The Program
From 1863 to 1935, National Bank Notes were issued by banks throughout the country and in U.S. territories. Banks with a federal charter would deposit bonds in the U.S. Treasury. The banks then could print banknotes worth up to 90% of the value of the bonds. The federal government would back the value of the notes - the issuance of which created a demand for the government bonds needed to back them.
The program was a form of monetization of the Federal debt. Bonds eligible as collateral for posting to the Treasury were said to have the "circulation privilege" and the interest they bore provided seigniorage to the National Banks.
Read more about this topic: National Bank Note
Famous quotes containing the word program:
“In a Kelton church, when a heated argument once began at morning services, a devout old deacon arose from his seat in the ‘amen corner’ and announced he was going to do for the church what the devil had never done—leave it.”
—Administration in the State of Sout, U.S. public relief program (1935-1943)
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