Citi Turns 200: City Bank finances Union cause

In celebration of Citigroup's 200th Anniversary, we are sharing stories from our rich history here on this blog. The fourth installation below covers our support of Abraham Lincoln and our acquisition of a national charter. Read the third installment about our contributions to transportation here.

City Bank finances Union cause

Moses Taylor, as president of City Bank, leads banks' support for Abraham Lincoln; the bank acquires a national charter and changes its name

The American Civil War (1861-1865) occurred after 11 southern states declared secession from the United States and formed the Confederate States of America ("the Confederacy") to fight for independence. The contentious issue was the expansion or restriction of slavery. In the first major battle of the war, the Confederates of the breakaway southern states defeated the Union forces of President Abraham Lincoln in the First Battle of Bull Run in eastern Virginia in 1861. Lincoln soon sought financial assistance from a group of bankers in New York, Philadelphia, and Boston. City Bank president Moses Taylor, spokesman for the group, announced that the banks would subscribe to a $50 million gold loan, with City Bank itself participating.

As the war progressed, confusion arose over the thousands of different banknotes in circulation. Congress attempted to develop a uniform national currency by passing the National Bank Act in 1863, which was superseded by another law in 1864.

City Bank gave up its state charter in 1865 and became a national bank. To meet federal requirements, it agreed to several conditions: a minimum capitalization of $200,000; no branching; securitization by federal bonds; and retention of 25 percent of its capital as reserves. It could not offer mortgages or exercise trust powers. The benefits, however, outweighed the constraints. National City Bank of New York (as it was renamed in 1865) became a depository for the federal government and began to accept the required reserves of national banks in other cities, giving it the wherewithal to become a bankers' bank. Adding "National" to the name also increased its prestige, indicating that it was able to meet the U.S. government's most stringent requirements.

The new name appeared on banknotes of various denominations up to $1,000 that would remain in circulation until 1935.