JUNE, 1797.] Duty on Stamps. [H. OF R. tem of banking has been wonderfully extended throughout that kingdom. In every part of it bank notes are current; every town and village has its banks; they are as universal as their churches. Mr. R. asked, where would be the propriety of taxing notes issued by fifty indi-ducing a profit to the banker, there would be viduals in their individual capacity, and exempting those issued by them when they associated, called themselves a Banking Company, and issued notes to three times the amount of their capital? The measure seemed to him unwise, and he was sure it would be unpopular. He could not conceive why people who had no other property than stock, which, in many instances, yielded an interest of fifteen per cent., should not contribute to the support of Govern that bank notes ought to be stamped. He did not believe the analogy between the bank and private notes was so strong as had been represented. If the facts were as represented, that every bank note was to be considered as progood ground for the tax; but he was of opinion this was not the case. For instance, if the bank gave their note for one hundred dollars, it was equal evidence with the note of an individual, that they had received the value of one hundred dollars. But if they went further, it would be found the analogy did not hold. The note of the individual was at a certain date, but that of the banker was on demand; and they were every day liable to be called upon for the money of which the note was the representative; so Mr. SWANWICK. - The greatest objection that they were obliged to keep the money, or which the banks in England seemed to have to money at least to a great amount, ready to take the tax, was, that it might ascertain the quan- up their notes whenever presented. Banks tity of notes they had in circulation. In order could not, therefore, be considered as receiving to prevent this, the Bank of England commuted a profit on all the notes they issued; but only with Government for a certain sum; but the upon the difference between the amount of notes notes of all the private banks were stamped. issued, and the cash they are obliged to keep by He thought it reasonable that this kind of notes them to answer their demands. The analogy, should be stamped as well as others, though he therefore, did not hold; and, if bank notes would have the tax low; for he saw no reason were taxed, it must be upon a different princiwhy merchants should pay, and bankers be ex-ple from that on which the notes of individuals cused from the duty, since great emolument are taxed. was derived from these notes, by the consent of the community, and the community, in retarn, had a right to expect assistance from the banks. ment. Mr. W. SMITH believed, if an original proposition had been brought forward to tax bank notes, it would have been thought a very serious thing, and they should have paused before they consented to the proposition. Gentlemen who advocated this proposition, allowed it would require many provisions to carry it into effect. What those provisions were he could not pretend to say. He thought bank notes had been too much confounded with notes of individuals, and they were quite different things. Those of individuals were mostly larger, the greatest part of bank notes were for five dollars. Notes of individuals, if not stamped, could not be received in evidence; but he did not know what must be the penalty on bank notes being issued without stamp. Besides, he said, to lay a duty upon the notes issued by the Bank of the United States would be a violation of its charter, for, by that charter, it was said, the notes of that bank should be received at the custom-house in payment of duties. It had been said a commutation might be allowed, but that would be equally contrary to the charter; besides, if such a thing were to be done, he did not know who could do it; it would not be the proper business of the PRESIDENT, and that House would have difficulty in saying what would be a proper sum to be paid for the purpose. He again feared the introduction of this principle would destroy the bill. Mr. Corr did not think it was quite so clear a thing as some gentlemen seemed to think it, Mr. POTTER was in favor of the amendment, and he trusted that gentlemen who were always ready to go into every species of expense, would not flinch when the object was to raise money. He had this morning voted for a bill laying additional tax on licenses, which he believed would be found in some degree oppressive, but he did it because he knew revenue was wanted. He hoped the gentleman from South Carolina would, on this occasion, concur in the proposed tax. He doubted not unexceptionable means might be devised for collecting it; if not, it might be given up. Mr. HARPER was against the amendment, not because he was satisfied bank notes were not a proper object of taxation, but because he did not wish to embarrass the bill with a subject which they had not time to consider. Mr. SWANWICK again spoke in favor of the tax. Mr. OTIS was against the amendment; not because he thought such a tax would be improper, but from the difficulties which would attend the carrying it into effect. Besides, he said, if the notes were to revert to the bank every two or three years, it would cause a run upon them for cash, instead of renewed notes, which might be very inconvenient. Mr. VENABLE did