The National Banks and State Taxation. 
 
 ADDRESS 
 
 BEFORE THE 
 
 American SStinhcrs Association, 
 
 AT 
 
 PITTSBURGH, PA., OCTOBER 13, 1887, 
 
 BY 
 
 CHAUNCEY P. WILLIAMS, 
 
 OF ALBANY, N. Y. 
 
 NEW YORK: 
 
 Published by the Bankers’ Publishing Association, 
 128 Broadway. 
 
 1887. 
 
■am 
 
 . 
 
THE NATIONAL BANKS AND STATE TAXATION. 
 
 ADDRESS 
 
 OF 
 
 C. P. WILLIAMS, OF ALBANY, 
 
 BEFORE THE 
 
 AMERICAN BANKERS’ ASSOCIATION, AT PITTSBURGH, 
 
 On tlx© 13tli of October, 1887. 
 
 Mr. President and Gentlemen of the Convention: 
 
 Perhaps i is human to curse the tribunal that decides our case against us. As 
 old Hudibras puts it— 
 
 “ No thief e’er felt the halter draw 
 With good opinion of the law." 
 
 Nevertheless, the condemned can hardly be denied the poor satisfaction of 
 criticising the Court. And perhaps it may be permitted to a layman to be rather 
 more free in his strictures than a member of the Bar would care to be. 
 
 There are two courses of judicial procedure, radically different and opposite. 
 One is, the establishment of fundamental principles of justice in accord with con¬ 
 stitutional requirement, and then applying those principles logically and uni¬ 
 formly to cases as they arise. The other is, to have certain aims and policies 
 ■which to the mind of the Court appear important to be maintained, and for their 
 maintenance the logical application of fundamental principles is to be dodged and 
 evaded to support a pre-determined decision. 
 
 It has been heretofore fondly trusted that the Supreme Court of the United 
 States—the highest judicial tribunal of our country—could be relied upon to pre¬ 
 sent an example of the former course. In the days of Marshall and of Story, 
 whose sepulchres we now build, this Court did present such an example. Its 
 credit and glory, and the confidence of the country in its decisions, have resulted 
 from such fidelity to fundamental principles. 
 
 The treatment by the Court of the National Banks, in the matter of State taxa¬ 
 tion of their shares, impresses us with the doubt whether it is not of late years 
 descending to the latter course. 
 
 The question of the non-taxation by the States of the instruments and means 
 used by the Government of the United States in the exercise of its constitutional 
 powers, had been thoroughly settled by the Supreme Court in repeated decisions 
 prior to the outbreak of the rebellion. The opinion of Chief Justice Marshall in 
 the case of McCulloch against Maryland, decided in 1819*, lays down the prin- 
 
 4 Wheaton’s Reports, 120. 
 
4 
 
 ciples of law resulting from the constitutional supremacy of the general Govern¬ 
 ment in so masterly a manner, as ever since to have commanded unquestioned 
 acquiesence. No State might, directly or indirectly, lay a tax upon the bonds of 
 the United States. 
 
 Notwithstanding such exemption of the bonds of the Government from taxa¬ 
 tion by the States had been thus settled, yet in its financial straits during the 
 rebellion Congress chose to enact as a provision of its loan laws the absolute and 
 entire exemption of all its instruments for borrowing money, from such taxation. 
 The Act of 25th February, 1862, providing for the issue of the legal tender notes 
 and the first issue of 5-20 bonds, contained this exemption in the following lan¬ 
 guage : 
 
 “And all stocks, bonds, and other securities of the United States held by indi¬ 
 viduals, corporations, or associations within the United States, shall be exempt 
 from taxation by or under State authority.” 
 
 A similar provision was embodied in each of the loan laws during the progress 
 of the war. In 1870 the Act of July 14, entitled “ An Act to authorize the refund¬ 
 ing of the National debt,” and by which act fifteen hundred millions of bonds 
 were authorized, including all the bonds now outstanding, except the currency 
 bonds issued in aid of Pacific railroads, the exemption from State taxation is 
 expressed as follows: 
 
 “All of which said several classes of bonds and the interest thereon shall be 
 exempt from the payment of all taxes, or duties of the United States, as well as 
 from taxation in any form by or under State, municipal or local authority.” 
 
 All these provisions of exemption from taxation under State authority of all 
 obligations of the United States, are re-enacted and re-affirmed by Congress in 
 Sections 3701 and 5413 of the Revised Statutes of the United States adopted in 
 1874. 
 
 Thus the entire exemption from State taxation of the obligations *of the United 
 States would seem to be as fully declared and established, both by Congressional 
 action and by the Court of last resort of the nation, as was possible to be done. 
 
 The case of McCulloch against Maryland, before referred to, arose in a tax im¬ 
 posed by the State of Maryland upon the notes of the Bank of the United States 
 then doing business as a corporation under Congressional charter. The Court 
 decided that the Bank was an instrument for the execution of the constitutional 
 powers and duties of the Government, created by “a law made in pursuance of 
 the Constitution, and is a part of the supreme law of the land. ” 
 
 The Act of Congress of 3d June, 1864, authorizing the establishment of the 
 present National Banks, enacted “that nothing in this Act shall be construed to pre¬ 
 vent" the taxation of the shares of the banks by the States; “ but not at a greater 
 rate than is assessed upon other moneyed capital in the hands of individual citizens of 
 such State." 
 
 The State of New York had previously made several attempts to subject the 
 
5 
 
 capital of her banks to taxation without making any allowance for their invest¬ 
 ments in the bonds of the United States, but had failed. The Supreme Court had 
 in each case applied to her laws, and the decisions of her courts sustaining them, 
 the principles of the Maryland case ; that the securities of the United States 
 could not be taxed by the States, either directly or indirectly. At the session of 
 her Legislature in 1865 the State passed a law* to enable the banks doing busi¬ 
 ness under the laws of the State, to transfer their corporate organizations under 
 the National Banking Act, and in that enabling act provided that all the shares 
 in the National Banks should be subject to taxation. No such provision was 
 made regarding the shares of the State Banks, the shares of which were expressly 
 exempt from taxation, by reason of the capital of the banks being liable to taxa¬ 
 tion. 
 
 In the decision of the case of Van Allen vs. Nolan,f in 1865, the Supreme 
 Court decided in favor of the banks, on the ground that as the State had failed 
 to subject the shares of her State Banks to taxation she could not maintain such 
 tax upon the shares of the National Banks. But the court went further, with 
 the purpose of disposing of the question “ whether the Slate possesses the power to 
 authorize the taxation of the shares of these National Banks in the hands of stock¬ 
 holders, whose capital is wholly vested in stock and bonds of the United States?" The 
 decision was that the shares are left by the Act of Congress “ subject to taxation 
 by the States under the limitations prescribed .” 
 
 This decision is reached by the court upon the ground that “ the tax on the 
 shares is not a tax on the capital of the bank ”—that the share “ is a distinct inde¬ 
 pendent interest or property, held by the shareholder like any other property that may 
 belong to him." 
 
 The majority of the court concurred in this decision ; but Chief Justice Chase, 
 and Associate Justices Wayne and Swayne, two of the oldest of the judges in 
 service on the bench of the Supreme Court, dissented ,X and placed upon the 
 records of the court thotfeasons of their dissent, in which they say : “ We think that 
 such taxation is actual, though indirect, taxation of the bonds ; * * * and that taxa¬ 
 tion by the States of the shares of National Banking Associations without reference to 
 the amount of the capital invested in national securities, is not authorized, nor teas in¬ 
 tended to be authorized by Congress .” 
 
 The dissenting opinion, discussing the restrictions upon State taxation of the 
 bank shares under the 41st section of the National Bank Act, arrives at the con¬ 
 clusion that it was the purpose of Congress to treat the interest of the shareholder 
 in his investment in the shares with reference to State taxation, precisely as the law 
 treats him in his individual investments. It says: 
 
 “ Here, then, we have the common rule and common degree of taxation applicable 
 alike to shares in National Banking Associations and to moneyed capital in the hands 
 
 * chap. 07 . Laws 1 8 Wallace Reports, 678. 
 
 t Dissenting opinion of Chief Justice Chase et al. Pamphlet J. F. Trow & Co. New York, 1866, 
 Also Wallace Reports, yoI. 3. 
 
6 
 
 of individuals. That proportion of each which is liable to taxation must be taxed alike ■ 
 that proportion of each which is exempt under the Constitution must not be taxed at all 
 by State authority." 
 
 The doctrine of this dissenting opinion of the Chief Justice and the minority 
 of the Court, would, it seems to us, follow logically in line with the Constitu¬ 
 tional principles of the relations of the general Government to the States, as laid 
 down in McCulloch vs. Maryland, and all the decisions of the Supreme Court from 
 that time down to this case. Nevertheless the decision of the majority of the 
 court in this case, has been held as controlling and settled law regarding the State 
 and municipal taxation of National Bank shares, from 1805 down to the present. 
 
 In the ease of the People ex rel. Duer vs. The Commissioners of Taxes and As¬ 
 sessments of the City of New York* decided by the court in 18GG, the relator, a 
 shareholder in the National Bank of Commerce in New York, claimed that as the 
 capital of the bank was largely invested in the bonds of the United States which 
 are exempt from tax, he was entitled to a ratable deduction from the value of his 
 shares when assessed for taxation, in proportion to such investment of the bauk’s 
 capital. The reply of the court in its decision of the case was, ‘ ‘ that the meaning 
 and intent of the law makers were , that the rate of taxation of the shares should be the 
 same, or not greater, than upon the moneyed capital of the individual citizen which is 
 subject or liable to taxation." 
 
