the tax upon deposits, to double the tax upon Government deposits, and to make the banks pay three per cent. As to Government deposits I have nothing to say. It is for the Secretary of the Treasury to make such arrangements as he thinks will be best for the interests of the country. If he thinks he can get three per cent. it is very well. He cannot get four per cent. He cannot manage to get five. If the banks are to pay at the rate the committee recommend it will be impossible for them to pay the tax upon the Government deposits. Therefore, if the Secretary of the Treasury is now getting, as I understand, in certain quarters interest upon Government deposits, the effect of this will be only to reduce the interest. Now, as to the local banks in New York: in the town in which I live the local tax is from three and a half to four per cent. and the tax for Government and local purposes is from six to eight, and sometimes runs up to ten per cent. The effect of this legislation upon the banks will be to drive them there to reorganize under the general banking law of New York. Some have contemplated this during the past year. They will do better under the general banking law of New York than under the law of Congress. For the reasons assigned by my colleague I hope this provision will be stricken out.

Mr. INGERSOLL. I wish to state there is no law compelling the banks to receive deposits from the Government. It is at their option. If they do not wish to do so they need not.

[Here the hammer fell.]

I am

Mr. BUTLER, of Massachusetts. asked to yield to the gentleman from Ohio, who wishes to correct some figures. I yield if it does not come out of my time.

The CHAIRMAN. It will come out of the gentleman's time.

Mr. BUTLER, of Massachusetts. I move, on page 129, to strike out the words "beyond the average amount invested in United States bonds." Those words in this bill except United States bonds held by the banks as part of their capital from taxation, and allow the banks by investing their capital in United States bonds so far to escape taxation. Therefore I desire, if we can, to meet the question whether we shall begin to tax these United States bonds in the hands of these institutions. I desire to test the sense of the House on this proposition precisely.

Mr. Chairman, we have come now to a place where we can try the question nakedly and alone, how much we have of real meaning when we say we are in favor of taxing bonds.

Mr. PRUYN. They are taxed as part of the capital.

Mr. BUTLER, of Massachusetts. If they are then this will not do any harm. This bill provides taxation only of the capital invested beyond the average amount invested in United States bonds. By striking out these words we allow capital invested in United States bonds to be taxed. When the proposition of the gentleman from Maine was before this House this morning we found ninety-eight members voted against any proposition to tax United States bonds; but I observed they all voted on a side issue, which might not involve the main one. I wish now to make the taxing of United States bonds held by banks the straight issue, bold, direct. I do not mean, if I can help it, to have any doubt what the question is; but it shall go out as the voice of this House whether we are willing or not to tax United States bonds in the hands of banks, for if you will not tax them in the hands of banks you will not tax them anywhere. There are no widows and orphans or savings institutions here now on which to avoid the question-none of that dodge. Plain cold steel, gentlemen; walk up to it. Let us have it understood. Let us plainly ascertain what the majority of the House mean to do on this question. I want gentlemen to understand distinctly what we are about. There is no double meaning here; no shelter. Any gentleman who votes against this amendment votes not to begin here when he has a chance I

to tax United States bonds. Any one who votes for this amendment votes to begin to tax United States bonds and relieve the industry of the country of its burdens. Who votes against it, votes to allow the bondholder to hold his bonds without bearing his proportion of the public burden.

Mr. BENTON. I rise not for the purpose of opposing the amendment, butMr. POMEROY. I rise to oppose the amendment.

The CHAIRMAN. The Chair recognizes the gentleman from New York.

Mr. BENTON. I rise to oppose the amend ment of the gentleman from New York, [Mr. POMEROY.]

The CHAIRMAN. That is not pending. Mr. POMEROY. The committee will recollect when this subject was under discussion in the old bill I was unfortunate in not being able to take part in the discussion, being chairman of the Committee of the Whole. Now, when I took the floor this morning I begged of the committee before proceeding to amend this section, to vote upon the question whether they would entertain the subject of bank taxation in the manner in which it has been brought before the committee, as an addition to this bill in relation to the tax on distilled spirits and tobacco. Now, sir, I impugn the motives of no person connected with the resolution instructing the Committee of Ways and Means. It was properly introduced, and was properly passed; but I say it was done at a time in the morning immediately after the reading of the Journal, when gentlemen were crowding around the desk with resolutions and other matters which they were eager to have introduced, and in the confusion few members knew what the resolution meant. Now, I attack no man's motive. The committee are technically right in reporting this bill. But I submit, as a question of courtesy to the House, whether we should still continue to consider in connection with whisky and tobacco, a subject so highly incongruous as that of the taxation of banks.

Now, sir, I call the attention of the committee to the extent to which the banks are now taxed. There is already a license tax on banks of two dollars per thousand. There is an additional tax of five per cent. on profits. There is a tax on circulation of one per cent. per annum. There is a tax of one half per cent. on deposits. Then there is in addition to all this a tax for the whole band of Department detectives who are constantly traveling over the country examining into the condition of the banks, whose expenses and salaries the banks have to pay. In addition to that there is no interest in the United States which, for local purposes, is taxed as clean and hard as that of banks. Their capital is known in every locality, and the tax which is assessed upon that capital is collected.

Under

Now, I have no reason to believe that the taxes on banks in my locality are any more severe than those of the average of the country banks. Under existing law the tax is over six per cent. on the cash capital in central and western New York. And yet that tax is paid, and there is no pretense of fraud on the part of any of those institutions in the payment of their taxes. Now these banks are dragged into this bill for the purpose of having an additional tax imposed upon them. this bill you propose to tax their circulation $6,000,000, being an increase of $3,000,000. You propose a tax on individual deposits of $5,287,794, being an increase of $2,643,880. You propose to tax Government deposits $728,750, being an increase of $607,292. I make this calculation on the basis of the bank returns in April last, at a period of the year when the deposits are ordinarily the lowest. I make the aggregate increase of tax on banks $6,251,172 over the present tax imposed by the Government.