not think the run upon the bank which the gentleman had mentioned could take place, as the notes would have to be renewed three years from the time issued, and all their notes would not be issued on one day. Mr. V. again insisted that this tax should be general; and if they had not time to make it so, it ought to be put off till they had. Not to include bankers would be to lay a tax upon the people whose complaints of its hardships could not be heard. He deprecated this as unjust. Mr. HARPER could not conceive that the great body of merchants and farmers throughout the United States were people who could not make their complaints heard, if they had them to make. The proprietors of banks, Mr. H. said, already paid taxes in a variety of shapes; many of them were merchants, and would, of course, pay the tax imposed on the notes of individuals. THURSDAY, June 29. BANK NOTES. [JUNE, 1797. The House went into a Committee of the Whole on the bill for imposing stamp duties, when the clause of Mr. GALLATIN yesterday proposed to the committee, on the subject of bank notes, being under consideration, Mr. OTIS supposed that at least two-thirds of the whole amount of paper issued by the banks, returned and were re-issued every year, and Mr. BROOKS was against going into a tax on thus the banks must pay tax upon two-thirds of bank notes at present, but denied that there their capital in the first year after the law passwould be any cause of complaint from the peo-ed, and which, according to a rough calculaple on account of the taxes imposed by this bill. tion, relation being had to the different denomHe wished to make a beginning with a stamp inations of notes, amount to nearly one per tax at present; it might not be completed these cent. on their capital. The tax ought to be seven years. Gentlemen might as well go on levied upon such new notes only as should be and propose a tax on newspapers, which, what-issued hereafter; all that were now in existence ever might be said against it, he believed might be laid without infringing the liberty of the press; but a thing of this kind would require a great deal of detail. Mr. CLAIBORNE was in favor of including bank notes; not to do this, he said, would be to catch small fish, and let the large ones pass. were protected by the charter, and any law relating to them would be retrospective; and as one-fifth of the whole number of notes would be renewed every year, a tax upon them would be found to bear as hard as upon other notes and bills, which seldom comprised more than the fifth part of the transactions of an individuIt ought also to be considered, that the paper issued by the bank generally became worn and dirty, and incapable of receiving a stamp, so that in less than two years the whole amount of paper must be re-issued, and the entire tax assessed in the same period. This plan would also be inconsistent with that of a commutation, which had been proposed. Mr. GALLATIN said that the provisions for lay-al. ing this tax would be by no means difficult. Indeed, three-fourths of the bill was copied from the British statute, and that part respecting bank notes could be as easy copied as any other part. The observations respecting the charter of the Bank of the United States, were not deserving of a reply. There was only one of two things which could be done, either to tax bank notes, or to excuse all other notes from the tax. Mr. SITGREAVES could not submit to hear that It was the intention of those who opposed this motion, to screen the moneyed interest of this country from paying a tax. He had no such views. He had no objection to tax the banks in proportion to the amount of their business; but he could not agree to its being done in this way. If gentlemen would estimate how much the stamp duty of a bank would produce to the United States, he would vote for a sum of this kind by way of commutation. Charges could rarely be made against the side of the House with whom he generally acted, for not being willing to vote for revenue; a contrary charge was more frequently made. He trusted the amendment would not be agreed to; but that if the tax were laid, it would be by way of commutation. The question was taken and carried, there being 55 votes in favor of it. The committee rose and had leave to sit again. The resolution respecting an adjournment was received from the Senate, and disagreed to. The disagreement being read, Mr. GILES moved the same resolution filled with Monday next; but Mr. WILLIAMS opposed it, and moved to adjourn. Mr. DAYTON (the Speaker) did not think that this proposition precluded the provision of a commutation. He was in favor of taxing bank notes, but he wished also to hold out a commutation, and such a one as should induce all the banks to embrace it; for, if this were not the case, they would not be taxed equally, as the notes of banks did not bear a just proportion to the amount of their dividends. This clause would not, therefore, preclude the commutation, but render it proper, and a clause could be brought in excusing such banks from the duty as came into the proposed plan. Mr. GALLATIN said, his ideas corresponded exactly with those of the gentleman who had just spoken. The scheme suggested by the gentleman from Massachusetts, of not taxing the notes at present in circulation, would excuse bank notes from all tax, as, according to his own account, only about one-fifth of the notes