The Ottawa free trader. [volume] (Ottawa, Ill.) 1843-1916, 1867-04-20
Taxing National Banks.

The subject OF taxing the National banks OF
this State is becoming so seriously agitated
that it is regarded {, more than probable the
Governor will convene an extra session of the
legislature to take it into consideration. There
are some $l2,OOO,OO0 invested in this State
in National Bank stocks Most of this large
sum is owned by Eastern capitalists, who are
making. besides the interest on their bonds,
from 10 to 20 per cent. annual profit ont OF
our people, without paying one cent OF tax IN
to our State or County Treasures. Our own
mechanics merchants or other business men are
unable to use dollar of capital in their bust
ness without paying Il heavy tax Why should
these wealthy nabobs, most OF them strangers
to us at that. bleed us at the rate of a million
or two year and yet go scot free Of taxation
There has been a gross Misrepresentation in
the public mind and among our Legislators
on this subject. Owing to few decisions OF
State Courts and at least two in the Supreme
Court of the U. S., that L. S. bonds made the
basis of banking capital, cannot be taxed, the
conclusion has been jumped at, that there is
no shape or form in which the capital stock
of National Banks GALL whose capital is based
ron T. S. bonds can be taxed. A letter from
Mr.. Cook, the representative in Congress from
this district, published in the Chicago
Tribune" of the 9th inst.,) has gone far to
dispe the decisions on this subject, and has
awakened discussion that promises to bring
the National Banks "to their milk" This
letter (Which has just been brought to oul no.
tice and for which we shall try to make room
hereafter,) shows that although it is true that
the L. S. bonds placed in pledge as security for
the circulation of the National Banks cannot
be taxed, yet the shares of bank stock issued
upon these bonds are, by the very terms of the
act of Congress creating the National Banks,
made taxable, and no decision of any court is
in conflict with this position. The case is like
this: A man places $4,000 in government
bonds in a National bank These bonds are
not taxable: but the bank places these bonds
on deposit in the U. s. Treasury Department
and receives in return for them $4,000 in
Dduk UllS. uc SHdTeHOlueT III tlle National
bank is entitled by his certificate not so many
shares in the bonds he has placed in the bank,
but to so many shares in the profits made by
the bank by using and loaning these $4,000
in bank bills. The owner Of shares in a Ma
tional Bank has the use of double his capital.
His bonds draw their high rate of per cent
interest in gold, and he makes Is to 20 per
cent. in addition by the. use of the bank bills,
by which his capital is duplicated. Now
glaring, partial, and unjust as are many of the
faults of the National Banking law, Secretary
Chase had enough regard for common decen-
cy and the fitness of things about him not to
engratt in his banking system feature of such
gross and palpable injustice.
Without proposing, at this time to go into
the legal reasoning on the subject we hold it
as clearly demonstrate as any proposition in
law, that the shares of the National banks of
this State are taxable by our Legislature, like
al other property, and as it involves an addi-
ton of something like quarter Of million to
3 our annual revenue, we hope that Gov Ogles-
by will not hesitate to call an extra session of
the Legislature forthwith to levy this tax