[Here the hammer fell.]

Mr. BENTON. I move to strike out the last word. As I understand it the objection made to the introduction of the sections in this

bill in reference to banks is that it was not understood by members when the resolution of instruction was passed that this subject was included. But I presume the resolution is to be treated like other resolutions introduced and passed without objection. It is not to be presumed that a resolution of this importance, introduced in the business hours of the House, is to be smuggled through without the notice or attention of this body. I think that would be a pretty extreme presumption for any man to make here. I take it, then, that this subject was properly enough before the Committee of Ways and Means, and that they have properly enough reported this section to the House. I go further, and I take the ground that if there is any interest in this country that can afford to bear its share of the burdens of taxation it is the very interest now under consideration, the banking interest of this country. It has been demonstrated here to my satisfaction, and I believe to the satisfaction of the majority of the House, that larger profits are made in the banking business in this country than in any other business. Gentlemen talk here about, the depressed condition of the banks. Why, sir, it has been stated upon this floor over and over again that they make from fifteen to eighteen or twenty per cent. profit annually, and no man has stood up here and introduced any figures or facts or arguments to refute the statements made by those who claim that these enormous profits are made by the banks. I believe that the country banks make much less profit than the city banks, which are favored with large deposits. I think the taxation proposed to be imposed on deposits is too small. It ought to be increased, and, perhaps, the tax on circulation should be diminished, because the country banks are almost entirely deprived of any advantage from deposits, and their circulation is what they have to rely on for their profit, and it is for the accommodation of the people.

[Here the hammer fell.]

Mr. HOLMAN. I trust that upon this section the gentleman from Massachusetts will see the advantage of obtaining a more direct vote than his proposition would-indicate. I offer the following amendment:

After the word "bonds," in the eighteenth line, insert the following:

And a tax of sixteen and two thirds per cent. on the interest annually accruing on the bonds of the United States held or deposited by such bank, with the Treasurer of the United States.

Mr. Chairman, this amendment presents the question directly whether the committee intend to impose any tax on bonds held by the national banks or not. Heretofore the Committee of the Whole have decided that the bonds shall

not be taxed for any purpose. But the question is now, shall these bonds held by the banks be taxed. The proposition that these banks are overtaxed, so urgently pressed by the friends of the banks is the most remarkable propositions ever submitted to a body of intelligent gentlemen. The banks overtaxed! Here are the banks with near eight hundred million dollars capital, having $360,000,000 of bonds, $300,000,000 of circulation, and $70,000,000 of surplus fund, and gentlemen come forward here with figures to show the large taxes they pay. Certainly they do pay very considerable taxes; but they have near eight hundred million dollars of capital on which those taxes are to be paid. So that when gentlemen talk of the enormous sums paid, they should take into consideration the enormous capital and the unexampled privileges possessed by these banks. They should consider the power of these banks, not only of controlling the entire moneyed affairs of the country, but of reaping unexampled profits. The entire tax proposed by this bill on the circulation of the banks is two per cent.; this, with the amount paid for license for banking, say $200 a year, and one half of one per cent. on their surplus capital, is the tax they pay. They pay on their individual deposits the small tax of one half of one per cent., but this has no connection with their circulation. They pay these inconsid

erable taxes while the whole country is laboring under heavy taxation, more on an average than two per cent. without any privileges from the Government. They pay less on their capital than any other business of the country pays, and yet you have graciously and freely given them $300,000,000 of capital. A small capital of $60,000,000 excited the apprehensions of Andrew Jackson, but he could scarcely have comprehended the power of $800,000,000 of united capital. Talk about the excessive taxation of the banks! Their power even in this Congress is illustrated in being able to command such arguments in their defense. Their power is not easily resisted, however virtuous may be the intentions of the gentlemen. Who has not seen the effects of the blandishments of wealth and power? You pay them their six per cent. interest in gold upon their bonds, purchased with paper greatly under par; you keep their bonds safely at the risk of the Government; you give them $300,000,000 of money and guarantee its solvency-money which they loan to your citizens at from six to fifteen per cent. interest; you have enabled them, after making large dividends annually, to accumulate $70,000,000 of surplus fund in three years; and now, when, for all these extraordinary bounties, you propose to increase the tax on their circulation from one to two per cent. and impose one per cent. only on their bonds, which is sixteen and two thirds per cent. on the interest, their indignation is actually unbounded. I affirm that there is no interest in this nation that is so lightly taxed, considering the amount of capital involved, as the banks, without reference to the enormous privileges and exemptions which they enjoy under our legislation. The Government, for their $300,000,000 of bonds, gives these banks $300,000,000 of currency, actually makes the money for them and pays the salaries of the officers who manage their bureau, and on this they are now paying but one per cent.; and when a proposition is made to increase the taxation to two per cent., the whole financial interests of the country seem to be brought to bear to defeat it.

I trust, Mr. Chairman, that this question will not be dodged. If gentlemen intend in good faith to tax the securities, here is the place to begin to tax them-in the hands of the bankers, persons who of all others are most able to pay taxes, and on whom, in view of the extraordinary benefits you have conferred, you may most justly impose a reasonable tax. trust the gentleman from Massachusetts will withdraw his amendment so that the question on this proposition may be directly taken. If we strike out the words which the gentleman proposes to strike out, the banks will still pay no tax on their bonds, the tax must be directly imposed or not at all. Those words stricken out, and the banks are still exempt from this taxation. If the voice of the country is heard, these bonds, especially in the hands of the banks will be taxed. If the intelligent convictions of the whole land are to control the action of Congress, these banks will be required to pay a tax, not simply in proportion to their wealth, but in proportion to the enormous bonus which they realize under the remarkable system of legislation which we have heretofore adopted. Capitalists should consider that a free people will not patiently submit either to great inequality of taxation or to extraordinary favoritism in legislation.

