The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1869-12-14
UNITED STATES SUPREME COURT
Important Decision by the Chief Justice
Authority Of Congress TO Tax the Circula-
ton Of State Banks observation-disclosures
of Government to Create a National
Currency-Constitutionality OF
Acts for the Emission Of
Treasury Notes Affirmed.


Justice Chase delivered the following opinion-
The necessity of adequate provision Tor the finan-
eiul exgencies created by the late rebellion suggest
ed to the Administrative and Legislative departments
Of the government important changes IN the systems
III currency ana taxation which had hitherto pre-
vailed. These changes, more or less distinctly
shown in administrative recommendations, took
form and substance In legislative acts. We
have now TO consider, within o limited range,
those which relate to circulating notes and
taxation OF circulation. Al the beginning
OF the rebellion tile circulating medium con-
sisted aimoss entirely Of bank notes issued
BY numerous independent corporations, variously
organized under State legislation; OF various de-
grees sf credit and very unequal resources, admin
istsred often with great and not unfrequenty with
little skill, prudence and integrity. The acts OF
Congress then In force prohibiting the receipt or dis
bursement In the transactions Of the national gov
ernment OF anything except gold and silver and the
laws OF the state recurring the redemption OF bank
noes In coin on demand prevented the disappear
ance OF gold and silver from circulation. There was
then authorized national currency except coin,
and no national taxation was imposed IN any form
on the State bank circulation.
The first act authorizing the emission Of notes by
the Treasury Department for circulation that Of
July H. 1851 az, U. S. ST., 25a The notes issued
under this act were Treasury notes, payable on de.
Dand In coin. The amount authorized by 1t was
$500 10000, and was increased by the act OF
February IL, 1862 ~, U. S. St. 1881 to SEQ. o00
On the 3lst OF December, 1861, the state banks
pended specie payment. Until this time the ex-
penses OF the war had been paid IL coin or III the
demand notes just referred to- and for some time
afterwards they continued TO be paid in these notes.
which, II not redeemed IN coin. were received as
coin IN The payment OF duties. Subsequently,
tha Fab no CO
34A a new policy became necessary. conse-
auence of the suspension and the condition OF the
country, and was adopted. The notes hitherto
Issued, as has Just been stated were called Treas
ury notes and were payable on demand in coin.
The act now passed auth ofized the issue Of bills for
circulation, under the name Of United States notes,
MADE payable 10 bearer, but not expressed to
be payable on demand to the amount OF
$780, 100000, and this amount was increased by
subsequent acts to $780, 900 OF which $50 Oo0 600
were 10 be held In reserve and only to be issued for
special purpose ana under special directions TO
withdrawal from circulation TACT OF July ii, 1862,
Il o. s. St 532; act OF March 1861 II u 5. &c. 7lo
These notes, until after Inc close OF the war; were
Always convertible into, or receivable at par Tor
rate not less than Ave per cent; and the acts by
which they were authorized declared them 10 be
lawful money and regal tender. This currency,
Issued directly by the government Tor the dlsDurse-
Inent OF the war and other expenditures, could not
obviously be proper object Of tsxation but on the
ing national banking associations III. u. 5. ST. 670)
IN which, for the first time during many years. Con-
greas recognized the expectancy and duty Of impos
Ing tAx upon currency. By TINS act a tax OF ten
per cent annually was imposed on the circulation OF
as y Msaea soon after BY the
lighter tax Of one per cent annually WAS Imposed
tons 70 their capital and or two per cent the ex
cess and the same act reduced the tax on the ma
tiona associations to the same rate. Botn acts also
Imposed lakes on capital and deposits which need
not be noticed here. AT later date BY the ACT OF
June ., 1894 Us. United States Statutes. III, which
substituted for the act OF February 25 1863 at
th0rzing national banking associations, the rate OF
tax on circulation was continued and applied to the
whole amount Oft, and shares OF their stockno
also subject taxation by the States; ana
few days afterwards by the ACT OF June So 1864 "a,
United states Statutes 277. to provide ways
State banks was also continued al the
before. but payment was required In monthly in
Stameuts OF one-lweliih Of per cent, with
monhly reports from each State bank OF the amount
in circulation. II can hardly be doubted that the
object or this provision was to inform the proper
authorizes Of tue exact amount oil paper money IN
circulation, with view 70 Its regulation by law. IL
the first step taken by Congress III that direc-
ton, and 1t was followed, some months later, by the
act Of March 1885, aInendatory OF The prior utter
nal revenue acLs the sixth section OF which provides
that every national banking association, state bank
or State banking association shall pay tax OF ten
per centqm on the amount Of the OF any state
bank or State banking association paid out by them
after tae Isl a dayoi '1y rsSs % = . ST. asa!
-
tended application, On the 18TH OF July ls66 IN these
WORDS
EycIy national banking association state hank or state
apoun; Of State bank banking
August. such ia1 sss sssl
nisa,Oper Of Internal Revenue ia T. s. ST. iis S0''
The consntutionaity OF the last provision Ia now
drawn IN question, and The Drlef statement OF the
recent legislation Of Congress has been made for the
purpose OF placing clear light It's scope and bear
Ing. especially as developed in the provisions lust
cited IL WIN De seen that WHEN the policy OF taxing
was inclined 10 discriminate for rather against
tue circulation OF the state banks; but that when
The country had been sufficiently furnished with
national currency py the OF the United states
and OF national bank notes the discrimination was
direction
The general question now before us is whether or
not the tax OF ten per cent imposed on state banks
or national banks, paying out the notes OF fndyid-
ua or State banks used for circulation, is repng-
nant to tue constitution or the United States. II Is
presented by certificate OF division OF opinion be-
tween the Judges Of the Circuit Court Of the United
States for the district Of Maine in brought by
the President Directors and Company OF the Veozie
Bank agsnst jeremiah Penno Collector or Internal
Revenue, lor the recovery OF the tax, penalty and
costs paid by the bank TO the collector under pro-
test and to avoid disrant The veazie Bank is cor.
poration chartered by the state OF Name with au.
thor1y to issue bank notes for oirculaton and the
notes on which tue tax imposed by act was col
lected were issued under this authority
There is nothing in the showing that the BANK
sustained any relation 10 the state as a financial
agent, or that its authority 10 notes was con
ferred or exercised with any special reference to
other than private interests. The was pre-
ssntod TO the Circuit Conrt upon agreed state
ment Of facts. and upon prayer Tor instructions to
the jury the judges found themselves opposed in
opinion On three questions, the first Of which was
this-Whether the second clause OF the ninth sec
ton Of the act OF Congress OF the 18th OF July 1866
under which the tax In this levied and col
lecsed, Is valid and constitutional law. The other
two questions diner from this In form only and
need not be recited.
In support OF the position that the act Of Congress
go tar AZ II provides for the levy and collection OF the
tax Is repugnant TO the constitution, two PROPOSE
hons have been argued with much force and ear
nesness. The first is, that the IN question is a
drect tax and mas not been apportioned among the
states agreeaDy to the constitution The second 49,
that Inc act imposing the tax impaIrs q franchise
GRANTED by the state, and that Congress has no
power TO pass any law with that intent or effect
INT hrs OF these propositions Will be first examined.
me difficulty OF defining with accuracy the terms
used 10 the clauses OF the constitution which