 The relator raised also the objection that in the assessment of insurance com¬ 
 panies the commissioners had assessed them for only the remainder of their capi¬ 
 tal, after deducting the amount of their investment in United States bonds, in 
 support of his claim to similar allowance from the value of his shares. To this 
 claim the court’s answer is, “that this clause does not refer to the rate of assessment 
 upon insurance companies as a test by which to prevent discrimination against the 
 shares; that is confined to the rate of assessments upon moneyed capital in the hands of 
 individual citizens" Chief Justice Chase and Justices Wayue and Swayne dis¬ 
 sented from this decision, for the same reasons stated in their dissenting opinion 
 in the Van Allen case. 
 
 For several years after the rendition of the two decisions last stated, the mana¬ 
 gers of the National Banks of the country made little resistance to the taxation 
 imposed upon them by the States, feeling that the prejudice against them in the 
 mind of the community, reflected by the evident bias of the courts, and not ex¬ 
 cepting the Supreme Court of the United States, rendered their efforts to obtain 
 justice in that regard hopeless. Several cases of minor importance had been pre¬ 
 sented to the Court, however. In the case of Hepburn vs. The. School Directors of 
 the Borough of Carlisle , decided in 1875,f it was shown that in the county in Penn¬ 
 sylvania, in which Carlisle was situated, the Legislature of that State had by law 
 exempted from taxation, except for State purposes, “all mortgages, judgments, 
 rec ognizances and money owing upon articles of agreement for sale of real esto-to,” 
 
 * 4 Wallace. 5 M.A. ~ t 23 Wallace, 480. 
 
and that was claimed to be a violation of the restriction of the Act of Congress, 
 which vitiated the State’s tax upon the plaintiff’s shares imposed for other than 
 State purposes. The decision of the Court is “ that there may he other moneyed capi¬ 
 tal in ilie locality than such as is exempt. Tf there is, moneyed capital as such, is not 
 exempt. Some part of it only is. It could not have been the intention of Congress to 
 exempt hank shares from taxation because some moneyed capital was exempt. ” And 
 the judgment of the State court imposing the tax was affirmed. 
 
 Thus all the efforts of the National Banks to convince the courts that they were 
 being taxed by the States at a greater rate than was imposed upon other moneyed 
 capital had failed, except in the case of People against Weaver , to which I shall 
 allude further on; although every shareholder in a bank had become painfully 
 conscious that such was the fact, until we come to the case of Boyer agst. Boyer,* 
 decided by the Supreme Court in 1884. In this ease it was shown that the laws of 
 Pennsylvania subjected the shares of National Banks to a tax “ for State purposes 
 at the rate of four mills on the dollar upon the assessed value thereof; and for 
 county, school, municipal and local purposes at the same rate as now is or may 
 hereafter be imposed upon other moneyed capital in the hands of individual 
 citizens of this State.” It was also shown that there were in the State, corpora¬ 
 tions doing business therein (other than banks) whose shares of capital stock 
 
 amounted to the value of. 8564,000,000 
 
 And that there were also held within the State, in the hands of indi¬ 
 vidual citizens, mortgages, money owing by solvent debtors, and 
 public loans or stocks (not including those of the State or of the 
 
 United States), and other moneyed capital in the hands of indi¬ 
 vidual citizens of the State, to the amount of over. 125,000,000 
 
 Making a total of. 8680,000,000 
 
 All of which was exempt from taxation by the laAvs of the State, except for State 
 purposes. 
 
 The capital of National Banks in the State was shown to be. 857,452,051 
 
 And of State Banks and Savings Banks. 7,151,740 
 
 Total. 864,603,791 
 
 The court, in the adjudication of this case, does not define the terms “ other 
 moneyed capital in the hands of individual citizens as used by Congress in the limita¬ 
 tion of the power of the States to tax the shares, so clearly as to make it certain 
 that its purpose was to admit under it the shares of State corporations other than 
 banks, but the language used in its decision leaves that fairly to be inferred. The 
 opinion, after citing the Hepburn case, says: “ That case is authority for the propo¬ 
 sition tint a partial exemption by a State, for local purposes, of moneyed capital in the 
 hands of individual citizens does not, of itself, and without reference to the aggregate 
 amount of moneyed capital so exempted, establish the right to similar exemption in favor 
 
8 
 
 of National Bank shares held by persons within the same jurisdiction. But it is by no 
 means an authority for the broad proposition that National Bank shares may he sub- 
 jected to local taxation where a very material part, relatively, of other moneyed capital in 
 the hands of individual citizens, within the same jurisdiction or taring district, is 
 exempted from such taxation .” 
 
 It was claimed on the part of the State that Pennsylvania derives her principal 
 revenue from railroads, and therefore has good reasons for exempting their securi¬ 
 ties from local taxation as a measure of public policy. To this the court replies : 
 “ This court has no function to deal with the considerations of public policy which com 
 trol the commonwealth in the assessment of property /or purposes of revenue. We have 
 no duly beyond that of ascertaining the intentions of Congress in its legislation permit, 
 iiiu/ the several Stales to tax the shares of institutions organized under national authority 
 for the purpose of providing a national currency secured by United States bonds. If 
 the principal of substantial equality of taxation under State authority, as between capital 
 so invested and other moneyed capital in the hands of individual citizens however in¬ 
 vested, operates to disturb the peculiar policy of some of the States in respect of revenue 
 derived from taxation, the remedy therefor is with another department of the Govern¬ 
 ment, and does not belong to this court.” 
 
 The judgment of the State court was reversed. 
 
 The decision in this case inspired the managers of tho banks of the country 
 with the hope that the Supreme Court, seeing the defenseless situation in which 
 its previous decisions left thoir shareholders, was prepared to do them justice. 
 
 In no State had the disproportionate taxation of National Bank shares been 
 carried to a greater leugth, or tho power of taxation in disregard of the restriction 
 of Congress more artfully or more ruthlessly exercised, than in the State of Now 
 York. 
 
 In 1861 a ease* came before the Court of Appeals of that State, brought in behalf 
 of the Bank of the Commonwealth in New York claiming relief from a tax laid on 
 that bank for tho whole value of its capital stock without any deduction for United 
 States bonds in which a part of its capital was invested. The State court held 
 that taxation by the State of money loaned to the Federal Government is not for¬ 
 bidden by the Constitution of the United States, where no unfriendly discrimina¬ 
 tion towards the United States as a borrower is shown by the Stato law, and proper¬ 
 ty in its stock is subjected to no greater burden of tax than property in general. 
 The case was carried on appeal to the Supreme Court of the United States; and 
 that Court reversed the judgment of the New York Court of Appeals on the broad 
 ground of the Maryland case, that the instruments used by the Government for 
 the execution of its constitutional powers could not be taxed by the States in any 
 manner; and replies to the claim of the New York Court as follows:! “ The conclu¬ 
 sive answer to the attempted exercise of Stale authority in. all those cases is, that the exer- 
 
 * People cx rtl. Bunk of the Commonwealth vs. Commissioners of Taxes, kc. 23 N Y KoDorts 192 
 
 t Reported in 2 Black, 870. 
 
9 
 
 cise is in derogation of the powers granted to the general Government ivithin which it 
 is admitted it is supreme .” 
 
 The judgment of the Supreme Court in this case was announced in April, 1863. 
 And on the 29th of that month the Legislature of New York passed an act (Laws 
 of 1863, Chap. 240) providing that all banks aud banking associations “ shall be 
 liable to taxation on a valuation equal to the amount of their capital stock paid in 
 or secured to be paid in, and their surplus earnings (less ten per cent, of such sur¬ 
 plus) in the manner now provided by law,” &c. 
 
 Mark the action hero taken ! The previous statute of the State just set aside 
 by the decision of the Supreme Court above cited, provided that such banks, &c., 
 “shall be subject to taxation on the full amount of their actual capital paid in or 
 secured to be paid in.” Immediately on the overthrow of the State statute thus 
 subjecting the banks in this manner to taxation on their capital without deduction 
 for United States bonds held by them, the Legislature seeks to reach the same 
 result by the indirect method of taxing them, not on their capital, but “ on a valua¬ 
 tion equal to their capital;” and attempts in that manner to evade the constitu¬ 
 tional exemption of the Government bonds from taxation, so far as such bonds 
 were held by the banks. 
 
 Agreeably to the provisions of this new act, the Commissioners of Taxes in the 
 City of New York, and the assessors of taxes throughout the State, again assessed 
 the banks for the full value of their capital, without deduction for investment in 
 the bonds of the Government. This mode of assessment was again sustained by 
 the Court of Appeals of the State, as not in conflict with the principles upon which 
 was founded the constitutional exemptions of the bonds of the United States from 
 taxation by the States. At the date of renderiog this decision the New York court 
 sustained in its full integrity, the principle of exemption in the case of bonds held 
 by individual citizens. Chief Justice Denio, of that court, in writing the opinion 
 in this case says: “It must be considered a settled point that the power of taxation 
 residing in the State governments does not embrace as a possible subject the 
 securities of the public debt of the United States.” 
 