[Here the hammer fell.]

Mr. PILE. Mr. Chairman, I would not say a word on this subject, but that I desire to call attention to one effect which I fear this legislation would produce upon the banks, particularly in my own section of the country-a matter which I have not thus far heard men. tioned in this debate. I fear that if this additional tax be imposed upon the banks its effect will be to drive money in large amounts to the great cities, rendering the money market more stringent in the interior cities of the West. If this should be the effect, then such legislation will injure instead of benefiting the class of persons whose interests, as I understand the

arguments of gentlemen favoring the proposition, it is intended to advance.

Every person conversant with the method of moving the produce of the West to market knows that the price of that product is affected one, two, and three per cent. by the condition of the money market; that the price of the grain that must be moved to the East is not only regulated by the demand and supply, but is also affected to the extent of one, two, and three per cent. by the amount of money that is on haud to move it, the rate of interest, and the readiness with which money accommodations can be secured. Now, one of the evils, as I understand, of our present financial condition, is that in the great money centers, in the large cities, there is a surplus of capital, while in the West and in the interior there is a stringent money market. If this increased tax upon circulation and deposits will, as I think it will, bear so heavily upon the smaller banks of the West as to promote the still further accumulation of money in the large centers and render the money market more stringent in the West, then the class of persons intended to be benefited-the laborer, the farmer, the producer, whose taxes this proposition is intended to lighten by imposing additional taxes upon the banks-will be subjected to an increased burden by reason of the decreased price which they will get for their products. To this single consideration I wished to call the attention of the committee. I yield the remainder of my time to the gentleman from Iowa, [Mr. PRICE.]

Mr. PRIČE. Mr. Chairman, I desire to say only a few words, principally in reply to the gentleman from Massachusetts, [Mr. BUTLER,] who challenges to a cold-steel encounter the advocates of the proposition to strike out this section. He maintains that inasmuch as the banks pay no interest upon their bonds there must be some kind of war instituted to bring them to that point. I would like to know whether the gentleman has ever considered this question: when a corporation puts $100,000 worth of bonds into the Treasury of the United States, taking out $90,000 of circulation, and is taxed upon that $90,000 one per cent. under the old law, or two per cent., as this bill proposes, does not the bank pay a tax on the bonds it puts in there? It holds the circulation in lieu of the bonds, and in that way pays tax upon the bonds. This idea does not seem to have occurred to the gentleman from Massachusetts.

Mr. BUTLER, of Massachusetts. No; it never did.

Mr. PRICE. Well, that is honest. The gentleman says it never has occurred to him. So I was right in my impression. I presume the gentleman will now change his opinion in reference to this matter. The chairman of the Committee of Ways and Means, when interrogated as to the increase of taxation contemplated by this section, stated it at about four million dollars. My friend from New York [Mr. POMEROY] has demonstrated, as I think conclusively, that the amount of increase will be over six million dollars.

[Here the hammer fell.]

The question being taken on Mr. HOLMAN'S amendment to the amendment, it was not agreed to.

Mr. BUTLER, of Massachusetts. I withdraw my amendment.

Mr. PIKE. Mr. Chairman, I renew the amendment of the gentleman from Massachusetts, [Mr. BUTLER,] for the purpose of making one or two statements in relation to the taxation of United States bonds. There seems to be a little difficulty about this matter of taxation. When I introduced the proposition this morning it was not in order because of some rule or other; and ninety-eight gentlemen, it seems, either because they were really opposed to it or for the laudable purpose of upholding the rule, concluded to vote against my proposition. It seems now that propositions relating to the banks are in order, because during the morning hour, or at some other time,

a resolution was, in some surreptitious way, adopted instructing the Committee of Ways and Means to embrace this subject in the bill, And yet it is complained that banks ought not to be taxed, even if in order, because the order itself ought not to have been adopted.

But I do not propose to discuss bank taxation just now. I wish to call the attention of the House to a more important matter, and as this House is at least three fourths Republican I desire to remind my party friends of the responsibility of the party legislation that falls upon them. I presented this amendment this morning, and it was based upon the reasons which I beg leave to submit to the House:

SEC.. And be it further enacted, That upon all interest arising from the bonds of the United States there shall be levied, collected, and paid a duty of ten per cent. on the amount of such interest, and the Treasurer of the United States and such subordinate officers as shall be charged with the payment of such interest shall assess and collect the duty hereby levied.

The reasons why I propose this method of taxation are these:

1. It is the English method. We are exceedingly sensitive on this question of bond taxation, and while many demand an unfriendly and an unreasonable rate of taxation as compared with the taxation of other property, there are others who shrink from all taxation as if it where a species of repudiation. For the benefit of such I cite the English example, feeling satisfied that if we keep within the pale of the present English law on the subject we shall not lay ourselves liable to this charge.

The income statute of 5 Victoria is very elaborate, occupying a hundred and twenty pages, with minute details of different subjects of taxations and modes of collection.

Schedule B provides that upon incomes from landed estates-and from this source some of the largest English incomes are derived-there shall be levied "two and a half pence upon every twenty shillings of value.”

Schedule C is as follows:

"Upon all profits arising from annuities, dividend 3, and shares of annuities payable to any person, body politic or corporate, company or society, whether corporate or not corporate, out of any public revenue, there shall be charged yearly for every twenty shillings of the amount thereof the sum of seven pence, without deduction."

