ence to which this stamp tax is most inconvenient had been sought out to be subjected to it. Mr. Chairman, these stamp duties are a relic of a departing system which has been in vogue in England and France. The stamping system in those countries has almost thrown out of commercial circulation those articles upon which stamps have been required. When our internal tax law was first framed, precedents were looked for, and the English law being convenient this system was adopted. Gentlemen have referred to the large profits which they supposed to be made in the manufacture of such articles as those embraced in the paragraph now under consideration. Now, sir, having investigated this subject, I say upon the honor of a gentleman that there is to-day a smaller percentage of profit upon this branch of trade than upon any other in this country with which I am acquainted. Many articles which a few years ago were a source of profit not only to the proprietors, but to the advertising press of the country, are now yielding no profit or are making bankrupt those who own them. So much with reference to the ability of these articles to pay the taxes here imposed upon them. I have proposed to the Committee of Ways and Means to fix upon these articles an ad valorem or specific tax. They have not chosen to meet the question in that way. Why is it, sir, that under this bill an article of luxury is taxed one half per cent., while one of these articles which are in many cases articles of necessity are taxed from six per cent. to fifty per cent. In the whole enumeration I cannot find a single article which is taxed less than six per cent. I ask gentlemen of the House to divest themselves of the prejudices attempted to be created by the remarks gratuitously offered by gentlemen on the other side, and to look at this business in the same manner they look at the business of the manufacturer of patent leather, the manufacturer of pianos or of other articles mentioned in the bill.

Is it fair? Is it right? Is it becoming practical men to make the invidious discrimination proposed in this bill?

[Here the hammer fell.]

Mr. BARNES's amendment to the amendment was not agreed to.

Mr. SCHENCK's amendment was agreed to. The Clerk read as follows:

Perfumery and cosmetics.

For and upon every packet, box, bottle, pot, vial, or other inclosure, containing any essence, extract, toilet water, cosmetic, hair-oil, pomade, hair-dressing, hair restorative, hair dye, tooth-wash, dentifrice, tooth-paste, aromatic cachous, or any similar articles, by whatsoever name the same heretofore have been, now are, or may hereafter be called, known or distinguished, used or applied, or to be used or applied as perfumes or applications to the hair, mouth, or skin, made, prepared, and sold or removed for consumption and sale in the United States, where such packet, box, bottle, pot, vial, or other inclosure, with its contents, shall not exceed at the retail price or value the sum of twenty-five cents, one cent. Where such packet, box, bottle, pot, vial, or other inclosure, with its contents, shall exceed the retail price or value of twenty-five cents, and shall not exceed the retail price or value of fifty cents, two cents. Where such packet, box, bottle, pot, vial, or other inclosure, with its contents, shall exceed the retail price or value of fifty cents, and shall not exceed the retail price or value of seventy-five cents, three cents. Where such packet, box, bottle, pot, vial, or other inclosure, with its contents, shall exceed the retail price or value of seventy-five cents, and shall not exceed the retail price or value of one dollar. four cents. Where such packet, box, bottle, pot, vial, or other inclosure, with its contents, shall exceed the retail price or value of one dollar, for each and every fifty cents or fractional part thereof over and above the one dollar, as before mentioned, an additional two cents.

Mr. SCHENCK. I move to amend by striking out in the paragraph just read the following: The sum of twenty-five cents, one cent. Where such packet, box, bottle, pot, vial, or other inclosure, with its contents, shall exceed the retail price or value of twenty-five cents, and shall not exceed the retail price or value of fifty cents, two cents. Where such packet, box, bottle, pot, phial, or other inclosure, with its contents, shall exceed the retail price or value of fifty cents, and shall not exceed the retail price or value of seventy-five cents, three cents. Where such packet, box, bottle, pot, vial, or other inclosure, with its contents, shall exceed the retail price or value of seventy-five cents, and shall not exceed the retail price or value of one dollar, four cents. Where such packet, box, bottle, pot, vial, or other inclosure, with its contents, shall exceed

the-retail price or value of one dollar, for each and every fifty cents or fractional part thereof over and above the one dollar, as before mentioned, an additional two cents.

And inserting in lieu thereof the following: To be fixed by the manufacturer of the article, and stamped or printed thereon, the sum of twenty-five cents, one cent; and where such packet, box, bottle, vial, or other inclosure, with its contents, shall exceed such retail price or value of twenty-five cents, for each and every additional twenty-five cents, or fractional part thereof, an addition of one cent.

