The National Bank Act of 1863, together…

The National Bank Act of 1863, together with Abraham Lincoln's issuance of "greenbacks," raises money for the federal government in the American Civil War by enticing banks to buy federal bonds and taxes state bonds out of existence.

The Act, passed on February 25 by British sympathizers over the objections of Lincoln, who signs it the follwing day, authorizes a private corporation to issue United States money by depositing “government bonds” with the U.S. Treasury secured by a first lien on all physical property within the nation and a first lien on national income.

The National Bank Act (ch. 58, 12 Stat. 665; February 25, 1863), originally known as the National Currency Act, had passed in the Senate by a 23–21 vote.

The main goal of this act is to create a single national currency and to eradicate the problem of notes from multiple banks circulating simultaneously.

The Act establishes national banks that can issue notes that are backed by the United States Treasury and printed by the government itself.

The quantity of notes that a bank is allowed to issue is proportional to the bank's level of capital deposited with the Comptroller of the Currency at the Treasury.

To further control the currency, the Act taxes notes issued by state and local banks, essentially pushing non-federally issued paper out of circulation.