During the Crimean war, in 1854, the tax was increased fifty per cent., and in 1855 it was again increased until it got to be sixteen pence on the debt and eleven and a half pence on landed income. After that war it fell back and was again increased last year in order to pay the expenses of the Abyssinian war. During the Napoleon wars the tax was two shillings in the pound or ten per cent. of the amount of interest. The mode of collection is provided in sections twenty-four to twenty-eight inclusive of the same act. Section twenty-four reads as follows:

"The governor and directors of the Bank of England shall be commissioners for executing this act, for the purpose of assessing and charging the duties hereby granted in respect of all annuities, dividends, and shares of annuities payable out of the revenue of the United Kingdom to any persons, corporations, or companies whatsoever, and which shall have been intrusted to said governor and company for payment."

The other sections make similar provisions in case of Bank of Ireland, South Sea Com.. pany, East India Company, and commissioners for the reduction of the public debt. The effect of these English statutes is:

1. A larger tax is assessed upon the holders of property in the public debt than upon the holders of landed estates.

2. Every holder of the debt, whether resident in Great Britain or not, is assessed.

3. As a portion of the public debt of England is in terminable annuities, to that exteut the principal of the debt is taxed, and that whether the holder resides in Great Britain or abroad. Leon Levi, one of the most eminent of English writers on finance, mentions this speciality of British taxation.

4. As the payment of the interest of the debt is intrusted to the banks of England and Ireland, the East India and the South Sea Com

panies, and the commissioners for the reduction of the debt, the effect of putting this tax into their hands to assess and collect is nearly the same as it would be in our case to deduct it from the coupons. I have in my amendment followed the idea of the British statute and charged the Treasurer with these duties. 5. Schedule C provides for payment of tax "without deduction." In case of other property it is provided by the statute that income up to a certain amount is not taxed. In our case all incomes under $1,000 are not taxed. The English limit is somewhat less.

It is evident that my proposition is clearly within the English example. It should be remembered that the larger portion of the English debt is but three per cent., while almost the whole of ours is at six per cent. A tax of ten per cent., as in Pitt's time, on the English holder, would leave him but two and seven tenths for interest, while in our case it would leave five and two fifths-just double.

2. A proposition was made the other day by the gentleman from West Virginia [Mr. HUBBARD] to tax the debt one per cent. and collect by means of the officers of the internal revenue department. It was similar to the tax I proposed in December last and bears a near analogy to the taxation of State bonds under State authority. That proposition failed by a vote of 44 to 52, and, as in a fuller House it would probably share the same fate, instead of renewing it, I propose the English method, which has the advantage of certainty both in assessment and collection.

3. There is no other method of taxation except this I propose or the one rejected by the House. It has been suggested many times that the present bonds may by and by be taken up from the proceeds of new bonds which shall be expressly made taxable by State authority. But this cannot be done. Congress has no authority under the Constitution to issue such bonds, and should they do so, and the bonds be taxed, the Supreme Court would pronounce the tax unconstitutional.

In the case of Van Allen vs. The Assessors, 3 Wallace, 585,) 1865, the court says:

"It is said Congress possesses no power to confer upon a State authority to be exercised which has been exclusively delegated to that body by the Constitution, and consequently that it cannot confer upon a State the sovereign right of taxation, nor is a State competent to receive a grant of any such power from Congress. We agree to this. But as it respects a subjec-matter over which Congress and the States may exercise a concurrent power, but from the exercise of which Congress by reason of its paramount authority may exclude the States, there is no doubt Congress may withhold the exercise of that authority and leave the States free to act. An example of this relation existing between the Federal and State Governments is found in the pilot laws of the States and the health and quarantine laws. The power of taxation under the Constitution, as a general rule, and as has been repeatedly recognized in adjudged cases in this court, is a concurrent power. The qualifications of this rule are the exclusion of the States from

the taxation of the means and instruments employed in the exercise of the functions of the Federal Government."

This opinion sets at rest all questions of local taxation of United States bonds, and as our Democratic friends have been in the habit of complaining that Congress in exempting these bonds from taxation has not dealt fairly by the towns and cities in which they are held, I beg them to notice that this opinion was not given hy a Republican, nor, by any of the recent Democratic converts on that distinguished bench, but by a member of the court whose Democracy has always been of the most unquestionable character, Judge Nelson, of New York.

It was entirely a work of supererogation for Congress to provide that the bonds should not be taxed by State authority, and as the clause in the loan law has caused so much discussion it was a blunder to insert it. The whole effect of it was to declare what the law was, and the result would have been the same had it been left out.

Several objections are made to this taxation. 1. It may be said that if this tax is levied and collected this year another and a larger one may be levied and collected next year. True. And the same thing may be said of every

other tax on the list. The English tax has ranged from seven pence to twenty-four pence in the pound. Ours may do the same. We tax the foreign and domestic holder of our railroad bonds five per cent. on his income and deduct it from the coupon. We have taxed him ten per cent. We have power to tax him twenty. The only assurance the holder of such property can have is in the good sense and honesty of the taxing power.

2. It is said the foreign Governments do not tax their own debts, The statement is entirely incorrect. I have already given the English example. The Governments on the Continent, so far as I have been able to learn, do the same thing. It is not infrequent to see complaints in the English newspapers of the amount of foreign taxation of Government stock held by British subjects. If we allow the property in our bonds to be untaxed we shall be alone among the Governments of the world. I doubt if any other Government, having a well-considered system of taxation, fails to tax this species of property.

3. Many of the holders of the bonds are people of moderate means. Trae again, but what of it? Our whole system of taxation, whether by means of a tariff or the internal revenue, gathers taxes from such people, and from them mainly. The largest holders of bonds in this country are banks, insurance offices, trust companies, and savings-banks. A considerable amount is held abroad, and the remainder is scattered everywhere. None of the very poor hold bonds, and although our tariff and internal taxation is obnoxious to the objection that it taxes anybody who consumes, whether of food or clothing, no matter how poor he is, this tax is not liable to that objec tion, because none who are really poor will be affected by it.