issued came in in the course of a year, so that it would be five years before a new tax could operate upon all their notes, and it was probable the bill might not pass for more than three or four. That gentleman supposed that bankers' notes ought not to be charged more than others; if this were the case, they might be reckoned to run for four or five years, while those of individuals were at six and twelve months. The note of an individual, for fifty dollars, was to pay ten cents; he calculated a JUNE, 1797.] Duty on Stamps. [H. OF R. bank note, therefore, for a like sum, which he | the rates of duty, it became necessary to fix supposed, upon an average, to run four years, the rates upon a fair basis. If the rates were thirty cents. fixed too high, they ought to reduce them. He did not see the propriety of selecting moneyed corporations for the purpose of laying a high duty upon them. He moved to strike out the three cents for every five dollars, and leave it a blank. With respect to the notes at present in circulation, Mr. G. said, they ought all to be called in before a certain time, and after that day no note should be negotiable which was not stamped. The gentleman from Massachusetts was not correct when he said that this tax would amount to one per cent. upon the capital employed in banks. The calculation of the amount of the tax upon a bank which he had made, would amount to $10,000 a year, whereas one per cent. upon the capital of the Bank of the United States would amount to $200,000; but he said (as he had before stated) that the notes issued by a bank were not equal to its capital, or any thing like it. He could not, indeed, say what the amount of the notes of the Bank of the United States might be which were received for duty, from one end of the United States to the other; but he knew banks in general, in large cities, did not employ more than two-fifths of their capital in this way. He knew it to be a fact with respect to a bank of the largest property in the United States, except the Bank of the United States. He thought of proposing the commutation to be one per cent. upon the amount of the dividend paid by each bank, which he supposed would be deemed a reasona ble sum. Mr. OTIS explained. Mr. SEWALL thought the observation of the gentleman from Connecticut yesterday, as to the nature of bank notes, had weight. He agreed with him that they were very different from the notes of individuals, as they were always obliged to keep cash in readiness to take up their notes, while individuals, knowing exactly the time when the money for theirs would be wanted, could make use of it in the mean time. Therefore, if they taxed bank notes, they ought not to tax them in the same proportion with those of individuals at a certain date. Notes of individuals, under twenty dollars, were to be exempt from duty, while every note issued by a bank was proposed to be taxed. Every banker's note of fifty dollars was to be charged with thirty cents, while those of individuals, which might run for two or three years, were charged only with ten cents. Every three or four years they would have to pay this sum. If a fair commutation were to be made, they should first fix the tax upon just principles. Mr. NICHOLAS thought if there was no objection to the commutation, there could not reasonably be any made to the tax, because if the commutation were reasonable they would not choose to pay the tax; but, if they should choose to pay the tax, instead of the commutation, it would be evidence that the tax was too low. Mr. W. SMITH did not see the force of the argument of the gentleman last up. As the commutation was to bear some proportion to VOL. II.-11 Mr. DAYTON hoped this proposition would be agreed to, as by a vote upon the question in blank they would fix the principle whether or not bank notes were to be taxed, and the scale could be afterwards fixed. If there was the difference alleged between bank notes and the notes of individuals, it would be sufficiently considered in the commutation. He should not, indeed, be willing to agree to any scale without a commutation, for the reason he had before mentioned. For, said he, take the Bank of the United States and the Bank of North America, and the notes issued by them bear no sort of proportion to their respective capitals. If the tax were to be laid upon the notes issued, the Bank of the United States would pay a much larger sum than the other in duty. Mr. GALLATIN observed that the gentleman from South Carolina had said they were about to select moneyed corporations as objects on which to lay a high duty. He had made a calculation to show that this was not the case, but that what was proposed was no more than just and reasonable, and that instead of the tax being one per cent. upon their capital, it was not more than one twentieth or one twenty-fifth part of one per cent. He would state the facts, and beg gentlemen to correct him where he was mistaken. In the first place he would state the capital of all the banks of the United States at $20,000,000; the whole amount of bank notes at less than $8,000,000. He would divide these $8,000,000, onehalf into notes under fifty dollars, and one-half above that sum as follows: $4,000,000 in notes under fifty dollars, which would give about eighty thousand notes, (for though they would be of different sizes they paid in the same proportion,) at thirty cents, $2,000,000 of