 The Supreme Court of the United States reversed the judgment of the New 
 York court in this case on the ground tllat the tax upon a valuation equal to its 
 capital, &c., “ is a tax on the property of the institution which consists of the stocks of 
 the United States."* 
 
 At the date of the announcement of this decision, the New York Legislature had 
 under consideration a law to enable the State Banks to become National Banks 
 under the laws of the United States, which was passed on the 9tli March, 1865.f 
 This act of the State provided for the taxation of the shares of the National Banks, 
 but did not impose any tax upon the shares of the State Banks. They were left_ 
 under the existing laws of the State, taxable as before, upon their capital; but from 
 which, under the late decisions of the Supreme Court above referred to, they must 
 
 2 Black, (520. 
 
 t Clwp. 97, Laws ol' i865. 
 
10 
 
 deduct the investment in United States securities. It was from the taxation of 
 the shares of the National Banks under this act that arose the celebrated Van 
 Allen case herein before referred to. 
 
 On the 23rd of April. 1866. after the decision of the Van Allen case, the Legis¬ 
 lature of New Yorkpassed another act (Chap. 761. Laws of 1866) intended to cor¬ 
 rect the error made in the statute of 1865. as follows: " No tax shall hereafter be 
 assessed upon the capital of any bank or banking association organized under the 
 laws of this State, or of the United States, but the stockholders in such banks and 
 banking associations shall be assessed and taxed on the value of their shares of 
 stock therein: said shares shall be included in the valuation of the personal proper 
 ty of such stockholders in the assessment of taxes at the place, town or ward 
 where such bank is located and not elsewhere.' 
 
 The general tax laws of New York require that “Every person shall be assessed 
 in the town or ward where he resides when the assessment is made, for all personal 
 estate owned by him.” 
 
 “Between tbs first days of May and July in each year they (the assessors) shall 
 proceed to ascertain by diligent inquiry, the names of all the taxable inhabitants in 
 their respective towns or wards, and also all the taxable property, real or personal, 
 within the same.” 
 
 "They shall prepare an assessment roll, in which they shall set down in four 
 separate columns, and according to the best information in their power: 
 
 ’1st In the first column, the names of all the taxable inhabitants in the town 
 or ward : as the case may be.' 
 
 ***** 
 
 “In the fourth column the full value of all the taxable personal property owned 
 by such person, after deducting the just debts owing by him.'* 
 
 In 1866. Peter Cagger. of the City of Albany, was assessed in that city upon 
 stock owned by him in one of the National Banks of Albany for the value of his 
 shares. He applied to the assessors to have his assessment reduced by the amount 
 of his debts: which application was refused. On his motion a mandamus was 
 is-sued by one of the judges of the Supreme Court of the State, directing the 
 de-duction to be made. The assessors appealed to the General Term of the court and 
 the order was there affirmed. The case was then appealed to the Court of Ap¬ 
 peals. 
 
 That court, in a very remarkable opinion, t delivered bv Justice Hunt, after- 
 Wards of the United States Supreme Court, reversed the decision of the General 
 Term, and held that. "The assessors did right in refusing to make the deduction 
 claimed, and the order appealed from should be reversed, with costs.' 
 
 The opinion is notable in declaring in effect, that it had been the settled and 
 uniform purpose of the State to subject its banking corporations to exceptional 
 taxation, and that it did not intend to abandon such taxation by the adoption of 
 
 ♦ SUvn.d e£XawYcKk. 
 
 f Paapl* mxrml C»gg»? *x Ba l my, SO It V. SUperti, 50. 
 
11 
 
 the Act of 1866. The opinion reviews the legislation of the State from 1823 clown, 
 on the subject of the taxation of its banks, including the statutes which have been 
 hereinbefore referred to, and says: “These unusual provisions and directions* 
 concur with the previous legislation in indicating the statutory intent, to establish 
 for bank shares a system of taxation peculiar to itself, and independent of the 
 general system of taxation in existence in the State.” 
 
 Referring to the language of the statute that the stockholders “ shall lie as¬ 
 sessed and taxed on the value of their shares, ” the opinion says: “It is as if they had 
 said, we cannot now tax the National Banks as we have been accustomed to do; 
 but instead thereof we will tax their shareholders, and we will apply to them the 
 system of taxation that we have heretofore imposed upon the banks, so far as it is 
 lawful to do so.” 
 
 It would seem that fuller or higher evidence of the purpose of the State, “ the 
 statutory intent ,” as Justice Hunt expresses it, to subject the banks to a greater 
 rate of taxation than it imposed upon other moneyed capital of its citizens, could 
 hardly be required or furnished. It is one of the marvels of this history and 
 illustrates the despair of the banks in obtaining justice of the courts, that this 
 judgment stood upon the records of the highest Court of the State as settled law 
 on the subject for thirteen years. 
 
 In the year 1880, however, a casef came up for argument and decision before 
 the Supreme Court of the United States, involving precisely the question decided 
 in the judgment of the Court of Appeals of New York. In this case the plaintiff 
 had demanded of the assessors the reduction of his assessment on his bank shares 
 on account of his debts, which had by them been denied, and the Court of Appeals 
 of the State had affirmed the refusal on the ground taken in the Cagger case, and 
 citing the decision in that case as its authority therefor. The Supreme Court 
 say in response to the claims of the Court of Appeals: “It cannot be disputed—is 
 not disputed here — nor is it denied in the opinion of the State court, that the effect of the 
 State law is to permit a citizen of New'York "dm has moneyed capital invested other¬ 
 wise than in banks, to deduct from that capital the sum of all his debts, leaving the re¬ 
 mainder alone subject to taxation, while he whose money is invested in shares of bank 
 stocks can make no such deduction. Nor can it be denied that inasmuch as nearly all 
 the banks in that State and in all others are National Banks, the ownei' of such shares 
 who owes debts is subjected to a heavier tax on account of those shares than the owner 
 of moneyed capitcd otherwise invested who also is in debt, because the latte)' can 
 diminish the amount of his tax by the amount of his indebtedness, while the former 
 cannot. That this works a discrimination against the National Bank shares as subjects 
 of taxation, unfavorable to the owners of such shares, is also free from doubt. The 
 question we are called to decide is whether Congress, in passing the act subjecting these 
 shares to taxation by the State, intended by the very clause designed to prevent discrimina- 
 
 * Alluding to the provisions of the statute of 18GG, under discussion, 
 t People vs. Weaver, 100 U. 8., 539. Browne’s National Bank Cases, 67. 
 
12 
 
 tian between National Bank shares and other moneyed capital, to authorize such a 
 „******** 
 
 result. 
 
 “ That such was the intent of Congress” (to permit the t.xationof the shares 
 to the same extent only as other similar capital is taxed) “ can admit of no doubt. 
 Have they given expression to that intent so that courts can see and enforce it, or have 
 they expressed themselves so unfortunately that the States may, by a narrow interprets 
 tion of the act of Congress and by skillfully framed statutes of their own, exercise the 
 power thus granted so as not only to reap its full benefit., but at the same time cause the 
 burden of supporting the State Government to fall with unequal weight on the subject of 
 taxation thus surrendered to it by the National Government ? 
 
 The court closes its argument in this case as follows : “We are therefore of 
 opinion thcU the statute of New York, as construed by the Court of Appeals, in refusing 
 to plaintiff the same deduction for debts, due by him, from the valuation of his shares of 
 National Bank stock, that it allows to those who have moneyed capital otherwise invested, 
 is in conflict with the act of Congress, and the judgment of that court is reversed and 
 the case remandedfor further proceedings in conformity to this opinion. 
 
 The judgment of the court in this case encouraged the managers of the 
 National Banks with the hope that their rights were to be respected, and that 
 they were not longer to appeal for justice in vain. But the end was not yet. 
 
 This same case went back to the Circuit Court of the United States for the 
 Northern District of New York, in the suit of Stanley vs. The Board of Supervisors 
 of the County of Albany, on .the claim for the repayment of the money forcibly col¬ 
 lected of the plaintiff under the provisions of the New York Statute, which the 
 Supreme Court had declared “in conflict with the law of Congress.” It was tried 
 by the Circuit Court in 1881, Judge Wallace presiding. The judgment of that 
 Court was that the act of the New York Legislature was “ void, so fir as it author¬ 
 ized or purported to authorize the assessment and taxation of shares in banking associa¬ 
 tions incorporated under the laws of the United States;” and “ that the plaintiff is entitled 
 to judgment against the defendant ” for the sums so collected, with interest.* 
 
 This judgment would appear to be the logical and inevitable conclusion of the 
 previous decision of the Supreme Court in People vs. Weaver; but when the case 
 came before the Supreme Court for final adjudication, the judgment rendered was, 
 that “the assessors were not without authority to assess National Bank shares; that 
 when no debts of the owners existed to be deducted, the assessment was valid, and the tax 
 paid under it a valid tax. That in cases where there did exist such indebtedness, which 
 ought to be deducted, the assessment was voidable but not void.”| 
 
 And this, notwithstanding it was shown that the New York law under which the 
 tax was levied, as interpreted by the highest court of that State, absolutely forbade 
 the assessors making any deduction for the debts of the shareholder and the tax 
 laws of the State gave them no authority to make any assessment whatever, until 
 
 * Pamphlet copy, decision of court. 
 1105 U. 8. Reports, 305. 
 
13 
 
 thev had ascertained and deducted the taxpayer’s debt; for they can assess him 
 only for the remainder of his personal property, “ after deducting the just debts 
 
 OWING BY HIM.” 
 