4. But it is said we agreed not to tax. That is not so. We not only did not agree not to tax, but we have always taxed. We com. menced at one and one half per cent. and went up to ten, and now have fallen back to five. The difficulty with previous and present taxation is, that we have failed to collect. The method I propose is not only for a reasonable tax, but it insures its collection.

5. If it be alleged that a part of the prop erty is held abroad, and therefore should not be taxed here, I reply that might be a good objection if the attempt were to tax the principal. But it is not. It taxes only the income. If it be said that this distinction is shadowy, I reply that it is the distinction upon which the whole income tax rests, as decided by the Supreme Court in the celebrated carriage case. And while it may well be that we should not tax a bond held abroad any more than a ship owned abroad, we may tax the income if it be in this country, because it is earned under the protection of our laws and comes in its payment within our jurisdiction.

It is to be hoped that while we tax everything else higher in this country than under almost any other Government, we shall not place ourselves in the singular position of being nearly alone among the Governments of the earth in the exemption of the best property in the country from all Government burdens. The fourth of the Chicago resolutions very well says:

"It is due to the labor of the nation that taxation should be equalized and reduced as rapidly as national faith will permit."

If the amendment is adopted, the amount obtained from this source should be between twelve and thirteen million dollars.

Mr. BENTON. I desire to say in reply to the remark made by the gentleman awhile ago, that of those who voted to sustain the decision of the Chair, at least three fourths did so without intending to express any opinion on the gentleman's proposition, but because they believed the decision of the Chair to be correct. Mr. WASHBURN, of Massachusetts. I desire to move an amendment in order to submit some remarks on this subject.

The CHAIRMAN. The pending amendment is to strike out certain words.

Mr. PIKE. I withdraw the amendment. Mr. WASHBURN, of Massachusetts. I move to strike out "one fourth of one per cent." Mr. Chairman, I wish to call the attention of the chairman of the Committee of Ways and Means to this amendment. I want to strike out one fourth of one per cent. a month upon Government deposits. It was offered by me and considered in the Committee of the Whole on the state of the Union when this tax bill

was up before. hope it will now be adopted. The position of this question is this: by the internal revenue law you oblige every collector in the country to deposit the money he collects daily with the Government depositories. In order that the House may understand the matter I will state the circumstances in my own district. After we passed the law to which I have referred the collector of my district was bound to make his deposits daily in a United States depository. There was none, however, within twenty miles. He violated the law if he did not deposit his money there daily. That bank came to the conclusion to refuse to become a depository, saying the trouble of doing the business was not compensated for at all. The law provided the collector should make his deposits daily, and the bank was compelled to give him triplicate certificates of deposit, one for himself, one to be sent to Washington, and one to be preserved. All this made great trouble for the bank, and they refused the deposits, saying they were not worth the trouble.

The law, as I have said, provided that he should deposit the money he collected daily. I endeavored to get the bank there made a depository. It was done. The collector deposited daily, and the Treasury called for certificates daily. There was all the trouble of making out all these triplicate certificates. What is the anomaly of our position to-day? At the other end of the Capitol the chairman of the Committee on Finance has submitted a proposition to abolish all tax upon all deposits in banks, and urges it as in the highest interest of the country. Yet, sir, we are here now proposing to increase the tax upon deposits of banks, the deposits of every little bank throughout the country, when every collector is compelled daily to make his deposits in these banks. We are asked to tax the banks three per cent. upon these deposits. They are more trouble than they are worth. The gentleman says they are not obliged to receive them. What is the result? Pass this into law and you will wind up every deposit bank in the country. Then where are we? You have collectors. They make collections daily. What are you going to do with the money? [Here the hammer fell.]

Mr. LOGAN. Mr. Chairman, I understand the argument of the gentleman from Massachusetts to be this: because the chairman of the Finance Committee of the Senate is against this tax therefore we ought not to pass it. We are here to act upon our own judgment. The chairman of the Committee on Finance has reported a great many bills which have failed to pass the Senate. Because he has reported a bill is no reason why we should adopt it. I think the House will agree to no such principle in our legislation. I see there is upon the Speaker's table one of his bills requiring contracts to be made in gold, making the poor in the country the pioneers in specie payment. I do not think we are bound by that. I am sure I am not. I introduced a proposition to tax deposits of the Government in national banks. I did it for the reason I gave at the time, that the Secretary of the Treasury was depositing Government funds in a few dead banks to enrich them, while the Government was paying them a percentage to bank upon. I stated then and state now, one of his pet banks in this city has had from six to thirty millions of Government money upon deposit for which no interest was paid, while the Government was paying interest at six per cent. upon its collaterals.

A MEMBER. What bank is it?

Mr. LOGAN. Examine his report carefully and you will find what bank it is. I do not wish to say what bank it is. These are facts that anybody can ascertain by examination. A MEMBER. Give us the name.

Mr. LOGAN. Well, if you want to know, it is Jay Cooke & Co. Now, I say this manner of doing business is not to the advantage or the interest of the people of the country. If the people can make four per cent. in agricultural and mercantile business they are very well satisfied. But the banking interest of the country makes from twelve to eighteen per cent. Then if you undertake to tax the banks you raise a howl against it. I tell gentleman there are other interests in this country than banking institutions, and you will learn it soon if you undertake to favor the banks to the detriment of the people, who have to pay the taxes. Now, sir, I do not desire to tax the banks out of existence by any means; but I do desire that they shall be taxed at a fair rate, so as to equalize the burden of taxation. Now, as to whether this portion of the bill was brought in fairly under the resolution is not the question before the House; but the ques tion for us to determine is, is it right to tax the banks in this way or is it not? The bill came before the House properly, in my opinion, and if it is unsatisfactory to the House let us amend it until it is satisfactory, and tax this interest as well as others.

