawal from circulation of the
notes of private corporations, and the issue in their stead of
United States notes, payable in coin on demand, in amounts sufficient
for the useful ends of a representative currency. The other proposed
a system of national banks authorized to issue notes for circulation
under national direction, to be secured as to prompt convertibility
into coin by the pledge of United States bonds and other needful
regulations. He discussed these two plans at length, but concluded
by recommending a system of national banks, the advantages of which
would be uniformity in currency, uniformity in security, an effectual
safeguard against depreciation, and protection from losses from
discounts and exchanges. He expressed the opinion that such notes
would give to the government the further advantage of