Mr. BARNES. I move to strike out "retail" and insert "wholesale." Mr. Chairman, I do not think that this question is understood by the House. Of course I have no idea that I can make it better understood than it is now. I will not take up the time of the committee in arguing the question. It may appear that my particular advocacy of subjects pertaining to this class of cases has some personal motive in it; and I desire to say that I am a wholesale merchant in New York, and that handling this class of cases I understand the inconvenience of this manner of paying duties. I do not come here asking favors. I have not asked that this class of manufactured goods or that these merchants shall not be taxed as severely as any others. But I do desire to present their claims, as they have requested, upon the simple ground of equity. They merely wished to be relieved from arrogance and trouble, and the loss of stamps. They desire that Congress, which makes laws now so onerous against them, should understand that they were paying two or three taxes on their products. They pay the wholesale druggist's tax, and the retail tax, as well as their own tax.

Mr. STEVENS, of New Hampshire. Has the gentleman any other objection to this matter of taxation except the expense of the mechanical labor of putting the stamps upon the articles?

Mr. BARNES. There is a great deal of expense. It will appear that these articles are small in amount. They have to be spread over immense premises in a damp state. The room for conducting business of this kind is large. Superintendence for the application of these small stamps is large. The manual labor in applying them is great. Then there are the losses of stamps, which cannot be exactly estimated, but it is a very large item. Then in addition to all those annoyances to these reputable manufacturers comes in the fact that they pay, in no instance, less than six per cent., and as high as fifty per cent. on the top of special tax.

[Here the hammer fell.]

The amendment to the amendment was rejected.

Mr. SCHENCK's amendment was then adopted. No further amendment being offered, the Clerk read the next paragraph, as follows:

Friction matches, or lucifer matches, or other articles made in part of wood, and used for like purposes, in parcels or packages containing one hundred matches or less, for each parcel or package, one cent. No amendment being offered, the Clerk read the next paragraph, as follows:

Mr. SCHENCK.. By regulation and decision of the Department such matches are counted as two matches.

No further amendment being offered, the Clerk read the next paragraph, as follows:

For wax tapers, double the rates herein imposed upon friction or lucifer matches; on cigar lights, made in part of wood, wax, glass, paper, or other materials, in parcels or packages containing twentyfive lights or less in each parcel or package, one cent.

No amendment being offered, the Clerk read the next paragraph, as follows:

When in parcels or packages containing more than twenty-five and not more than fifty lights, two cents. Forevery additional twenty-five lights or fractional part of that number, one cent additional,

Mr. SCHENCK. I move to strike that out and insert in lieu of it as follows:

For every additional twenty-five lights or fractional part of that number, an addition of one cent. The amendment was agreed to.

No further amendment being offered, the Clerk read the next paragraph, as follows: Playing-cards. For and upon every pack not exceeding fifty-two cards in number, irrespective of price or value, five cents.

Mr. ROBINSON. I move to insert after that paragraph the following:

Provided, That no stamp duty shall be required on any certificate or receipt given for goods received by any pawnbroker where the money advanced upon said goods does not exceed dollars.

Mr. GARFIELD. I rise to a point of order. The amendment is not germane.

Mr. ROBINSON. It is to be added to the provision in regard to stamps; therefore I think it germane. I do request the Committee of the Whole to hear me one moment on this subject. It belongs to the stamp law, and should go in somewhere.

Mr. ALLISON. If I understand it, it relates to stamps on receipts.

Mr. ROBINSON. It is on certificates or receipts given by pawnbrokers.

Mr. ALLISON. We have stricken out stamps on receipts entirely.

Mr. ROBINSON. This is certificates. I think the committee will see its importance.

Mr. GARFIELD. I withdraw my objection. Mr. ROBINSON. In a great many cases persons go to pawnbrokers with a very small pledge, something of the value of a dollar, perhaps, upon which they receive five or ten cents. I believe it is now the requirement to put a five-cent stamp on the certificate which the pawnbroker gives, so that the person who makes the pledge gets his five or ten cents and then has to pay an additional five cents for the stamp. This makes it ruinous to these poor people. There is a story of a woman who, every morning after break fast, pawned her husband's razor, and redeemed it so that her husband would have it the next morning for shaving again. That, perhaps, is an extreme case, but there

When in parcels or packages containing more than one hundred and not more than two hundred matches, for each parcel or package, two cents.

The motion was agreed to.