I

One word further. If the gentleman from Massachusetts [Mr. BUTLER] desires this banking provision to remain in the bill and to tax United States bonds also, I say to him I am now ready, and ever have been, to vote for taxing the bonds. I am as willing as he or anybody else to vote for that proposition. I am willing to vote for this amendment if it will secure the object, though I do not think it will. I am willing to vote to make it stronger. I am ready to tax United States bonds. think this House ought to do it, and unless they do it I think they will make a great mistake. This idea that because contracts are made and money furnished to the Government with the understanding that the bonds should not be taxed is one which has no force in it in my estimation. Let us see. Some people have constitutional objections on this subject. I have none. I think we have a right to tax the bonds, both the interest and the principal, for the purpose of maintaining the Govern-. ment. Entertaining these views, I am ready to vote to maintain this proposition in the bill, and to go further, if necessary, and vote for an additional proposition for the taxation of bonds. [Here the hammer fell.]

Mr. KELLEY. I propose to amend the amendment of the gentleman from Massachusetts by inserting "three eighths" in place of "one fourth." Mr. Chairman, I hold in my hand a most instructive public document. It is the answer of the Secretary of the Treasury to my own resolution calling for a statement of the deposits in the banks, the amount per month, and the amount in each bank for seventeen consecutive months. We loaned the deposit banks nearly thirty million dollars throughout the whole period. We now loan them, it is said, an average of not more than $23,000,000, but we let them have it in such sums that they can invest the bulk of it in gold-bearing bonds, and while holding them draw an average of from eight to ten per cent. currency interest. Now, I propose that they shall pay three eighths instead of one fourth of one per cent. tax on these deposits.

I turn to the report to which I have referred, (Ex. Doc. No. 87,) and take one single bank as an illustration. In the months of November and December, 1866, and January, February, and March, 1867, its deposits of public money amounted in the first month to $2,806,638 19; in the next month to $6,155,801; in the next to $1,685,619 39; in the next to $2,601,092 26; and in the next to $2,306,461 24. That bank could have had about two million dollars of this money invested during these five months in six per cent. gold-bearing bonds. Now, I ask whether it would have been a hardship

that it should give to the Government three eighths of one per cent. a month of the interest on its own money, the specific produce of its own funds.

I request gentlemen to turn from month to month in this official statement, and ascertain the average deposit in the First National Bank of Cincinnati, which, I think, ranged from eight hundred thousand to a million dollars through the seventeen months; turn to the First and Fourth National Banks of New York, with deposits ranging, if my memory serves me, at about the same figures. Turn also to the First National Bank of Philadelphia, where I think the undisturbed balance ranged from four to five hundred thousand dollars during all that long period. But why point to special instances when the whole report will well repay scrutiny? It is an official list of the corporate beneficiaries of the Treasury, and abundantly illustrates the justice of my proposition. I propose by imposing a tax of three eighths of one per cent. per month on these deposits to compel the pet banks to give back to the Government some of the largesses that the Secretary of the Treas. ury is bestowing upon them. He has thus given them millions of dollars in gold. And in the name of justice and the people I demand that we tax these deposits, if gentlemen will not prohibit them by express statute. And let me just here say a word on the question of taxing bonds. Will it be wrong to tax bonds held by banks with the money of the Government? There is not a well-informed capitalist in the country who does not know that Great Britain always taxes investments of this kind, in some instances the principal, and in others the income derived therefrom. There is not an intelligent bondholder in the country that does not feel that while his amassed property is freed from taxation, while it is proposed to make the cigar-maker pay a license for the privilege of following his trade, and the tea, sugar, coffee, molasses, and other essentials of the life of the laborer are taxed, his exemption is arraying the masses of the people against the owners of realized riches, and the labor of the country against its capital. There is not an intelligent bondholder that will not feel relieved when you shall have included his bonds in the taxable property of the country, and have thus given him a guarantee against a popular excitement which might terminate in repudiation or a temporary suspension of the payment of interest and the depreciation of the value of his investments. I would do this, and increase the tax on private deposits also. The banks are to be ruined, say gentlemen. If they are so sorely oppressed why do not some of them in the East, where they most abound, surrender their charters, that the South and the West may get the banking facilities they need? I have not heard of one surrendering its charter. More than fifty per cent. of the banking capital of the country is located in New York and New England, and no one corporation dreads taxation, present or proposed, sufficiently to induce it to yield its charter to escape oppression, or give banking facilities to the South or West, which are suffering from the need of them.

[Here the hammer fell.]

Mr. SCHENCK. The first motion submitted by the gentleman from New York [Mr. POMEROY] being to strike out the whole section subsequent debate upon amendments may or may not result in something, and although it is not the regular order of proceeding, and cannot be done except by unanimous consent, I ask whether the committee will not be willing first to take the question whether this bank section is to stand or not, by having a vote upon the motion of the gentleman from New York, before we consume more time on questions of amendment. I ask unanimous consent that the vote be first taken as a test question. Mr. INGERSOLL. I object.

Mr. PETERS. I object. If the amendment should not be adopted in the House, then the section could not be perfected.

The CHAIRMAN. It will be open to amend

ment afterward if it should not be stricken out.

Mr. PETERS. The House may not concur in striking it out.

The CHAIRMAN. If the committee requires to strike it out it will be open to amendments to perfect it.

Mr. INGERSOLL. But if the committee strike it out there is an end of it.