 There was one dissenting voice from this judgment on the bench. Mr. Justice 
 Bradley placed upon the records of the court his dissenting opinion,* in which 
 he says: “The State laws authorizing the capital stock of National Banks to be 
 taxed without allowing any deduction for the debts of the stockholders, where such 
 deduction is allowed in relation to other moneyed capital, are void in Mo so far as 
 relates to National Banks. To hold the law valid, except as to those who are 
 actually indebted and actually claim the benefit of the deduction, and actually set 
 it up in a suit brought by the bank for relief, is practically to render the condition 
 of the Act of Congress nugatory, and to deprive the National Banks and their stock¬ 
 holders of its protection.” 
 
 We come now r to the case of the Mercantile Bank vs. The Mayor, cGc., of the City 
 of New York, lately decided by the Supreme Court. In this case it became ne¬ 
 cessary for the court to define the language of the Act of Congress, “ other moneyed 
 capital in the Hands of individual citizens of such State,” as used in the restriction 
 upon the permission to the States to tax the shares of the National Banka. In all 
 the cases heretofore decided the Court had only partially defined this language. 
 It had assumed that certain capital or property was or was not intended to be 
 covered by the expression. 
 
 In one casef the language of the restriction is held to mean “the moneyed 
 capital of the individual citizen which is subject to taxation,” and that “ it does 
 not refer to the rate of assessment upon insurance companies as a test by which to 
 prevent discrimination against shares.” In the Hepburn case the Court seems to 
 admit without question that “all mortgages, judgments,recognizances and moneys 
 owing upon articles of agreement for the sale of real estate” are such moneyed 
 capital. It also says, “we cannot concede that money at interest is the only 
 moneyed capital included in the term as here used by Congress. The words are 
 ‘other moneyed capital.’ That certainly makes stocks in those banks moneyed 
 capital and it would seem that other investments in stocks and securities might be 
 included in the descriptive term.” In a Kentucky case* the Court say, Congress 
 “ intended to provide against a discrimination on taxing such bank shares unfavor¬ 
 able to them, as compared with the shares of other corporations and with other 
 moneyed capital.” In Adams vs. Mayor, &c., of Nashville ,\ it says, “The Act of 
 Congress * * * * required that capital invested in National Banks should 
 
 not be taxed at a greater rate than like property similarly invested.” 
 
 In the Boyer case it was charged, and not denied, that while the National Banks 
 were subjected by the laws of Pennsylvania to local taxation, there were exempted 
 from such taxation in the State the shares of other corporations which were valued 
 
 * 105 U. S., 326. 
 
 $ National Banka r*. Commonwealth, 9 Wallace, 363. 
 
 t People vs. Commissioners, 4 Wallace, 244. 
 g 05 U. S., 19. 
 
14 
 
 at five hundred and sixty-four million dollars, and other taxable values described 
 as “mortgages, money owing by solvent debtors, * * * articles of agreement 
 and accounts bearing interest,” corporate and municipal loans and all public 
 stocks (except those of that State or of the United States) amounting to one hun¬ 
 dred and twenty-five millions, and stocks of State banks, seven millions; all 
 which is treated by the Court as other moneyed capital under the designation 
 of the Act of Congress. No objection or suggestion of objection is made to any 
 of these being included under the language of the restriction upon the State 
 taxation in those terms. Speaking of these, the Court says: “ Upon such fuels and 
 in view of the revenue laws of the Slate, it seems difficult to avoid the conclusion that, in 
 respect of county taxation of National Bank shares, there has been, and is, such 
 a discrimination in favor of other moneyed capital against capital invested in such 
 shares, as is not consistent with the legislation of Congress. The exemptions in favor 
 of other moneyed capital appear lobe of such a substantial charade)’ in amount as to 
 take the present case out of the operation of the rule that it is not absolute equality that 
 is contemplated by the Act of Congress; a rule which rests upon the ground that exact 
 uniformity or equality of taxation cannot in the nature of things be expected or attained 
 under any system. But as substantial equality is attainable, and is required by the 
 supreme law of the land, in resped to State taxation of National Bank shares, when 
 the inequality is so palpable as to show that the discrimination against capital invested 
 in such shares is serious, the Courts have no discretion but to interfere 
 
 Taking into the account the language of the Court in all the cases here cited, 
 in adjudications running through more than twenty years, under the Act of Con¬ 
 gress referred to, it would appear reasonable to regard them as establishing what 
 could be relied on as a rule of interpretation of the act in the language of the re¬ 
 striction. Following this reasonable and natural construction of the language of 
 the Court, we would conclude that mortgages, judgments, recognizances, and 
 money owing upon articles of agreement for the sale of real estate; the stocks of 
 other corporations, money at interest, corporate and municipal loans, and public 
 stocks (except those of the State and the United States), are properly included in 
 the phrase—“other moneyed capital in the hands of the individual citizens of the 
 State,” when they are held by such citizens. 
 
 But, when the Court comes to the adjudication of this case of the Mercantile 
 National Bank, which rests upon almost precisely the same grounds, we find it 
 setting up a new definition of the words of the statute, according to which they do 
 not include the shares of other corporations; they do not include ordinary invest¬ 
 ments of capital in industrial or commercial enterprises. They only include the 
 stocks of such corporations, and the investments of such capital as, from the nature 
 of the business engaged in, compete with the business of the National Banks!* 
 That the meaning of the Court maynoffbein any manner misunderstood, X quote — 
 A tax upon the money of individuals, invested in the form of shares of stock in Na- 
 
 Sec the case reported, 121 U. S., 139. 
 
15 
 
 tional Banks, would diminish their value as an investment and drive the capital so in¬ 
 vested from this employment, if at the same time similar investments and similar em¬ 
 ployments, under the authority of Slate laws, were exempted from an equal burden. 
 The main purpose, therefore, of Congress, infixing limits to State taxation on itirest- 
 \ments in the shares of National Banks, was to render it impossible for the State in 
 levying such a tax, to create and foster an unequal and unfriendly competition, In/favor- 
 ting institutions or individuals carrying on a similar business and operations and 
 investments of a like character. ’’ * * * * * * * 
 
 “So far as the policy of the Government in reference to National Banks is con¬ 
 cerned, it is indifferent how the Slates may chose to tax such corporations as those just 
 mentioned," — (namely, railroad companies, mining companies, manufacturing com¬ 
 panies, and other corporations,) — “or the interest of individuals in them, or whether 
 they should be tcuced at all. Whether properly interests in railroads, in manufactur¬ 
 ing enterprises, in mining investments and others of that description , are taxed or 
 are exempt from taxation, in the contemplation of the law, would have no effect upon 
 the success of National Banks. The business of banking, as defined by law and 
 custom, consists," &c., &c. * ***** * * * * 
 
 “ These arc the operations in which the capital investedin National Banks is employed, 
 and it is the nature of that employment which constitutes it in the eye of this statute 
 1 moneyed capital.' Corporations-and individuals carrying on these operations do come 
 into competition with the business of National Banks, and capital in the hands of indi¬ 
 viduals thus employed is what is intended to be described by the Act of Congress .” 
 
 Well! well! well! verily; after this, but small effort is required to sweep away 
 the remaining 482 millions exempted capital, admitted by the Court as coming 
 under the proper meaning of the terms “moneyed capital,” as used in the statute. 
 And this, without consideration for the previous declaration of the same Court in 
 the Boyer c.ise, as to the “ very material part relatively, of other moneyed capital ”* 
 being exempted! The total sum subjected to taxation in the State, of all personal 
 property whatever, including all moneyed capital of all kinds, being 832 millions 
 only; of which sum about 100 millions is made up of bank shares. 
 
 Of this 482 millions, the Court releases 32 millions — the shares of trust com¬ 
 panies—for the reason that “ it fails to find ground to believe that the rate of tax 
 which falls on their capital is less than that imposed upon National Bank shares.”! 
 
 * See the quotation at length, ante page 14. 
 
 t The stipulation shows (p. 31, pi. 5) that the ** * * aggregate actual value of the shares of the capital stock 
 of trust companies existing in the State of Hew York and organized under its laws amounts to $32,018,900." 
 The detailed statement on page 5i of the record shows that the par value of the capital stock of such cor¬ 
 porations was $12,052,000. 
 
 ltemcmbering that the assessed value of the entire capital stock of all the National Bauks in the city of 
 New York was $45,016,074 only, it would seem that the exemption of $30,215,900 wortli (ltecord, p. 32, top), 
 
 of shares of trust companies in that city, is a "very material discrimination.” * * * * 
 
 The Supreme Court has said in the Boyer ease that a " very material discrimination ’’ against National 
 Bank stock by the laws of a State would be a violation of the condition imposed by Congress upon tho right 
 to tax National Bauk stock. Necessarily, tho Court did not say what would constitute a very material dis¬ 
 crimination. ************** 
 
 If the State of New York by any species of legislation pertaining to its own creatures which possess the 
 
1C 
 
 And this, regardless of the fact that the shares of the trust companies are not 
 taxed at all; and regardless of the fundamental principle of the Van Allen case, 
 that “ a tax on the shares is not a tax on the capital of the bank;” and, if so, then a 
 tax on the shares of the trust companies, is not a tax on the capital of those com¬ 
 panies; and regardless further of the logical conclusion of the doctrine of that 
 case, that if the shares of the banks are justly taxable, when the capital represented 
 by them is invested in non-taxable securities, then the shares of the trust com. 
 panies and of other State corporations are also justly taxable although the legally 
 taxable capital they represent may be otherwise taxed. 
 