one hundred dollars and upwards, at fifty cents, $2,000,000 of three hundred dollars and upwards, Allow for mistakes, Which includes all the notes in circulation in the United States, $24,000 10,000 4,000 $38,000 2,000 $40,000 As to the principle of taxation itself, that bank notes of fifty dollars should pay thirty cents when notes of individuals only pay ten cents, justice requires the difference, on the same principle that notes of sixty days had been charged with only two-fifths of the duty charged upon others. H. OF R.] Duty on Stamps. [JULY, 1797. Mr. G. stated the following account of a bank | for less than five per cent. to clear the expense in Philadelphia, whose capital was $2,000,000, of making it. and to which Government owed nothing; which, he said, would apply to every other bank in the same circumstances, with little variation: To the original fund, To deposits, about To bank notes, Total debts, By notes discounted, *By cash in vault, Total credits, Mr. W. SMITH thought they should first fix the rates to be paid on bank notes before they determined upon the composition. $2,000,000 As banks were thus able to transact business to the amount of three millions of dollars, though their original fund was only two millions, he accounted for their sharing dividends of nine per cent. on their stock. It would be observed that the two millions capital were not touched for notes, and yet they were charged with selecting these bodies of men upon whom to lay a heavy tax. Mr. G. concluded by saying he had no prejudice against banks. He knew they were liable to abuse, but, upon the whole, he believed them to be useful. He believed the scale he had formed was correct, but should withdraw it for the present, in order to give an opportunity of trying the principle. FRIDAY, June 30. Duties on Stamps. The proposition of Mr. GALLATIN for admitting of a composition from the banks in lieu of the tax, came next under consideration-the blank in which was moved to be filled with one per cent.; when Mr. W. SMITH said, if the gentleman from Pennsylvania was right in his calculation yesterday, the whole amount of duties arising from the banks would be $8,000 a year, and therefore they ought not to go farther in fixing the composition, whereas one per cent., according to the same statement, will produce more than double that sum; for, if the whole capital of the banks in the United States be twenty millions, and their average dividend ten per cent., that will produce two millions, which at one per cent. will give $20,000. He therefore moved, in order to bring the matter nearer to a fair equivalent, to strike out one per cent. and insert one-half per cent. Mr. NICHOLAS said what the duty would produce was uncertain; they could with more correctness say, that one per cent. was a reasonable composition on the dividends, than what might be produced by the duty. He knew of no tax laid upon property that could be made *This sum which amounted to one third of the amount of the notes and disposits, was a general rule for regulating the quantity of cash kept to answer their eurrent demands. Mr. SMITH denied that he wanted first to fix the composition; it was his wish to strike out the rates, to reduce them, that he moved to leave the sum blank. The question was put and carried, there being 54 votes in favor of it. Mr. GALLATIN then renewed his motion for fixing the scale of duty to be paid on bank notes. It was, on notes not exceeding fifty dollars, three cents for every five dollars; those not exceeding one hundred dollars, fifty cents; those above one hundred dollars, and not exceeding five hundred dollars, one dollar; for all above five hundred dollars, two dollars. Mr. DAYTON said there were many notes under five dollars, for which there was no provi sion. Mr. GALLATIN thought "the rate of" would have included the small ones; and, to dissipate every doubt on the subject, he moved to replace "three cents for every five dollars," with "three-fifths of a cent for every dollar." Carried, 39 to 24.* MONDAY, July 3. The bill for laying a stamp duty was read a third time, and the blanks filled up, viz: that for fixing the time of the act taking effect, with the 31st day of December next; the fine and imprisonment for counterfeiting stamps, &c., with $1,000 and seven years' imprisonment; and the time for which the duration of the act was limited, with five years. age of the bill, were-yeas 47, nays 41, as The yeas and nays being taken on the pass follows: Brooks, James Cochran, Joshua Coit, William Craik, This taxation of bank notes presents the ready mode of regulating the paper currency of the States, and suppressing the mischief of small notes which are a constant source of depredation upon the laboring part of the community, a constant source of crime in the making and passing counterfeit paper, and the constant expeller of the constitutional currency. These small notes were hardly known at the time of this tax, which was so readily imposed, and therefore were taxed lightest: now they are a general circulation, and the most profitable part of a bank's issues; and, therefore, should be taxed highest, both on the principle of being most profit. able to the banks and most injurious to the community. JULT, 1797.] Duty on Salt. [H. OF R. Samuel W. Dana, James Davenport, John Dennis, | $800,000, and were not certain of any revenue Geo, Dent, Thomas Evans, Abiel