THE NATIONAL BANKS AND THE CURRENCY.

SPEECHES IN THE SENATE, ON AMENDMENTS TO THE BILL PROVIDING A NATIONAL CURRENCY, APRIL 27 AND MAY 5, 1864.

APRIL 26th, the Senate having under consideration the bill to provide a National Currency secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof, the Committee on Finance reported an amendment to strike out this clause,

"And nothing in this Act shall be construed to prevent the taxation by States of the capital stock of banks organized under this Act, the same as the property of other moneyed corporations, for State or municipal purposes; but no State shall impose any tax upon such associations, or their capital, circulation, dividends, or business, at a higher rate of taxation than shall be imposed by such State upon the same amount of moneyed capital in the hands of individual citizens of such State: Provided, That no State tax shall be imposed on any part of the capital stock of such association invested in the bonds of the United States, deposited as security for its circulation,"

and insert instead thereof another clause, which, after providing for payments to the Treasurer of the United States "in lieu of all other taxes," further declared,

"Provided, That nothing in this Act shall be construed to prevent the market value of the shares in any of the said associations, held by any person or body corporate, from being included in the valuation of the personal property of such person or corporation in the assessment of all taxes imposed by or under State authority for State or other purposes, but not at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens of such State; and all the remedies provided by State laws for the collection of such taxes shall be applicable thereto: Provided, also, That nothing in this Act shall exempt the real estate of associations from either State, county, or municipal taxes, to the same extent, according to its value, as other real estate is taxed."

Mr. Sumner saw in the report of the Committee a deference to the State banks which he feared might imperil the national system, and

he made an effort to secure for the national banks the largest immunity, believing it important to the national credit.

Early in the debate he spoke,1 and Mr. Fessenden replied to him. April 27th, Mr. Sumner spoke again.

MR.

R. PRESIDENT,This question seems to me very simple. The country is now engaged in mortal struggle to establish itself as a nation. It has gone forth to meet Rebellion organized in the name of State Rights. In preparing ourselves for this unparalleled contest, we are compelled to look about in every direction to increase our army, to enlarge our navy, and to multiply our financial resources; but at every stage we are encountered by objections in the name of State Rights. No single proposition is brought forward, having for object the salvation of the Republic by infus ing new energy and new vitality, which is not encountered in the name of State Rights. And now, Sir, while considering how to secure financial stability, we are doomed again to encounter the oft-repeated objection. The Rebellion began in State Rights, and all opposition to the measures conceived to crush it is in the name of State Rights. It is hard that we should be obliged to meet State Rights not only on the battle-field, but also in this Chamber.

The Senator from Vermont [ Mr. COLLAMER] complained that it was proposed to sequester so large an amount of property from State taxation. The sum-total of property thus sequestered is $300,000,0002; but has the Senator considered how much is sequestered by other agencies to save this Republic? There is the army with all the

1 Congressional Globe, 38th Cong. 1st Sess., p. 1873, April 26, 1864. 2 Act to provide a National Currency, February 25, 1863, Sec. 17: Statutes at Large, Vol. XII. p. 669.

material of war, there is the navy with all the material of the navy,—all sequestered. Who complains that this vast material, now counted far beyond $300,000,000, is sequestered from State taxation? Does any Senator, in the name of State Rights, claim that the enlarged navy of the Republic, as it floats into a Northern port, shall be brought within the sphere of local taxation, whether State or municipal? Does any Senator say that all the vast material of war, ammunition, cannon, and the like, deposited, for the time being, in any particular locality, shall fall within the sphere of State or municipal taxation? Or does any Senator insist that the public securities shall be left exposed to State taxation? No Senator makes any such complaint. But the complaint is reserved for the present occasion, when it is proposed to create a new agency for the currency of the country.

I know not how the exemption can be sanctioned in one case and not in the other. The reason applicable to one is applicable to the other. It is said that the army and navy are for war, and naturally share exemptions incident to war and its preparations. But it would be difficult to say, that, in this crisis, what you do for the finances is not essentially a war measure, entitled to all the consideration accorded to such measures in a moment of war. What are your army and navy without a Treasury? Milton, in one of his sublimest sonnets, has aptly pictured that statesmanship which was able

"to advise how War may, best upheld,

Move by her two main nerves, iron and gold,

In all her equipage."1

In these few words the very likeness is given. All who hear them will confess their truth.

1 Sonnet XVII.: To Sir Henry Vane the Younger.

Now, Sir, no Senator complains because we protect the nerve of iron; but the Senator from Vermont registers complaints because it is proposed to protect the much more delicate nerve of gold. What is worth doing is worth well doing; and if it be worth while to organize the finances of this Republic by the proposed banking system, it is worth while to do it well; and can you do it well, if, at the very moment of its organization, you leave its most sensitive part exposed to hostile influence?

The precedent for this exemption is complete. Already you exempt the public stocks and securities from local taxation. Pray, Sir, tell me what policy justifies such exemption which is not equally strong for the exemption of shares in the national banks. Clearly, it was to commend your national stocks that you established the exemption; and for the same reason I ask you now to establish this other exemption. It is strange that the vast sequestration of the national stocks from State taxation should have been made with so little doubt, when Senators question so pertinaciously this smaller sequestration. If it was proper in one case, it is in the other. If it was necessary in one case, it is in the other.

If you allow the State to interfere with the proposed system by taxation in any way, may they not embarrass it? Where shall they stop? Where will you run a line? Undoubtedly, according to the Supreme Court, they cannot tax the bank directly. This would be unconstitutional. But it is said that they may tax the shares. Now I raise no constitutional question. It may be that a tax on shares is constitutional. But I shall not consider it on this ground. I am now arguing

against the policy of such tax. It is a question of expediency which I raise, for the sake of the system we are about to establish. But here the rule seems clear. Every consideration urged against taxing the bank directly may be urged against taxing the shares. If it be bad policy in one case, it must be in the other.

I suppose there is no judgment of our Supreme Court which has been more admired than that in the case of M'Culloch v. The State of Maryland. It was pronounced by Chief Justice Marshall, and is as good a specimen of that "pure reason" which belonged to this magistrate as any that can be named. In the course of this elaborate judgment all the topics were considered which enter so peculiarly into this debate. It was there insisted that the tax was unconstitutional. But the words of the Chief Justice seem intended for the present occasion. His object, from beginning to end, was to keep the bank safe from the hostile acts of the States. It was a great effort to uphold a national institution against State Rights. It was, permit me to say, an answer in advance to the Senator from Vermont. I do not like to trouble the Senate, but there are passages so pertinent that I will read them. Here, for instance, the Chief Justice considers the ground of exemption.

Mr. Sumner then proceeded at some length to analyze the judgment of Chief Justice Marshall, reading important parts of it; and he then said:

Now, Sir, every consideration, every argument, which goes to sustain this great judgment, may be employed against the proposed concession to the States of the power to tax this national institution in any particular, whether directly or indirectly. The reason of the judg

14 Wheaton, R., 316.