The Clerk read the next paragraph, as follows: And for every additional one hundred matches or fractional part thereof, one cent.

Mr. SCHENCK. I move to insert after the word "thereof" the words "an addition of."

The amendment was agreed to.

Mr. GARFIELD. I ask the gentleman whether he has made provision against a fraud which two years ago was largely practiced against the Government in reference to these stamps on matches? Manufacturers of matches made them of double length, and dipped both ends, thus getting two matches instead of one, which was a source of complaint, and the Commissioner of Internal Revenue recommended that it should be provided against.

SCHENCK] in a good humor a minute ago, I trust he will allow me to make this amendment either in the place I have indicated, or on page 145, line one hundred and fourteen, if it is improper to be inserted here.

Mr. SCHENCK. When the gentleman asked me to make an amendment in schedule C, I said, "Certainly." It did not occur to me, however, that he was going to make it to a different part of the bill.

Mr. ROBINSON. I think it makes not much difference where it goes in.

Mr. SCHENCK. I hope it will not go in anywhere.

Mr. ROBINSON. I ask that it go in here. The CHAIRMAN. The Chair rules it out of order. The gentleman can introduce it as an independent paragraph. It properly belongs on page 145.

Mr. ROBINSON. Imove it as an independent paragraph.

Mr. ALLISON. It seems to me we should have no special legislation for these pawnbrokers.

Mr. ROBINSON. It is not for pawnbrokers. Mr. ALLISON. We have stricken out the provision in relation to stamps on receipts, and it will be the easiest thing in the world for pawnbrokers instead of giving a certificate for a razor that has been pledged simply to give a receipt for the razor and so avoid the tax entirely. I think there will be no difficulty about it.

Mr. ROBINSON. It is not the pawnbroker I am trying to protect, but the poor people, to whom this is charged. The internal revenue department will still insist, no doubt, in doing as they have done. I move the amendment as a separate paragraph, and I will fill the blank with the words "one dollar;" so that it will read :

No stamp duty shall be required on any certificate or receipt for goods received by any pawnbroker when the money advanced on said goods does not exceed one dollar.

Anything to save these poor people.

The question being taken on the amendment, there were-ayes 33, noes 25.

The amendment was, by unanimous consent, considered as agreed to.

Mr. MAYNARD. I hope that, by general consent, the amendment of the gentleman from New York, which has just been adopted, will be inserted on page 145, where it appropriately belongs.

Mr. ROBINSON. Oh, we can easily fix that when we get into the House.

Mr. ALLISON. I object to going back.
The next section was read, as follows:
Banks and Bankers.

SEC. 113. And be it further enacted, That there shall be levied, collected, and paid a tax of one twentyfourth of one per cent. each month upon the average amount of the deposits of money, subject to payment by check or draft, or represented by certificates of deposit or otherwise, whether payable on demand or at some future day, with any person, bank, association, company, or corporation engaged in the business of banking; and a tax of one twenty-fourth of one per cent. each month, as aforesaid, upon the capital of any bank, association, company, or corporation, and on the capital employed by any person in the business of banking, beyond the average amount invested in United States bonds; and a tax of one sixth of one per cent. each month upon the average amount of circulation issued by any bank, association, corporation, company, or person, including as circulation all certified checks and all notes and other obligations calculated or intended to circulate or to be used as money, but not including that in the vault of the bank, or redeemed and on deposit for said bank. And a true and accurate return of the amount of circulation, of deposits and of capital, as aforesaid, and of the amount of notes of persons, State banks and State banking associations, and of cities, towns, or other municipal corporations, paid out by them for the previous month, shall be made and rendered monthly by each of them to the assessor of the district in which such bank, association, corporation, or company may be located, or in which such person has his place of business, with a declaration annexed thereto, verified by the oath or affirmation of such person, or of the president or cashier of such bank, association, corporation, or company, in such form and manner as may be prescribed by the Commissioner of Internal Revenue. And for any refusal or neglect to make or to render such return and pay the tax, any such bank, association, corporation, company, or person so in default shall be subject to and pay a penalty of $200, besides the additional penalty and forfeitures in other cases provided by law; and in default of such return the several amounts subject to tax shall be estimated by the assessor or assistant assessor on the best information he can obtain. And in the case of banks with branches each branch shall make a separate return, and the tax shall be assessed on the deposits, circulation, and capital of each severally. And so much of the forty-first section of the Act to provide a national currency secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof," approved June 3, 1861, as imposes a tax on the banks organized under that act, be, and is hereby, repealed: Provided, That the deposits in associations or companies known as provident institutions, savings banks, savings funds, or Savings institutions, having no capital stock and doing no other business than receiving deposits to be loaned or invested for the solo benefit of the parties making such deposits, without profit or compensation to the association or company, shall be exempt from tax on so much of their deposits as they have invested in securities of the United States, and on all deposits less than $500 made in the name of any one person; and the returns required to be made by such provident institutions and savings banks shall be made on the first Monday of January and July of each year, in such form and manner as may be preseribed by the Commissioner of Internal Revenue.

