state supervision in states that adopted it. The real value of a bank bill was often lower than its face value, and the issuing bank's financial strength generally determined the size of the discount. By 1797 there were 24 chartered banks in the U.S.; with the beginning of the free banking era (1837) there were 712. During the free banking era, the banks were short-lived compared to today's commercial banks, with an average lifespan of five years. About half of the banks failed, and about a third of which went out of business because they could not redeem their notes. (See also "Wildcat banking".) During the free banking era, some local banks took over the functions of a central bank. In New York, the New York Safety Fund provided deposit insurance for member banks. In Boston, the Suffolk Bank guaranteed that bank notes would trade at near par value, and acted as a private bank note clearinghouse. 1863–1913: National banks The National Banking Act of 1863, besides providing loans in the Civil War effort of the Union, included provisions: To create a system of national banks. They were to have higher standards concerning reserves and business practices than state banks. Recent research indicates that state monopoly banks had the lowest long run survival rates. The office of Comptroller of the Currency was created to supervise these banks. To create a uniform national currency. To achieve this, all national banks were required to accept each other's currencies at par value. This eliminated the risk of loss in case of bank default. The notes were printed by the Comptroller of the Currency to ensure uniform quality and prevent counterfeiting. To finance the war, national banks were required to secure their notes by holding Treasury securities, enlarging the market and raising its liquidity. As described by Gresham's Law, soon bad money from state banks drove out the new, good money; the government imposed a 10% tax on state bank bills, forcing most banks to convert to national banks. By 1865, there were already 1,500 national banks. In 1870, 1,638 national banks stood against only 325 state banks. The tax led in the 1880s and 1890s to the creation and adoption of checking accounts. By the 1890s, 90% of the money supply was in checking accounts. State banking had made a comeback. Two problems still remained in the banking sector. The first was the