The CHAIRMAN. The Chair understands the object of the chairman of the Committee of Ways and Means to be to get a test vote. Mr. INGERSOLL. I withdraw the objection. Mr. PETERS. I insist on the objection. Mr. O'NEILL. I rise to oppose the amendment offered by my colleague from the fourth district, [Mr. KELLEY,] because, sir, I am in favor of letting the banks alone. I am in favor of keeping the law just as it is to-day, and I am in favor of letting this national banking system remain as it is, for I believe it is the best system that has ever been inaugurated in this country. I am not only opposed to the amendment, but I shall vote to strike out the section, and I hope the Committee of the Whole will not sustain the great increase, over six million dollars, proposed to be made to the now almost ruinous taxation drawn from these institutions. Why, what are we doing here to-day, and what have we been doing for the last year or two relative to banks? It seems to me that Congress wants to destroy this banking system, and all I have to say as to that is that if you will look at the State banks, State bank systems which have gone down, you may trace their destruction in a great degree to inordinate legislation, such as this appears to be, by those who are opposed to the banking interest and to the facilities which it affords.

means.

Now, Mr. Chairman, who are benefited by banks? To be sure there are large investments of capital in banking organizations; that must be. But I can tell you-I suppose it is known, and I do not state it for information, for every gentlemen present knows it already, or should know it-there are in this country something like two hundred and thirty thousand stockholders in the national banks. Who compose that large number? Not the great capitalists of the country exclusively, but the less wealthy men, those of moderate And I have known within my experience when there has been a financial crisis, and banks were shaking, the poorer men have still, to a great extent, preserved their stock, waiting for the time when the country would become more flourishing, having confidence that their investments would not be lost. It is certainly true that money invested in bank stock has been lost; but it is also true that to this day many of these institutions has stood the shock of monetary revulsions, and that those who owned their stock have found it yielding not only a profit, but have been secured in their investments, when capital placed in individual enterprises has frequently entirely disappeared.

There is invested in banks in this country about four hundred and twenty million dollars, or on an average some eighteen hundred dollars to each stockholder, and yet complaint is made by gentlemen on this floor that we are legislating for the rich to the destruction of the poorer classes of the community. Sir, we are putting upon these banks and upon those who are interested in them what they cannot bear, thus not protecting the property of either poor or rich men.

The chairman of the Committee on Banking and Currency [Mr. POMEROY] says that in his own county the tax now paid by the banks amounts to something like six or seven per cent. on their capital. I understand that in the city of New York the amount of tax, Government, State, and municipal, paid by the banks, is from six to ten per cent., and I know that in the State which I in part represent no city bank gets off with much less than six or eight per cent., while in the rural districts the taxes exacted of them will amount on an average to four or five per cent.

Now, in relation to the taxation of deposits of public moneys, I find, by referring to section forty-five of the act of June 3, 1864, that it is not merely a privilege given such banks as are designated by the Secretary of the Treasury to be depositories of public money to have in their vaults the Government deposits, but certain duties to be performed are imposed upon them as financial agents, and they are obliged to receive at par all the national currency bills, by whatever association issued, which have been paid in to the Government for internal revenue or for loans or stocks.

Why should we double the present tax upon the money deposited by individuals, making it one per cent. per annum instead of one half of one per cent., as now? And why should the circulation be taxed two per cent. per annum when, under the existing laws, the tax is but one per cent.?

The answer to me seems plain. There is a determination, under the plea of more revenue wanted, to distress these institutions, to take from them the means of carrying on a paying business for their stockholders, to put obstacles in the way of their success, and in the end, now that the time for coming to the aid of the Government when temporarily in want of funds has passed, to create distrust in them, to shake confidence in them, and thus bring them to ruin. I say again, let them alone. In general business transactions they are useful. They connot easily violate the laws under which they are organized, and so long as they are accommodating the people and are carried on legitimately let them alone.

In regard to taxing the interest on Government bonds, that question has not come up regularly to-day. It was not in order when introduced by the gentleman from Maine, [Mr. PIKE.] But still it has been brought into the discussion. Now, wherever we have lawfully a right to tax anything, let us do so if there be necessity for it. But first let us see that we have the authority. Our duty is to carry out in full faith the promises of the Government to its creditors, and not hastily and without proper consideration and reflection to impose a tax where, by common consent and a fair understanding, perhaps, the subscriber to our loans took them in the belief that his coupons or interest were not to be taxed.

[Here the hammer fell.]

Mr. KELLEY. I will withdraw my amend

ment.

Mr. PETERS. I object to the withdrawal of the amendment; let it be voted upon and disposed of, so that other amendments may be offered.

The question was then taken upon the amendment of Mr. KELLEY, and it was not agreed to.

Mr. WILSON, of Iowa. I move to amend this section by reducing the rates of taxation proposed by it one half in all cases. This bill rests upon a most peculiar theory. It does not rest upon a theory of the Committee of Ways and Means, for it is the result of the action of this House. But the theory of the bill is this: that wherever you find an interest in the hands of men who are disposed to defraud the Government, and who refuse to pay the taxes levied upon them, then you must reduce their rate of taxation. But wherever you find an interest in the hands of men who pay their taxes fully, by whom the Government loses nothing, then you must increase their rate of taxation. You must relieve the scoundrel and put an additional tax upon the honest man. That is the theory upon which this bili is based. For weeks we have had discussions here denouncing the men engaged in the whisky frauds and in the tobacco frauds. And this bill relieves to a great extent those two interests of the taxation heretofore imposed upon them, and proposes to make up a part of the loss resulting thereby by putting a burdensome and ruinous tax upon probably the only interest in the country that pays every farthing of the tax imposed upon it.

Now, suppose this proposed increase of taxation is imposed upon the national banks.

