The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1892-07-23
TAX ON STATE BANKS.
sneech of Hon. Charles B. Roberts.

1910. Hon. NllI1. -. lNobSi ~
in tne House on June 18th, of that year,
4 dill to reduce the tax on the circulation
or State banks to an amount equal to that
maid by national banks. On July 18th,
1876. Mr.. Roberts delivered speech on
the subject, which we give entire below, as
the tax on state banks is living question
of to-day:
Mr. Speaker, Although | may not now
reasonably hope to see any action taken
at the present session upon the bill H..
r. No. 1921 which | introduced on
the 18th of June last, for the purpose OF
reducing the tax on the circulation OF State
banks to an amount equal to that paid by
national banks, shall yet be entirely con-
tent if | succeed in calling the attention
of the House, and of the country to the
Importance of subject which, In my opin-
ion. has not received the attention to which
il is entitled. either as an abstract question
of right or as question out Of which would
result great good to the people of this coun-
try, if treated independently OF partisan
considerations and with a view to multiply
ing the means by which the country may
hope to escape from its present distressed
condition. do not therefore propose at
this time an extended argument upon this
subject, but shall cOnfine myself to BRIEF
statement of my views upon the leading
questions which it presents, and which are;
First. Is not the imposition OF tax oil
10 per cent. on State bank circulation,
ghile the National banks pay but per
cent. most unjust discrimination, and
practically destruction of certain OF the
reserved rights of the several States of the
Union. which can neither be safely COM
mended, nor successfully defended, especi-
ally in time Of peace; and
Secondly. Does not sound policy die
tate the propriety of relieving the State
banks of this burden and enabling them to
stand in all respects upon an equal footing
with the national banks
Great credit is unquestionably due, and
almost universally conceded, to the master
mind that conceived and carried into sue
cessful operation the present system of gov
ernmental finances, which was made to sub
serve the immediate wants and exigencjes
of the war even though he was at times
compelled to apply the doubtful principle
that ''the end justi6es the means" and
even though he clearly foresaw that the
dawn of peace would lift the veil which,
but dimy concealed the impoverished con-
dition and financial distress of the whole
country. As parts of that system came
the preseut national banking associations,
which were the natural outgrowth of the
embarrassmenls necessarily accompanying
the recent conflict, and in this respect not
unlike the Bank of Venice, the first estab-
lishment of the kind in Europe, which was
founded in III; and like also the Bank
of England, established in 1894, both OF
9hich owed their existence 10 the burdens
of war and the necessity of the govern
ment's providing the necessary means to
meet the same; and in each instance they
became to their respective governments,
what the heart is to the animal organism,
supplying the vitaiisiDg power by which
their preservation was secured.
To proper comprehension ct the char
acter of the tax by which the State banks
ceased to exist and the national banks grew
Gnto successful operation, it will be neces-
aary Ia present brief history of the legis-
Jation relating to the subject.
On the 18th of February, 1868, the act
authorizing national banking associations
was passed, by which tax of Z per cent,
annually was imposed on the circulation OF
she associations authorized by it, and by
the act of March 3, 1868, tax of per
cent. annually was imposed on the circula-
lion of State banks in certain proportions
10 their capital, and of , per cent. on the
excess, and the tax on the national associ-
ations was reduced to the same rates, BY
the act of June 3, 1864, which was sqbsti
tuted for the act of February %, 1863, the
rate of tax on the circulation of the assOcla
tions was continued and applied to the whole
amount of it, and the shares OF their stock
holders were also sub ected to taxation by
the States. Then followed quickly, the
act of June 80, 1864, by which the tax on
the circulation Of the State banks was con-
tinued at the same ANNUAL rate of | per
cent, to be paid in monthly installments Of
1-s2 of ] per cent, with monthly reports
from each State bank of the extent of its
circulation.
The object which the Government had
in view became now clearly manifest, which
was to keep itself informed us 10 the extent
and character of the paper money ia cjFcH-
iation with view to its ultimate regulation
by act of Congress. Indeed Congress had
so early as July u, 1862, passed an act
prohibiting the issue add circulation Of notes
under 81 by any person or corporation.
The next step taken by the Government
was bold effort to obtain absolute control Of
the whole currency Of the country, and at
the same time to compel the State banks
to withdraw their circulation and organize
under the national system, and thereby be-
come the purchasers through necessity Of
Government bonds. This was accomplished
by the act of March B, 1865, which was
.amendatory of the previous internal-rev-
,enue acts, and contained the provision
''That every national banking association,
State bank, or State banking association shall
aay a tax of 10 per cent on the amount Of
the aoLes of any State bank or State banking
association paid cut by them after the LIST day
of July, 1866"
This provision was Fe-eUacted on the
18th day of July, 1866, with much more
extended application of its terms, and be-
came, as il was intended that it should be,
the death-bIoE 10 the entire State banking
interests Of the country. by which the Gov
eminent found itself master Of the currency,
with ready market for its bonds.
However defensible the action of the
Government may be considered at a time
when it was hedged in by difficulties not
easily surmouated, and Notwithstanding
the fact that the Supreme Court has given
its sanction to the constitptiopality Of the
act by which this tax was imposed, it will
yet be questioned by all fair minded citi
Gems whether the Federal Government is
clothed with the authority requisite to the
imposition Of tax for the professed and
avowed purpose of crushing ont of exist
eaee n hank or any other eoIpOratiop char