Mr. SCHENCK. I am instructed by the Committee of Ways and Means to offer the following amendment :

Page 166, line one hundred and twenty-three, before the word "cities" insert the word "State;" so that it will read:

And a true and accurate return of the amount of circulation, of deposit, and of capital, as aforesaid, and of the amount of notes of persons, State banks

remark that I have not included the State, county, and municipal tax, which a friend near me suggests is two and a half per cent. If it be the object of the Committee of Ways and Means to get rid of these banks this will answer first rate.

Mr. HOOPER, of Massachusetts. Will the

towns, or other municipal corporations, paid out by them for the previous month, shall be made and rendered monthly, &c.

The amendment was agreed to.

Mr. SCHENCK. I am also instructed by the Committee of Ways and Means to offer the following amendment:

Page 167, line forty-two, strike out the words "the deposits, circulation, and capital of;" so that the

clause will read:

And in the case of banks with branches each branch shall make a separate return, and the tax shall be assessed on each severally.

The amendment was agreed to.

Mr. SCHENCK. I offer the following amendment from the Committee of Ways and Means: Page 167, at the end of line forty-seven insert the words and requires returns to be made to the Treasurer of the United States;" so that the clause will read:

And so much of the forty-first section of the act to provide a national currency secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof, approved June 3, 1864, as imposes a tax on the banks organized under that act, and requires returns to be made to the Treasurer of the United States, be, and is hereby repealed. The amendment was agreed to.

Mr. PRICE. On page 166, line fourteen, I

one

move to strike out "one sixth" and insert". twenty-fourth" in lieu thereof; so that the clause will read:

And a tax of one twenty-fourth of one per cent. each month upon the average amount of circulation issued by any bank, association, corporation, company, or person,

I make the motion for the reasons which I will state briefly, and I would like to have the attention of the committee for a very short time. Take a bank of $200,000 capital. This bill proposes to tax them half of one per cent. on their capital; that is $1,000. Then half of one per cent on their deposits. I suppose the bank will have $500,000 deposits. I am not supposing a case; I have such a bank right in my eye. That makes a tax of $2,500 on deposits. Then there is a $400 tax imposed before they can commence business. Put that down. The first thing a bank has to do is to pay into the Treasury of the United States $400. And then this bill proposes to tax them two per cent. on their circulation. If the bank has a capital of $200,000, it will have a circulation of $180,000. Two per cent. on $180,000 is $3,600. Now, if gentlemen have put the figures down, they will find that I have got three and three quarters per cent. on the capital.

Now, in the next place, I assume at least I do not assume it, for I have the papers to prove it-that it will cost for the expenses of running the bank a little over two per cent. on the capital. Put it down at two per cent. in round numbers. Gentlemen ask me if that is a national tax. I tell them no; it is for rent of the bank building, pay of the cashier, teller, book-keeper, and discount clerk-I do not include pay of the president and directors-and fuel, light, and stationery, without which a bank cannot run. Now, if gentlemen will put the figures together, they will discover that they have got between eight and ten per cent. on the capital of that bank. I know, sir, that a man who stands up here to advocate the cause of banks or railroads is in a losing business, and I do not expect that this will amount to anything. But I advertise gentlemen that no bank, unless it be in some Atlantic city, or at some central point of commercial operations, can do business under this tax. It must be very plain to any gentleman that if he has $100,000 to invest he had better loan it out at current rates of interest at six, eight, or ten per cent., and have no expense for Government or State tax, than to bank with it under the national banking law, with that law as it now stands. Aud, by the way, let me here

scribes it, gets as interest on its loans? He says the capital is $200,000. What amount of loans does it draw interest on?

Mr. BLAINE. In other words, what is the amount of its deposits.

Mr. PRICE. I have told the gentleman; about five hundred thousand dollars. It has a circulation of $180,000.