 The 437 millions Savings Bank deposits are also released by the Court although 
 acknowledged to be “moneyed capital in the hands of individuals within the tei'ms 
 of any definition which can he given to that phrase;" becaifse “ to promote their growth 
 and progress is the obvious interest and manifest policy of the State." And this, 
 regardless of the doctrine of the Boyer case, that the Court has no function to 
 deal with questions of public policy of the State governments.’ * 
 
 franchise of discount and deposit, as in the case of the trust companies, does relieve them or the Bhares 
 therein from the public burden of taxation which it specifically imposes upon the shares of National Banks 
 located and operating in the same community, side by side, that legislation is in itself a discrimination 
 against the National Banksand is in violation of the Act of Congress aforesaid, irrespective of what the State 
 may have done, with relation to the remainder of other moneyed capital within the State. In the case of 
 trust companies this relief from taxation is afforded by the State at the same time that the burden is con¬ 
 tinued upon the shares of National Banks. 
 
 The earning power of these trust companies as compared with that of the national banks is therefore 
 nurtured by the State to the disadvantage of the National Banks. As competitors in the conduct of this 
 business of discount and deposit the State has to this degree diminished the efficiency of the creature of 
 the National Government. These trust companies invite and receive deposits subject to check, they make 
 investments in commercial paper, they make loans of money on pledge of security. 
 
 The State of New York has accomplished this discrimination under the Statute of 1882, just quoted, by 
 relieving from taxation the shares of the capital stock of trust companies whilst it has continued the tax 
 on the shares of National B inks. Thit a distinct intent existed to thus discriminate is indicated by the fact 
 that theretofore all shares of both (National Banks aud trust co n panies), were taxable under the same section 
 of the law, and that by the same section in the Act of 1882 the tax on the one was continued whilst from the 
 other it was removed. 
 
 No substitute was created for the tax thus removed, but tho corporation itself was thereby thrown back 
 under the law of 1857. The situation thus purposely created by the State of New York is this : “If the 
 citizen invests his money in the shares of National Bank stock we will tax him on their full value, less only a 
 proportionate amount of the real estate of the bank—we will not permit a deduction for United States bonds 
 lor State corporate shares, or property outside our jurisdiction. If, however, he will invest that money 
 instead, in the shares of trust companies we will not tax him at all, and wo will only tax the trust company 
 for that portion of its capital stock not invested in United States bonds or other non-taxable property.” 
 
 The effect of such a discrimination is evident. 
 
 Trust companies in the city of New York having shares of a total actual value of. $30,215,900 
 
 Aud real estate of (p. 82'. 2,330,572 
 
 And a not value of.. $27,879,328 
 
 " ere themselves taxed on an assessment of capital stock, *• after making deductions for shares 
 
 in N. Y. corporations and non-taxable securities," of only. 166,506 
 
 Or a difference of.. $27,722,822 
 
 That is to say, had the same system of taxation been applied to trust companies as was applied 
 
 to National Banks, the assessment on the former would have been. $27,879,328 
 
 But under the system specially provided for them it was only. 156,506 
 
 Or, to reverse the picture, hid tho same principle been applied to the Mercantile National Bank 
 
 as was applied to the trust companies, the total net assessment which was (p. 3). $809,000 
 
 would have been cancelled by the investment in U. S. bonds of (p. 2j. 949,000 
 
 Brief for appellant in Mercantile National Bank case versus City of New York in Supreme Court of the 
 United States. 
 
 * See quotations from tho Court’s opinion in the Boyer case, ante page 8. 
 
17 
 
 ! The remaining item of the 482 millions admitted moneyed capital within the 
 terms of the restriction of Congress, namely, the thirteen millions exempted 
 New York City bonds, is easily disposed of on the ground of its comparatively 
 small amount, and “ as from their nature they are not ordinarily the subjects of 
 taxation, they are not within the reason of the rule established by Congress for 
 the taxation of National Bank shares.” 
 
 The case is then decided against the banks. 
 
 Thus the defences which Congress had set up for the protection of the National 
 Banks are wholly swept away, and they become a delusion and a mockery ! Well 
 may the dissenting language of Mr. Justice Bradley be repeated, and with renewed 
 emphasis, that the condition of the Act of Congress is rendered nugatory, and the 
 National Banks and their stockholders are deprived of its protection. 
 
 Before proceeding to the other branches of our subject, a little further con- 
 sideration is due to the very singular definition adopted by the Court of the con¬ 
 gressional language, “ otlier^moneyed capital in the hands of individual citizens.” 
 The generally accepted and natural meaning of this language would have com¬ 
 pelled a judgment the opposite of that rendered. It became necessary therefore 
 to narrow its meaning, to support the conclusion which the Court had determined 
 upon. His Honor, Justice Matthews, in writing the opinion of the Court, evi¬ 
 dently found this a subject of some difficulty, yet it must be accomplished. It was 
 evidently deemed important that something of warrant for the needed definition 
 should be found in the previous decisions of the Court. The learned Judge 
 therefore goes to the Van Allen case, and that of People vs. Commissioners for such 
 warrant. I quote: “It was also hold (in People vs. The Commissioner's) that tho lan¬ 
 guage of the act of Congress which fixed the rate of taxation upon National Bank 
 shares, by reference to that imposed by the State ‘ upon other moneyed capital in 
 the hands of individual citizens,’ excluded from the comparison moneyed capital 
 in the hands of corporations, unless the corporations were of that character, such 
 as State banks were held to be in the case of Van Allen vs. The Assessors, that 
 shares of stock in them fell within the description of ‘ moneyed capital in the 
 hands of individual citizens.’ In that way a distinction was established between 
 the shares of stock held in banking corporations and those held in insurance com¬ 
 panies and other business, trading, manufacturing and miscellaneous corporations, 
 whose business and operations were unlike those of banking institutions.” 
 
 The honorable Judge here claims that the Van Allen case holds that shares in 
 State banks “ fell within the description of moneyed capital in the hands of indi¬ 
 vidual citizens.” Now, on a careful examination of the opinion recorded in the 
 Van Allen case, no such holding can be discovered. No allusion whatever is made 
 in that opinion to the terms “ moneyed capital,” &c.; but, on the contrary, it is ex¬ 
 pressly stated that the judgment in that case is controlled by the other and further 
 restriction then staudiug in the statute, viz..: “ that the taxation should not be at a 
 
greater rate than was imposed upon the shares of banks organized under the laws 
 of the State within which the National Bank was located.” (See 41st sec. of National 
 Bank Act of 1864.) 
 
 The honorable judge also states that the People vs. Commissioners, excluded 
 from the comparison moneyed capital in the hands of corporations, “ unless the 
 corporations were of that character, such as State banks were held to be,” &c. 
 
 Now, no one knows better then the learned author of this opinion, that People 
 vs. Commissioners does not admit to the comparison moneyed capital in the hands 
 of corporations at all; and he himself says so in the same paragraph from which I 
 quote. Why then does he say in the sentence which I quote, that capital in the 
 hands of corporations is excluded from the comparison “ unless the corporations 
 were of that character such as State banks were held to be," &c. ? Clearly for the pur¬ 
 pose of justifying the conclusion which he seeks to establish, viz.: “ In that w r ay a 
 distinction was established between the shares of stock held in banking corpora¬ 
 tions and those held in insurance companies and other business, trading, manufac¬ 
 turing and miscellaneous corporations, -whose businessfand operations were unlike 
 those of banking institutions.” 
 
 The learned judge labors to draw from these earlier cases material for the foun¬ 
 dation of the distinction he here declares established. But- as we have before 
 shown, his premises wholly fail; and, of course, his conclusion fails with them. 
 No such distinction exists in the contemplation of Congress; or in the natural and 
 literal interpretation of its language ; or in the judgment of the court as expressd 
 in the cases previously adjudicated. 
 
 The judge goes on to say that as respects insurance companies, “it was held 
 in People vs. Commissioners, that shares of stock in them were not taxable as 
 moneyed capital in the hands of individual citizens. ” 
 
 The only apparent warrant for this assertion we can find in People vs. Commis¬ 
 sioners, is the following: “These companies are taxed on their capital, and not 
 on the shareholder, at the same rate as other personal property in the State.” 
 
 This is very far from asserting that shares of stock in such companies “ are not 
 taxable as moneyed capital in the hands of individual citizens.” It is simply stat. 
 ing the fact that their shares were not actually taxed in the State of New York, 
 which is one of the facts complained of by the appellants in this case. 
 
 Again, the learned judge says: “A l’ailroad company, a mining company, an 
 insurance company, or any other corporation of that description may have a large 
 part of its capital invested in securities payable in money, and so may be the 
 owners of moneyed capital; but, as we have already seen, the shares of stock in 
 such companies held by individuals are not moneyed capital.” 
 
 Of course this assertion of his honor is based upon the distinction he has at¬ 
 tempted to establish, which utterly failing of its claimed authority, must fail with 
 it. 
 
