Year: 1879

Understanding that some of the Missouri
oranges have passed resolutions instructing the
from this state to vote against the |
repeal of any and all taxes on banks and bank |
Drs, We call your attention to the Importance of
among the many different taxes |
now imposed on us. confident that on eXaIhina-
ton you will agree with us that the tar de-
pOsits is working such an injury to our state
and to the business OF all our people that it
should be separated from the other taxes and its
repeal demanded.


The law placing a tax of one-half of one per
cent a year on the aggregate amount OF deposits
in bank was first enforced in 1854, and was for
the purpose of raising funds to carry on the war.
1t is tax the like of which has never been heard
of in any other country. 1t is n tax paid by
banks and bankers on what they o,ce, after they
have paid various taxes on what they orcn. 1t
Is not unusual to allow taxpayers to deduct
what they owe from what they own before pay
ing taxes on the latter; but in the case now be-
fore this just and reasonable rule is reversed.
1t is a tax paid by bankers on the property of
other people. We are merely the custodians of
deposits, but are required to pay tax on them
as if they were our property. If it is said that
we get the advantage OF the use of DEPOSITS. we
reply that we either pay interest on tbcut or
grant accommodations favorable terms to
those who deposit with us, on plan of recipro-
cal benefits between the parties concerned. But
no bank uses its entire deposits; large portion,
varying from one-third to all. according to cir-
cumstauces. must always be kept on hand and
never used; yet on this vast sum that belongs to
others, that we never use. that we are often in
peril of our lives to keep secure for its own
red n n
we were the absolute owners of 1t or had the
benefit of its use.


When business becomes hazardous, and bank
ers would rather keep their entire deposits safe
in their vaults, they must nevertheless venture
to use part of them, because they can only earn
the enormous sum needed to pay the tax on them
by such use. Ii not taxed, the deposits might
in such seasons lie idle and safe; for there
would be no expense connected with the custody
of them. .
Unjust and unbusiness like as this law Of con-
gress is, 1t was never intended to be more thar
single taxation; yet 1t is actually more thar
double taxation, on the average, because the
same funds taxed in the hands of severa
bankers ut once. An actual instance from oul
own observation shows where it amounts tt
sUadruple taxation! At certain town In th'
Interior farmer ships wheat to his commission
merchant In Chicago, drawing draft for Il Ger
tain sum against it and depositing it with
banker in the same town for credit. 1t goes int
that bankers aggregate deposits he reports it t.
the Internal revenue department with his othe
deposits, and pays tax on it. AS he keeps III
account with bank In the county seat of tn
| same county, he forwards the draft there for hi
credit; it goes into the aggregate deposits of tn
second ba nix aud Ia reported by 1t to the interna
| revenue department, and q tax paid on it II sec
| ond time. This bank forwards it TO its CORES
pendent in St. Louis where it becomes thir
| time deposit in bank, and is taxed the thir
| time. The st. Louis bank forwards it to a Chi
| cago bank where it Is the fourth time rcporte
| to the revenue department as a deposit, and ft
| the fourth time pays tax! 1t is evident tn.
| these charges must come out of the wheat
last, and it is the farmer who pays it; 1t is nom
nally tax on bar kers. but really q tax on fa
msrs. This example Is applicable TO the who
country. There is not bank in the Union t
day that is not paying taxes to the United Stat
on the identical funds upon which ut least OF
other bank pays the same taxes. As our cu
toners are to u great extent farmers, whatev
Injuries them Injuries us also.


Perhaps the most important Injury done
this law is keeping up the rate of Interes
Money is now pouring into this country fro
Europe and becoming plenty for the demands
legitimate trade, ami unless absorbed in spec
lntions, and the rate thus raised, lower r;
should prevail through the country districts III
heretofore. Yet every one who is acquainl
with the subject acknowledges that the effect
taxing deposits is to prevent the rate of inter
falling to what it ought to be. and that Its eff
Is most iniurionsly felt among agricultural pl
ducers, who in these times Of almost unpre'
dentedly low prices of produce should also hs
the benefit Of the low rate OF in terest that
would have but for this unwlse law. And,
the other hand, there is u class of deposit
keeping small savings In banks on interest, u
In many cases depending largely on this 10
living. But If the banks pay One-half OF one
cent on these savings deposits, they can afft
to pay the owners just that much less inter
only. So the tax comes, in these cases, dlrec
out of the borrowers of money and out of
small incomes of savings depositors-out Of


debtor class and the frugal poor.


But, besides expressing certain classes and
dividuals, this tax works against the state,


county. the city and town. No bank can C,
troll the amount of Its deposits, but must recc
anu pay the tax on them just as the deposit
choose to pay them in; but the capital of


bank ID under Its own control, to increase or
mlnlsh. Hence, in order to make a set
against the tax on deposits, the tendency amt
banks everywhere is to reduce their capital Sc
to escape the taxation on capital which is


same rate US on deposits. The secretary of
state of Missouri and the commissioner of inl
nal revenue at Washington both report ste
decline in banking capital in our state. II
unnatural u thing this is may be seen from


fact that our state never had enough bank
capital to answer the wants of our people bel
the war. when our population was about
what 1t is at present; and now that our popl
ton has increased, and is still increasing,


banking facilities. under this law of taxing


posits. are steadily decreasing. Again When
banks, in order to tighten their intolerable
dens, thus reduce their capitals the state, coul
city, and town thereby lose the revenue deri
from the taxation OF bunk capital. The reve
thus made short cannot be SO surely made
from any other source as by taxing the
higher, and it is out of the farmers that it Il
come And again: AS banks reduce their ,


ital it causes the withdrawal of deposits to


tain extent, for some depOsitors, considr


themselves less secure on account OF the re,


ton IN capital, will reduce their deposits


cordingly, thus reducing the total sum avail





makes 1t safe for them to secrete money at he


and such money pays no taxes and is of the


use Hence ii is PLAIN that this unwise for


taxstion-the taxing of deposits in bank b,


federal govrrnment-is against the lnteres


every state, and of every county, city, and


In which there is a bank in which OF


wanted. The interests OF the people, VIII,


We regard them as individuals needing suni


banking facilities to develop their lands


handle their crops TO advantage and carr


their various concerns, or AS II state needing


enue to pay its officers and the interest 0,
public debt, alike demand that the federal


taxing deposits in bank be repealed To


end it is plain that men in all vocutlons 81


work in unison. In New York one bank ,


cuts Its capital IN two, reducing it five mil


at one stroke. The total reduction there am,


to thirty millions of dollars. This affect


state also, for eastern banks re-discount til


per which our banks have discounted for


customers. Just as taking water out of


side OF a pond lowers it on all sides, so Ii


ducing oil banking capital in New York n