Foster, Dwight Fos- to meet the expenditure. The license act, he ter, Jonathan Freeman, James Gillespie, Henry Glenn, believed, might produce from $50,000 to $60,000, Chauncey Goodrich, William Gordon, Roger Griswold, and the stamp act from $100,000 to $150,000, John A. Hanna, Robert Goodloe Harper, Thomas if they should be passed; but he considered this Hartley, William Hindman, Hezekiah L. Hosmer, as doubtful. But if these laws were passed, Samuel Lyman, James Machir, William Matthews, this tax on salt was necessary to keep up the Daniel Morgan, Lewis R. Morris, Harrison G. Otis, Elisha R. Potter, John Read, John Rutledge, jun., equilibrium of taxation;* for the stamp act James Schureman, Samuel Sewall, William Shepard, would almost exclusively fall upon commerce Thomas Sinnickson, Samuel Sitgreaves, Jeremiah and large cities; this would principally be felt Smith, Nathaniel Smith, William Smith, (of Charles- by the agricultural part of the Union; and, if ton,) George Thatcher, Richard Thomas, Mark Thom- it were not agreed to, they must have a land son, John E. Van Allen, Peleg Wadsworth, and John tax. Williams. Mr. SHEPARD said, no tax would operate so NAYS.-George Baer, jr., Abraham Baldwin, Da- equally as a salt tax, as every citizen must make vid Bard, Lemuel Benton, Thos. Blount, Nathan Bry- use of it in a smaller or larger quantity. an, Dempsey Burges, Samuel J. Cabell, Christopher Mr. GALLATIN opposed this tax on the same G. Champlin, Thomas Claiborne, Matthew Clay, John ground which he heretofore opposed it, as opClopton, Thomas T. Davis, John Dawson, Lucas El-pressive to certain parts of the Union, and no mendorph, John Fowler, Albert Gallatin, Jonathan N. Havens, David Holmes, Walter Jones, Edward way affecting others, and therefore wholly unLivingston, Matthew Locke, Matthew Lyon, Nathan-equal, and particularly as it bore heavy on the iel Macon, Blair McClenachan, Joseph McDowell, John Milledge, Anthony New, John Nicholas, Josiah Parker, Thompson J. Skinner, William Smith, (of Pinckney District,) Richard Sprigg, jr., Richard Stanford, Thomas Sumter, Abram Trigg, John Trigg, Philip Van Cortlandt, Joseph B. Varnum, Abraham Venable, and Robert Williams. TUESDAY, July 4. poorer classes of society. He was against it also, because it was not proposed that the amount of this tax should go towards a reduction of the public debt, but merely to encourage expense in the Government; for he believed if they filled the Treasury with money, means would be found to expend it. Indeed, if the Treasury had not been at present in rather a low state, he believed they should have gone into most of the expensive measures proposed yester-to them this session. He allowed the tax would be productive, as a tax upon bread, air, or any necessary of life, must be productive. If this tax, however, were to be agreed to, he should wish to make an amendment to the present proposition. At present the drawback allowed to the New England States, on account of salt. Duty on Salt. Mr. ALLEN called up the resolution he day laid upon the table, for laying an additional duty on salt. Mr. GALLATIN moved to postpone the consideration of this resolution until the second Monday in November. Some debate took place on this question; and, when it came to be taken, the House was equally divided, there being 43 votes for the postpone ment, and 43 against it. The SPEAKER decided against the postponement, and the resolution was referred to a Committee of the Whole immediately. The House accordingly resolved itself into a Committee of the Whole on this resolution; when Mr. ALLEN moved the blank cents per bushel be filled with twelve. Mr. SWANWICK wished the sum to be seven. Mr. ALLEN consented to make it eight. Mr. SITGREAVES hoped it would be twelve. The question was first taken upon twelve, and negatived, there being only 30 votes for it. It was next taken upon eight, and carried, 47 to 42, and then upon the resolution as amended, and carried by the same numbers. The committee rose, and the House took up the resolution. After a few words from Mr. LYON against the tax, and from Mr. WILLIAMS in favor of it, used in the fisheries, amounted to about $90,000 there should only have been allowed $50,000. a year, though by the statements it appeared To rectify this, he proposed the following proviso to be added to the resolution, viz: Provided, That the allowance now given upon vessels employed in the fisheries, shall not be increased. This amendment was opposed by Messrs. HARPER, SEWALL, DANA, and KITTERA, on the ground of its being an unfair way of introducing the proposition, as no one expected it; they were not prepared to meet it; the correctness of the statement was doubted; and, if it were correct, it was said, the proper way of doing the business would not be to pass the present law without a drawback, but to reduce the former drawback and make it less on this occasion. The motion was supported by the mover, and Messrs. VENABLE and LIVINGSTON; but, after some discussion, Mr. GALLATIN withdrew it, in order to give gentlemen time to make themselves acquainted with the fact he had stated; Mr. W. SMITH went at considerable length into a defence of the measure, in the course of *This equilibrium was soon destroyed. The merchants which, he said, they had already agreed upon | soon got rid of the stamp tax; but the farmers still bear a appropriations to the amount of $700,000 or salt tax. |