 If the honorable judge had beep solicitous to follow the clear leading of former 
 
19 
 
 decisions, lie might have found repeated expressions of the court justifying the 
 conclusion that it did regard the shares of corporations in general as properlv 
 included in the terms “ other moneyed capital in the hands of individual citizens.” 
 In the Hepburn case the court says, “it would seem that other investments in 
 stocks and securities might be included in the descriptive term.” In National 
 Bank vs. Commonwealth, it says, “Congress intended to provide against a dis¬ 
 crimination on taxing such bank shares unfavorable to them as compared with 
 the shares of other corporations,” &c. In Boyer vs. Boyei', the inclusion of the 
 shares of corporations generally in the State of Pennsylvania as a part of “ other 
 moneyed capital ” presented in the plaintiffs complaint as exempted from taxa¬ 
 tion; and such inclusion was treated by the court in its judgment of the case 
 without objection. They are evidently treated as being properly so included. In 
 the case of Adams vs. Mayor of Nashville,* the court says: “It” (the National 
 Bank Act) “ simply required that capital invested in National Banks should not bo 
 taxed at a greater rate than like property similarly invested.” 
 
 We find, therefore, that in all the previous adjudication of the court upon 
 these questions, there is not only no warrant whatever for Judge Matthews’ re¬ 
 stricted definition, but on the contrary, there is found in the previous cases much 
 which points to the opposite and natural definition of the terms of the statute. 
 
 And, as further and complete evidence that Congress meant the terms under 
 consideration to be understood in their broader, and more commonly understood 
 and liberal application, to include all usual moneyed investments, the statute 
 originally adopted, added to these terms the further restriction, “that the tax so 
 imposed under the laws of any State, upon the shares of the associations author¬ 
 ized by this act, shall not exceed the rate imposed upon the shares of any of the 
 banks organized under the authority of the State where such association is 
 located.f 
 
 Now, it is manifestly absurd to suppose, if Congress meant by its first limitation 
 of State taxation of the bank shares to a rate not exceeding that imposed upon 
 other moneyed capital, to be understood to include only such moneyed capital as 
 the shares of State banks and investments of money which compete with the busi¬ 
 ness of banking, it would immediately have added this further restriction as above 
 quoted, that the tax should not be greater than that imposed upon the shares of 
 State banks. Yet it is in this absurd position that Mr. Justice Matthews and the 
 opinion of the Supreme Court in this case places Congress by their construction 
 of its language. 
 
 The practice of modern jurisprudence properly requires of courts a reason for 
 their judgments; but in this case it would seem that the court would have better 
 subserved its dignity and credit by recording its decree in silence. 
 
 The Yan Allen case was the first departure of the Court from the constitutional 
 principle that the securities of the United States could not be taxed by the 
 t National Bank Act, 3d June, 1864, Sec. 41, proviso. 
 
 * 95 U. S. Reports, 19. 
 
20 
 
 authority of the States in any manner, directly or indirectly. When this barrier 
 was overborne with reference to the banks, against the protest of so respectable a 
 minority of the court as the Chief Justice and two Associate Justices, the rest 
 was easy. 
 
 The decision in the Stanley case, that the law of New York, which forbade the 
 deduction for debts of the bank shareholder from the assessed value of his shares 
 which was allowed and required as against the assessed value of all other personal 
 property and moneyed capital, was not void, but was voidable at the suit of the 
 shareholder who could prove injury, was another departure of the court from the 
 application of its principles out of consideration for consequences. 
 
 In the Mercantile Bank case hereinbefore referred to, lately decided, we find 
 the Court disregarding the conclusions of reasou, reversing the doctrine of its 
 previous decisions, forcing an arbitrary and unnatural definition of the English 
 language, and in the end avoiding the application of its own definition, in order 
 to support its evidently pre-determined decision. 
 
 Our apprehensions may justly be aroused as to the future of the National 
 Banking system. But, in view of this recital of the action of the Supreme Court 
 upon these questions, there is one reflection which impresses us, and will impress 
 the country with more profound sadness than the fate of the banks, whatever that 
 may be. It is, that the highest judicial tribunal of the country—the court of last 
 resort for the interpretation of the legislation of Congress, and the determination 
 of constitutional rights—instead of being guided by the sure com pasts and chart of 
 principle, has launched itself upon the treacherous and uncertain sea of policy, 
 and that it consequently finds itself floundering around in self-stultification and 
 the evasion of settled principles, to find plausible reasons to sti&tain its judgment, 
 already pre-determined in view of possible consequences—as matter of policy! 
 
 Although in the judgment of Mr. Justice Matthews and the Supreme Court, it 
 is a matter of indifference to the Government “ how the States may choose to tax ” 
 their corporations, and the capital and personal property of the State at large, “ or 
 whether they should be taxed at allyet it is not a matter of indifference to the 
 banks, nor to the legal principles governing taxation. Whether the banks of the 
 State of New York, for example, are to contribute one-third or one-thirtieth of the 
 total taxes exacted from the entire moneyed capital and chattel property of the 
 State, is by no means a matter of indifference to them or to the State. The capital 
 of the banks forms, as estimated, about one-thirtieth of the total moneyed capital 
 and personal property of the State. Under the present unequal laws of the State, 
 and the sanction of the Supreme Court of the United States, they are required to 
 pay about one-third of the total taxes collected from this source 
 
 The continued existence and efflciehey of the National Bankingsystem depends 
 upon the,, being treated with justice in this regard. It cannot but be obvious to 
 all who have eyes to see, that the banks cannot continue a successful struggle for 
 existence handicapped by an annual discriminative tax as compared with other 
 
21 
 
 business interests in the State, about equal to the current interest rates upon cap¬ 
 ital. Things are greatly changed since the inauguration of the system in 1863-4. 
 Then, the bonds of the Government bearing six per cent, interest in gold, were pur- 
 chaseable considerably under par in currency. The semi-annual gold interest was 
 salable at 50 to 180 per cent, premium—the investment thus yielding 9 to 16 per 
 cent, annual interest. All loanable capital was in active request at 7 per cent, and 
 upwards. This condition of affairs enabled the banks to earn so liberal profits that 
 they were able to bear heavy taxation without feeling its weight. 
 
 Now, the net income upon all Government bonds is reduced to per cent, per 
 annum, or less upon their cost. All the National currency now issued by the banks 
 is done at a positive loss to them. The very success of the banks in the aid ren¬ 
 dered by them to the Government, has reduced the current interest rates upon 
 capital to a minimum never before known. The earnings of the banks from all 
 legitimate sources of business, are but a pittance of what was readily possible 
 twenty years ago. Yet the Government and the public stupidly hold to the old 
 conclusion of prejudice that the banks are proper subjects to bear every burden of 
 tax which can be put upon them, without over nice consideration of the justice of 
 the imposition. The result is the issues of National currency have already 
 diminished one half, and the remaining outstanding volume is steadily lessen¬ 
 ing. The system is doomed to extinction if its present disabilities are to be con¬ 
 tinued. 
 
 It is maintained now, more from the feeling on the part of the bank managers 
 that the public good demands its continuance, than by any hope of gain to them 
 through its maintenance. It is readily recognized that its earnings are less than 
 those of most other uses of capital. The general disposition to subject them to 
 unjustly discriminative burdens of taxation is driving investments of capital from 
 bank shares steadily. The doom of the system can be but a question of time, if 
 things continue as at present. 
 
 Congress might do two things to relieve the banks if public prejudice did not 
 prevent: 
 
 First, in its anxious solicitude to lessen the public revenues, it could throw off 
 the one per cent, per annum tax upon their circulation. 
 
 Second, it could permit the issue of one hundred dollars of currency instead of 
 ninety upon the deposit of each one hundred dollars in bonds, whenever the 0100 
 issued did not exceed ninety jier cent, of the mai’ket value of the bonds deposited. 
 
 These two changes alone would enable tne banks to earn a small profit on their 
 circulation, which they now issue and continue in use at a loss to themselves; and 
 they would also be wholly consistent with safety and in line with professed public 
 policy. 
 
 It seems to have been impossible to convince the Supreme Court that the banks 
 are subjected to an unfair and unjust measure of taxation, while facts everywhere 
 
22 
 
 abound pointing in that direction. We will now present some statements from 
 officials of the State whose duties and experience render them peculiarly fitted to 
 judge of the truth in that regard. 
 
 The State of New York appoints by law three State Assessors, whose duty it is 
 to visit each county in the State at least once in two years, to supervise the assess¬ 
 ments of the State, to promote equality of assessment and compliance with the 
 law. They are empowered to swear witnesses, and the officials of all the towns 
 cities and counties of the State, as well as the State officers, are required to give 
 them all the information they require. Their official calling gives them peculiar 
 opportunities of observation and information to enable them to judge wisely and 
 accurately on the subjects upon which they report to the Legislature. I present 
 the following statements of these State Assessors as to the taxation of the banks 
 relatively to other moneyed capital and personal property, from their annual re¬ 
 ports. 
 
 “As a general rule we find all over the State that the assessment of personal 
 property is made without regard to the law. ” 
 
 Report for 1873, page 7. 
 
 “From our examination we are satisfied that less than fifteen per cent, of the 
 personal property of the State liable to taxation finds a place on the rolls of the 
 assessor, and of mortgages not over five per cent, of the value is assessed.” 
 
 Ibd., page 6. 
 
 “ The Bank of Commerce, in the City of New York, paid more taxes in 1872 on 
 a capital of $10,000,000 than any one of thirty-five counties in the State.” 
 
 Ibd., page 7. 
 
 “ The assessment of personal property and the stock of incorporated compan¬ 
 ies, as generally practiced under the present law, is a mere mockery. ” 
 
 Report for 1875, p. 45. 
 
