h all payments to the treasury were required
to be in coin, to be held until required for disbursements on
government account. This protected the United States, but it did
not save the people from loss, as, from necessity, they were
compelled to use bank bills authorized by the several states,
varying in value and security, and chiefly limited in circulation
to the state in which issued. With a narrow view of the powers of
the national government, Congress had repeatedly refused to authorize
a national bank, a policy I heartily approve, not from a doubt of
the power of Congress to grant such a charter, but from the danger
of intrusting so vast a power in a single corporation, with or
without security. This objection did not lie against the organization
of a system of national banks extending over the country, which
required every dollar of notes issued to be secured by a larger
amount of bonds of the United States, to be deposited in the treasury
of the United States, thus saving the note holder from all possibility
of loss.

Secretary Chase, in his report of December 9, 1861, recommended
that a tax be imposed upon notes issued by state banks and also
that Congress should exercise its authority to establish a system
of national banks, with proper safeguards and limitations. A bill
was introduced for the latter purpose in the House of Representatives
in 1861, but, owing to the urgency for legislation on war measures,
it was not acted upon.

CHAPTER XIII.
ABOLISHMENT OF THE STATE BANKS.
Measures Introduced to Tax Them out of Existence--Arguments That
Induced Congress to Deprive Them of the Power to Issue Their Bills
as Money--Bill to Provide a National Currency--Why Congress Authorized
an Issue of $400,000,000, of United States Notes--Issue of 5-20
and 10-40 Bonds to Help to Carry on the War--High Rates of Interest
Paid--Secretary Chase's Able Management of the Public Debt--Our
Internal Revenue System--Repeal of the Income Tax Law--My Views on
the Taxability of Incomes.

Long before I became a Member of Congress I had carefully studied
the banking laws of the several states. The State of Ohio adopted,
in 1846, an improved system of banking. My study and experience
as a lawyer in Ohio convinced me that the whole system of state
banks, however carefully guarded, was both unconstitutional and
inexpedient and that it ought to be overthrown. When I entered
Congress I was entirely prepared, not only to tax the ci