National Bank Act Law and Legal Definition
The National Bank Act (1863) was a United States federal law that established a system of national charters for the United States national banks. It encouraged development of a national currency based on bank holdings of U.S. Treasury securities. It also established the Office of the Comptroller of the Currency (OCC) as part of the Department of the Treasury. This was to establish a national security holding body for the existence of the monetary policy of the state. The Act, together with Abraham Lincoln's issuance of "greenbacks", raised money for the federal government in the American Civil War by enticing banks to buy federal bonds and taxing state bank issued currency out of existence.
The law proved defective and was replaced by the National Bank Act of 1864. National Bank Act of 1864 was the start of the development of a uniform and stable national currency that was backed by U.S. Government bonds issued by a new system of national banks. While there was a growing demand for a national currency, the overriding purpose was to provide a reliable market for the government bonds sold by the new network of national banks to finance the Civil War. The OCC uses this seminal document for its preemption orders.