 “ The shares of bank stock, both National and State, are under the present law 
 as administered taxed when assessed according to law, to a greater extent than 
 any other kinds of personal property." 
 
 Report for 1876, p. 25. 
 
 “It is safe to assert that not three per cent, of all the money loaned on bond 
 and mortgage in the State is assessed, and unless some efficient remedy is apjdied, 
 the assessment of bonds and mortgages will soon be a thing of the past.” 
 
 Report for 1877, p. 8. 
 
 “ The banks pay 30 per cent, of all the taxes paid on personal property in the 
 State.” 
 
 Report for 1878, p. 14. 
 
 “ The banks of the City of New York pay 36 per cent, of all taxes on personal 
 property in the city.” 
 
 Ibd., page 16. 
 
 “ In Albany the banks pay about 58 per cent, of all the taxes on personal prop¬ 
 erty.” 
 
 Ibd., p. 16. 
 
23 
 
 “Iu Troy the banks pay 50 per cent, of all taxes paid on personal property. 
 
 See Report for 1878. 
 
 “No one will claim that the actual personal property, in any city or village, is 
 fully assessed and taxed as heavily as bank stock is.’’ 
 
 Report of Hon. H. L. Lamb, Supt. of Bank Department, 18th 
 Dec., 1878. Quoted as concurred in by Report of State As¬ 
 sessors for 1878, p. 18. 
 
 “ In our report of last year, we presented facts and figures of bank taxation, that 
 in our opinion were deserving of the law-making power of the State, especially as 
 bank capital paid taxes out of all proportion to auy other property assessed in the 
 State, and so onerous had been the taxes that in six years we had lost some thirty 
 millions of bank capital from the rolls.” 
 
 Report for 1879, p. 14. 
 
 “ Banking capital is assessed fully 85 per cent, of its nominal value, while it is 
 quite evident that other personal property is assessed at an average of less than ten 
 per cent.” 
 
 Report for 1880, p. 7. 
 
 The State Banking Department has frequently referred to the unequal and ex¬ 
 cessive taxation upon the banks. I have already quoted the remarks of Hon. H. 
 L. Lamb, Superintendent, in his report of 1878. 
 
 Hon. A. B. Hepburn, Superintendent, in his report for 1881, says:—“It is a 
 well authenticated fact that the taxation levied upon banks is greater in proportion 
 than that imposed upon any other species of personal property.” * * * 
 
 “ The necessity for a revision of our tax laws has long been felt and frequently 
 
 Bank Department Report, Assembly Document No 5, January 5,1881. 
 
 The present Superintendent, Hon. Willis S. Paine, has frequently alluded to 
 the subject of the unjust taxation of the banks, giving his testimony in the same 
 direction. 
 
 It would seem that all this testimony from official sources, impartially given, by 
 men placed in positions of responsibility, by reason of their fitness to judge 
 of such subjects, would be sufficient to convince the minds of all caudid men that 
 the banks do not complain of excessive taxation without just cause, so far as the 
 State of Now York is concerned. Our information leads us to believe that in the 
 other States, as a rule, the situation is very similar. 
 
 We have before alluded to the judicially declared purpose-the “statutory in- 
 tent” of the State of New York to subject the backing institutions within its 
 borders to exceptional taxation-*' to establish for bank shares a system of taxation 
 peculiar to itself, and independent of the general system of taxation in existence 
 in the State.” She has persisted in her purpose to establish and maintain this 
 peculiar system of taxation in defiance of the restriction of Congress, and in disre¬ 
 gard of the equitable and legal principles of equality of taxation required by the 
 doctrines of elementary law; and now she has the sanction of the highest judicial 
 
24 
 
 tribunal of the nation in support of her injustice. Her Legislature has received 
 from year to year, for fifteen years, the declarations of her officials that the injustice 
 was being perpetrated, but no step has been taken—no effort attempted, to correct 
 the wrong. To-day, as for more than twenty years past, the State taxes the shares 
 of banks, and subjects the shares of no other corporations to taxation. To-day, 
 while subjecting the shares of the banks to assessment and. taxation at their full 
 value , she succeeds in getting upon her assessment rolls less than ten per cent, of 
 the other taxable moneyed capital and personal property of the State; and this in- 
 justice has the sanction of her own Courts; and now, also, of the Courts of the 
 United States. 
 
 Although the statutes of the State, in apparent conformity to the laws of 
 Congress, requires that in the assessment of the shares of National Banks they 
 shall 11 he included in the valuation of the personal property of the owner;” yet it has 
 been, and still is, the practice of the assessors in the City of Albany, and generally 
 throughout the State, to assess and tax all bank shaves specifically by a separate 
 list, apart from the tax roll as prescribed by the statuto; and this practice is upheld 
 by the Courts. 
 
 . The shares of the banks are the only species of personal property which is 
 specifically taxed in the State, and, as if to add insult to the injury, the owner of the 
 shares, if he resides out of the city or town in which the bank is located, the tax is 
 made a specific lien upon his shares that must stand until the tax is paid. This is 
 the only instance of a lien upon personal property to secure the payment of a tax, 
 known to the statutes of New York. Any citizen holding any other personal prop¬ 
 erty or moneyed capital may transfer it, or may remove it from the State without 
 any restraint of law, unless by a special suit entered for that purpose. But the 
 owner of a bank shai*e must suffer it to be placed under a specific lien to secure the 
 payment of the tax. 
 
 This condition of statute provision as to taxation of the shares affords the op¬ 
 portunity to the tax officials to make their power offensively conspicuous, which 
 they are not slow to avail themselves of. The shareholder is harrassed with 
 methods of assessment and taxation unknown to him in relation to any other 
 property. He finds that whereas the tax assessor has the means only to guess at 
 the amount And value of any other moneyed capital or personal property which 
 may be held by a taxable citizen, every share he may hold in a bank is sure to be 
 on the tax list, and for its full value. On inquiring the reason of this, he finds 
 that the law provides the assessor the means of the discovery of every share of a 
 bank held by any person. It requires the manager of every bank to disclose to 
 the local assessor the name and residence with the number of shares held, of 
 every shareholder of the bank. No similar or equivalent requirement is made as 
 to the ownership of any other species of taxable personal property or moneyed 
 capital whatever. As to all other such property than bank shares, the assessor is 
 required to “ascertain by diligent inquiry;” which, as we have before explained, 
 
25 
 
 means that lie must guess at tho holding, without any information from tho 
 
 owner. 
 
 It is the practice of tho assessors also to establish different rules of treatment 
 0 f holders of bank shares from those of the owners of other taxable moneyed 
 capital and personal property, regarding the verification and reduction of assess¬ 
 ments thereon. The assessor is required by law to enter in the assessment roll 
 opposite the name of each taxable person “ the full value of all the taxable per- 
 flonftl property owned by such person, after deducting the just debts owing by him." 
 This language of the law clearly requires the assessor to ascertain the indebtedness 
 of the taxpayer, as much as the value of his taxable property, before he can legally 
 assess him, for he can only assess him for the value of his personal property 
 “after deducting the just debts owing by him.” 
 
 But, the assessors of the City of Albany (and tho same practice prevails 
 throughout the State so far as our information extends) disclaim any obligation or 
 duty to make any inquiry or deduction on account of debt of the bank share¬ 
 holder, unless the fact be each year set out by sworn proof, while as to the assess¬ 
 ment of every other spqcies of personal property, they accept the unsworn decla¬ 
 ration of the party assessed, and admit the sworn statement of previous years to 
 govern their assessment. The result is that the bank shareholder is each year 
 assessed for the full value of all his shares, regardless of the question whether he 
 is entitled to deduction for debt, while by confession of tho State Assessors, not 
 so much as 10 per cent, of the total taxable personal property and moneyed capital 
 of the State is gotten upon the tax-rolls, and of mortgages not 3 per cent.* The 
 bank shareholder therefore quite naturally comes to feel, not only that Ins invest¬ 
 ment in bank stock is discriminated against in the matter of taxation as compared 
 with other investments, but that he is held in some sense culpable for having his 
 money so invested. 
 
 Beyond the grievance of the banks in the uujust treatment complained of, it 
 becomes the statesman to consider with care the tendency of snob .nins me. K 
 has become so much the habit of the public mind m our county to «- 
 jealousy the power of money as threatening the rights andliberties 
 perhaps eve may bo in danger of making tho grave eeonom.oal mrstake of denymg 
 to capital its just rights. Bauks are regarded as the ™ “op to 
 
 * See quotations from Report of State Assessors. A* »• 22 23 * 
 
26 
 
 widows, orphans and other helpless persons. * There can be little danger of a com¬ 
 bination of capital so organized that shall menace the rights of the people. The 
 just protection of capital is simply the protection of the individual in the enjoy¬ 
 ment of the fruits of his industry and enterprise. When our Government fails to 
 extend such protection, its usefulness will bo ended, and the country in its deca¬ 
 dence. 
 
 The National Banks have rights, and they have claims upon the country entitling 
 them to consideration and just treatment. Moreover the true interests of the 
 country demand their maintenance, even more than any individuals interested in 
 them as shareholders have in that question. 
 
