In 1865, Congress raised the tax on state bank notes to 10 percent of the value of notes in circulation. This tax

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In 1865, Congress raised the tax on state bank notes to 10 percent of the value of notes in circulation.  This tax

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The tax on state bank notes made it costly for state banks to issue their own currency, leading them to rely more on demand deposits (non-interest-bearing accounts from which money can be withdrawn at any time without notice) as a way to continue operations without directly issuing currency that would be taxed. This move did not end the dual banking system but rather adapted it to the new financial landscape imposed by the tax.

In 1865, Congress Raised the Tax on State Bank Notes