, 1865-10-27

TAKING NATIONAL BANK ST0CR.
The Court Of Appeals Of the State Of New
York has Just rendered a decision In favor Of
tp1ine shareholders for their shares in the
National Banks, which has been misrepre-
scented In some quarters a. q decision In favor
of taxing United States Bonds On the con.
trary the decision expressly rcatfrms the set
tied doctrine that Federal securities are not
taxnhle by State authority, and bases the
taxation Of shares In National Banks on the
ground 1hst the bank, not the shareholder. II
The owner Of tic Federal bonds. As the bank
owns the bonds, the amount Of them must be
deducted from the amount tor which ths
bank wonld otherwise he assessed. But the
owner Of National Bank stock is merely
creditor Of the bank, whose claim Ia even SUBJ
ordinate to other creditors, and hence he Is In
no sense an owner or part owner Of the Fed-
cral securities on which the bank is based'
and bis shares are not exempt from tazation.
The decision Is cmtncntly wise and Just
one, whether REGARDED from The financial o.
the legal point Of view. Financially, 1t il
Just, because the money or rpropcrty which IN
indiyidunl invests In National Bank Stock was
liable to taxation before he SO Invested It, and
should lie aftcrwards, unless some imperative
measure can he urged to the contrary. He
has not loaned his money TO the Government
but 10 private bus1ness corporation, distinct
both from himself mud from the Government,
which, in turn, loans 1t 10 the Government by
buying federal bonds. Ills dividends include
the interest which the Government pays on
the bonds, the interest which the Bank saves
from the people On Its circulation, and
from deposators On their deposits and the
interest which IL obtains in the form Of dis.
counts on notes, when both Its circulation aud
ltk deposits arc loaned. Through the agency
OF The banl4 the shareholder gets double
interest On the money invested, and isexempt
from one taxation, yiz: the Federal securities
held by the hank are deducted from the taxa
bic assessment against the bank. It !, mani.
fetly unjust that he allould ask that Federal
lopds should he twice excmptod-auce Ia the
hands Of the bank which holds them, and
once In the hands Of the shareholder, who
docs not hold them, but only Claim on their
earnings. The argument Of the court appears
by The following extracts: ......-.
The tsxef in al the Gases afe legal OF Illegal OF
two pzincap&, questions: fiErt, that The banking
institution: arr creations Of the FedeGsl Govern
meut, aud arr trstFuruenlAlluts pfosided BY tht
10 II by The CONSTITUTION; and. secondly. that tht
espitai of fhese hanks having been inref1ed IN 50
cnsi,ies Of the public debt Of the un1led bAtes
which securities have bocn determined mt 70 he
liable 10 State taxxion the tAzatton Of the shatci
Il an 1ct hostile 10 thAt immunity. and destructive
OF II, and thas tnch taxation Is Consequently illegal
md void. As 10 The rst position, It is iuconteet'
hle and ptupesty wholly devoted to public ntcs by
1be general Government cannot be subjected
to The taxing power reposlng in the Gov
s1nnent Of the Tinted su!es o! th, Union
,udeed in lhe Federal Courts il i perfectly p!.in
upon prineple: and 1t results inevitably from thr
system Of thc con-ltntion that the nstiopal Inst
tutious and establishments Of cseJ kind, wh,et
have hcen brought into edstruce by LAWS constitu
taoralfy c1acted by Tho NauouaI Legislature c1is
independently Of The State Governments and cappo
be made tributary by means OF s,nte laws for UNA
tton+ or IN any oh1 manner 10 the needs OF cxi.eu
de. Of ths s!ate e'ove1nneuss. This results noes
R1r1ly tom thh pse-t:ninence which must eITry,
belong to IN imperial government over the vubor
diDate knd local eoSefument4 which are emteaoet
within it. though these may be eovssriru il
nspect to al snttects not committed 10 tte tzn,
nnf, sovereignty, which, within 1a assigned snhe1r
r;rhffully dom!nAtes over them ali. This nre
entfneure Is, moreover, cautiously defined IN
S,rsrnnfeed by the provisions Of the Constitution
Which declares th1t itseiL. and al the law1 Of Ii
f1nited state which ehall be made In pursuance
IL shsll be lie aupreme aw Of The land, and abo