 It is not too much to claim for the National Banks that they saved the Union in 
 the war of the rebellion. Until their inauguration the investment of the capital of 
 the public in the loans of the Government proceeded slowly and with difficulty. 
 The Secretary of the Treasury had dispatched a special agent to Europe to promote 
 investment in them there with small success. Congress had authorized the issue of 
 legal tender Treasury notes increased from one hundred and fifty millions to four 
 hundred and fifty millions; and to quiet the well-grounded apprehension of the 
 country, had pledged its solemn faith that that sum should not be increased. The 
 act which recorded this pledge, however, authorized the issue, at the discretion of 
 the Secretary, of two hundred millions two and three year Treasury notes bearing 
 six per cent, interest, and to be a legal tender for their face value in place of the 
 same sum in six per cent, bonds; and the whole sum of interest-bearing legal-ten¬ 
 der notes was afterwards issued, because the bonds could not be negotiated. The 
 coin value of the six per cent, gold bonds of the Government had fallen to forty 
 cents on the dollar and below. The inevitable collapse of the irredeemable forced 
 currency of the legal tender notes must have been reached soon after midsummer 
 of 1864, had not some influence been summoned to strengthen the public faith and 
 promote the investment of the capital of the people in the Government bonds. 
 That influence, brought to bear in the hour of extreme need, was the National 
 Banking system. In addition to the large amounts of the bonds taken by the 
 banks themselves as a permanent investment of their capital, every bank in the 
 country became a standing monument, in the presence of a hesitating and appre¬ 
 hensive community, of faith in the bonds as a safe security. Each bank also be¬ 
 came at once a public agency for their distribution to the people. From that 
 period the money of the public was flowing in steady and accelerating streams into 
 the Treasury from the fountains of two thousand National Banks, dealing directly, 
 daily and hourly, with the people in their money transactions. 
 
 It is well known that Mr. Chase looked in 1861-2 with great apprehension on 
 
 * See report of Comptroller Knox. 1876, page GO, on “ Distribution of National Bank Stock,” which 
 shows that the average amount of stock held by each shareholder is about $3,100, and that more than one- 
 half of tho National Bank shareholders hold stock for only $1,000 or less. 
 
the scheme of irredeemable currency.* His plan was to allow it as a means of im¬ 
 mediate and temporary relief only, until he could induce Congress to adopt and get 
 into working order his scheme for the organization of the National Banks. That 
 system was planned by him to be a substitute for, and to take the place of the 
 Greenbacks as a financial policy. Mr. Chase and the statesmen of that period were 
 too well acquainted with sound financial principles, not to know the extreme peril 
 to be incurred in reliance upon a forced currency as the means of carrying on a 
 great war.f 
 
 The National Banking system organized the commerce—the capital—the busi¬ 
 ness and industries of the country, as the basis of the Government credit. In place 
 of a half dozen Sub-Treasuries in a few of the large cities, and the very limited deal¬ 
 ings of the Treasury directly with the people; that system placed a Treasury agency 
 in every town and considerable hamlet of the country under the charge of the 
 people’s most trusted financial advisers, and in every-day communication with 
 them. It affords the public a currency having not only the faith of the United 
 States for its security, but having also the values of the business and commerce of 
 the country at its back. It placed the Government and the business of the country- 
 in close sympathy, and served to the financial department the office of the nervous 
 system in the animal economy. Every impulse—qvery thrill of patriotic, commer¬ 
 cial and financial interest felt by the one, was thus imparted to and reflected by the 
 other. 
 
 No organized moneyed interest ever held a purer and more unselfish relation to 
 any government than the National Banks to the Government of the United States. 
 The records of the country and of history will be sought in vain for evidence of 
 collusion with officials, or corrupt practice in all their immense moneyed transac¬ 
 tions with the public Treasury. Nor has the Treasury ever been the loser of a 
 dollar by the banks. 
 
 During the past quarter century a great war has been brought to a successful 
 termination. The currency of the country has been placed on a solid basis of 
 coin redemption. The National credit has been improved from a condition in which 
 a 6 per cent, bond was of painfully slow and difficult negotiation at forty cents on 
 the dollar, to one in which capitalists of this and other nations vie with each other 
 to obtain its four per dents at near thirty per cent, premium. One-half the conti¬ 
 nent, then a wilderness inhabited by the savage and wild beasts, has been brought 
 under cultivation and dotted with thriving towns and populous cities. Railroads 
 have spanned the continent and threaded every inhabited district. Telegraphic 
 wires have been strung to every hamlet and laid under the seas to every land con¬ 
 veying instantaneous information from all the world. Industrial establishments in 
 
 * See Spaulding's History of the Legal Tender paper money of the Great Rebellion. Buffalo. I8G9. 
 
 Also Knox " History of the issues of paper money by the Government of the United States," pp. 88, 
 122.—Scribner’s, 1884. 
 
 t See Debates on the Legal Tender BUI in Congress; Session of 1861-2. 
 
 Also Bolle’s Financial History of the United States. Vol. 1, chap. 4. 
 
28 
 
 every branch of manufacture have been erected and put iu successful operation. 
 We have witnessed with wonder and admiration all this achievement, and it is well 
 for the country to reflect that no agency has bad so potent an influence in its pro¬ 
 motion as the National Banks; and that they form an agency without which (or some 
 other like it) this development would have been impossible. 
 
 The National Banks do not ask favors of the Government or of the courts. They 
 demand simple, even-handed justice. They demand that our judicial tribunals 
 shall not permit popular prejudice, or the selfishness of the State governments, or 
 the natural bias of judges toward sustaining the revenues of the States, to over-ride 
 the great principles of constitutional right and of established justice. If the 
 National Banking system is to be sustained it must have these. Shall they be 
 denied? 
 
 Recapitulation. 
 
 It has been suggested to me that a recapitulation of the points made in the 
 paper presented from me on State taxation of the National Banks may aid the 
 Convention in its full comprehension. I have aimed to establish the following 
 propositions, which, it seems to me, are placed beyond successful controversy, 
 namely: , 
 
 1st. That the non-taxability, either directly or indirectly, by the States of the 
 bonds of the United States had, prior to the authorization of the National Banks, 
 become thoroughly settled as both constitutional and statute law. 
 
 2d. That notwithstanding such exemption, and although the National Banks 
 were required by the law authorizing them to invest a large portion of their capital 
 in the bonds of the United States, and they might so invest the whole of it; the 
 full value of all such bonds was subjected to State taxation through the taxation 
 of their shares, on the ground that the shares are a property held by the owner 
 distinct and independent from the jiroperty of the bank, and that the taxation of 
 the shares was not taxing the bank or its capital, and therefore was not taxing the 
 bonds in which such capital was invested. 
 
 3d. That while such taxation of their shares, without proportionate deduction 
 for their investment in the bonds of the United States, was held by the banks to 
 be indirect taxation of such bonds and therefore illegal, their acquiesence was 
 compelled by decision of the court of last resort. 
 
 4tli. That although the concession to the States of the right to tax the shares 
 of the National Banks is limited by the restriction that “ such taxation shall not 
 be at a greater rate than is imposed upon other moneyed capital in the hands of 
 individual citizens;” yet it has been the practice of the taxing authorities of the 
 States, by artful and insidious measures to evade such restriction; and the State 
 of New York, through it highest judicial tribunal, has made open declaration of its 
 purpose to do so. . 
 
 5th. In this situation it seemod to the managers of the National Banks that they 
 
29 
 
 could appeal with confidence to the courts of the United States to protect them 
 from the rapacity of the States, by the enforcement of the restriction imposed 
 upon them as a condition of their exercise of the right to tax; and that this restric¬ 
 tion should be enforced in its fair and obvious meaning. 
 
 6th. Instead of which, we find the United States Supreme Court shrinking 
 from following its own rule as to declaring an unconstitutional State law void, 
 because to do so would require the return of the money unjustly and unlawfully 
 collected from the bank shareholders under it. 
 
 7th. After twenty years of adjudicated cases on these questions we find the 
 same court stultifying itself by misrepresenting its previous decisions and over¬ 
 ruling and reversing their principles and doctrines; and forcing an unwarranted 
 and unnatural construction of the English language, to reach a definition of the 
 terms of the statute which shall support its judgment denying the just claims of 
 the banks for relief. 
 
 8th. After formulating such unnatural and unwarranted definition, the court, 
 finding that it does not reach far enough to support its pre-determined judgment 
 throws it all overboard and pronounces a judgment directly opposed to its own 
 definition and to the principles laid down in previous cases. 
 
 9th. Thus the defences set up by Congress for the protection of the National 
 Banking system are, in the language of the dissenting opinion of Mr. Justice 
 Bradley, rendered practically nugatory, and the National Banks aud their share¬ 
 holders are deprived of their protection. 
 
 10th. That the system of National Banks is a fiscal system which organizes 
 the capital of the country, with all its commercial and industrial interests in 
 harmony with the interests, and in support of the credit of the Government— 
 that it has contributed as a needed agency greatly to the vast development of the 
 country during the past quarter century, and that it is of much greater impor¬ 
 tance to those interests that the system be sustained than it can be to the banks 
 themselves or to their shareholders. 
 
 11th. As a principle of political science it is beyond controversy that the 
 maintenance of the right of property—capital—is indispensable to the mainte¬ 
 nance of the rights of the individual person ; and that if government fails in this, 
 it fails in its most vital and important duty. 
 
 I2tli. The banks do not ask favors of the Government or of the courts. 
 They demand simply even-handed justice. That, the Government and the people 
 have as great an interest in giving as the banks have in receiving.