Then the aggregate amount to be collected of those institutions by the local authorities and under Federal legislation will be $25,000,000 per annum, one twelfth of the entire amount of capital represented by the circulation of the banks, or eight and one third per cent. per annum tax on the entire capital so represented. Now, in addition to that tax of eight and one third per cent. it will cost say three per cent. to meet the expenses of the banks. Then you have eleven and one third per cent. to begin with. I suppose gentlemen will not object to a bank declaring annual dividends of six per cent. If they do that, you have as the amount they must necessarily earn, without taking into account any losses, seventeen and one third per cent. upon their entire capital; that is the amount which by your legislation you compel these banks to earn. Does not every man here know that a system of legislation which drives the banking institutions of the country into a line of business compelling them, without taking account of losses, to earn seventeen and one third per cent. in ordinary times is a system which will bring disaster and ruin upon the whole banking interest of the country? Does any man believe that any banking system, whether national or State, can exist in this country, upon which a burden so onerous as that is placed?

But we are told that some banks are making enormous dividends, and we are also told that these banks are making enormous profits out of Government deposits, and two cases have been cited by the gentleman from Pennsylvania [Mr. KELLEY] in support of that statement. Now, that statement may be true. But does the gentleman from Pennsylvania propose to test the whole system and condemn every bank because the Secretary of the Treasury or somebody else may have made pets of two or three of these institutions in the country? Is the system to go under because an abuse of that kind may be found in the administration of the law?

Mr. KELLEY. Can the Secretary of the Treasury compel a bank to receive Government funds on deposit?

Mr. WILSON, of Iowa. I do not care what he can or cannot do. I am informed that these banks are compelled to receive the Government funds on deposit, when selected for that purpose. But be that as it may, the gentleman from Pennsylvania cited those two cases for the purpose of basing an argument upon them in support of this proposition. I object to having a general system run down by a few isolated cases of wrong that may be found in the administration of the law by the Secretary of the Treasury. Now, I object to this unparalleled legislation on the part of Congress, which must lead in a short time to the utter destruction of the present system of banking in this country. If it is followed up it must necessarily drive the banking business into the hands of private bankers, without there being any organized banking institutions under the laws of the States of the United States.

[Here the hammer fell.]

Mr. PETERS. I have an amendment I desire to offer, and unless some gentleman desires to be heard in opposition to the amendment of the gentleman from Iowa [Mr. WIL| SON] I hope the vote will be taken upon it. Mr. WILSON, of Iowa. I withdraw the amendment.

Mr. PETERS. I move to amend section one hundred and eight by inserting, after the clause imposing a tax on deposits, the following:

But no bank shall be obliged to receive the deposits of public moneys.

If I understand the provisions of this section, a tax of three per cent. per annum is imposed on all public moneys deposited in these banks. Now, from my connection, as a director, with a national bank in my State, I know that these deposits are not worth to the bank one per cent. per annum.

Mr. INGERSOLL. To what bank does the gentleman refer?

Mr. PETERS. To the First National Bank

of Bangor, Maine. These deposits are received in driblets, and are drawn by the Government in large sums, and without notice. If I understand the provision of the present law, it is mandatory upon the bank; it requires any national bank which may be selected as a public depository to receive these deposits. I do not think there can be any objection to my amendment, and, therefore, I will say no more in favor of it.

Mr. INGERSOLL. Will the gentleman allow me to correct a statement he has made?

Mr. PETERS. Yes; if I have made any which needs correction.

Mr. INGERSOLL. I find, upon examination, that the amount of Government deposits in the First National Bank of Bangor run from forty-seven thousand to sixty-one thousand dollars; the lowest point being $27,000.

Mr. PETERS. I suppose that the gentleman will allow that I know as much about the matter as he does, or any statement he has got.

Mr. INGERSOLL. The Secretary of the Treasury says so.

As

Mr. PETERS. I do not care who says so; I think I understand what I am saying. the Government draws these deposits without any notice, sometimes drawing the whole amount of the balance, or even overdrawing it, the matter is not regarded as worth anything to the banks, and the idea that these banks shall be compelled to receive these deposits whether they desire them or not, and be required to pay a high rate of interest upon them, I do not think is of any advantage to them. Mr. PRUYN. No bank is now compelled to receive these deposits.

Mr. PETERS. There may be a doubt about the construction of the law. My construction is that the banks are compelled to receive these deposits. At least the law is doubtful, and my amendment will make it certain. I ask the Clerk to read section forty-five of the currency

act.

The Clerk read as follows:

SEC. 45. All associations under this act, when designated for that purpose by the Secretary of the Treasury, shall be depositories of public money, except receipts from customs, under such regulations as may be prescribed by the Secretary; and they may also be employed as financial agents of the Government; and they shall perform all such reasonable duties, as depositories of public money and financial agents of the Government, as may be required of them. And the Secretary of the Treasury shall require of the associations thus designated satisfactory security, by the deposit of United States bonds and otherwise, for the safe keeping and prompt payment of the public money deposited with them, and for the faithful performance of their duties as financial agents of the Government: Provided, That every association which shall be selected and designated as receiver or depository of the public money shall take and receive at par all of the national currency bills, by whatever association issued, which have been paid into the Government for internal revenue, as for loans on stocks.

Mr. SCHENCK. I ask unanimous consent that all further debate on this section be terminated in five minutes.

Mr. INGERSOLL. I wish to state that the figures I gave in reference to the Bangor national bank were for 1866. I find on examination the deposits in 1867 were only $15,000.

Mr. PETERS.. And they were worthless to the bank.

Mr. POMEROY. I wish, before debate is closed, to explain two amendments I have to offer.

Mr. BARNES. Is it intended to close debate on all the subjects of the section? Mr. SCHENCK. Yes, sir.

Mr. BARNES. Then I object. Mr. SCHENCK. I move that the committee rise for the purpose of closing debate. The motion was agreed to.

The committee accordingly rose; and the Speaker having resumed the chair, Mr. BLAINE reported that the Committee of the Whole ou the state of the Union, had, pursuant to the order of the House, had under consideration the Union generally, and particularly the special order, being House bill No. 1284, to change and more effectually secure the collection of internal taxes on distilled spirits and tobacco,