But there is another item connected with this matter. In reference to banks with a capital under $200,000, the rate of interest would be greater. Go into the country, away from the great commercial centers, you will find $50,000 and $100,000 banks; the majority of

them will be of that class.

Mr. HOOPER, of Massachusetts. I do not think the gentleman has answered my question. He states that his bank has a capital of $200,000, a circulation of $180,000, and $500,000 of deposits, making $880,000 in all.

Mr. SAWYER. Does the gentleman suppose a bank will loan its entire capital?

Mr. PRICE. If my friend from Massachusetts [Mr. HOOPER] thinks our banks loan all their deposits, their circulation, and their capi tal, he is very much mistaken.

Mr. HOOPER, of Massachusetts. Answer my question, if you please.

Mr. PRICE. There have been questions put to me, looking toward the investment of the capital of a bank; I am not certain whether they are put for the purpose of acquiring information, or for an opposite purpose.

Mr. HOOPER, of Massachusetts. I put my question for the purpose of getting the gentleman's statement before the committee.

Mr. PRICE. I hope my friend from Massachusetts [Mr. HOOPER] will keep as quiet as a man of his temperament can until I am through. Then he can take his five minutes, and I will listen to him with a great deal of pleasure. I suppose that gentlemen all know that before a bank can get its $180,000 circulation, it has to put $200,000 in bonds on deposit in the Treasury of the United States. That is where its capital goes.

Mr. BLAINE. And the bank gets six per cent. interest in gold on those bonds.

Mr. PRICE. Yes; so they do; but they do not lend it out in every direction. And this interest I have ciphered up here more than eats up the interest the bank gets on its bonds. The expense of running the bank under the law is more than that. Therefore, as I have said, so far as that goes the bank is losing money, and had far better keep its money out of the bank and use it in some other kind of business. There is nothing wrong in these figures of mine. And when my friend from Massachusetts [Mr. HOOPER] gets the floor I want him to show me where the figures are wrong if he can, and not deal in glittering generalitics.

[Here the hammer fell.]

Mr. HOOPER, of Massachusetts. I riso formally to oppose the amendment of the gentleman from Iowa, [Mr. PRICE, ] for the purpose of giving the gentleman an opportunity to answer my question fairly and squarely. He . says that the capital of his bank is $200,000.

Mr. PRICE. I did not say my bank.

Mr. HOOPER, of Massachusetts. Well, the bank which he presented by way of illustrating his position. He said he knew all about it, and I supposed it was his bank. That bank has a capital of $200,000, a circulation of $180,000, and deposits to the amount of $500,000, making $880,000 in all.

Mr. PRICE. The bank is obliged to keep

under all circumstances, will find a reserve of $280,000 sufficient, thus leaving, aside from its capital, $400,000 which it can loan. At six per cent., that will be $24,000 which it receives for interest on its loans. Then, on the bonds it has deposited in the Treasury for its circulation, it receives interest at the rate of six cent. in gold, which will be equal to at least eight per cent. in currency.

per

Mr. MULLINS. It is equal to $8 40 in currency.

Mr. HOOPER, of Massachusetts. That will then be equal to $16,800 in currency, which the bank receives as interest on its bonds; which, added to the $24,000 it receives as interest on its loans, will make $40,800. Now, I think when the gentleman comes to deduct his expenses from that amount, he will find that there is a pretty good margin left as profits.

Mr. PRICE. With a little experience in banking, I confess it never occurred to me that it was quite so profitable a business as my friend from Massachusetts [Mr. HoOPER] makes it out to be. The banker takes $200,000 to start with; that is all there is in the concern, and buys bonds with every dollar of it, and those bonds are deposited in the Treasury of the United States. For that $200,000 in bonds draws back $180,000 in currency. He receives his current deposits in the bank $500,000. He has now $680,000. He proposes out of that $680,000 to loan $600,000.

Mr. HOOPER, of Massachusetts. My statement was that the bank has altogether $880,000, of which it loans $400.000, making, with the $200,000 in bonds, $600,000 upon which the bank receives interest, leaving $280,000 for reserve.

Mr. PRICE. I beg the gentleman's pardon if I do not state his position correctly. This banker has on hand altogether $680,000, $500,000 of which is current deposits; and he loans $600,000, leaving $80,000 with which to meet that indebtedness of $500,000 due the depositors. Would $80,000 be considered by sound bankers a sufficient margin?

Mr. HOOPER, of Massachusetts. Two hundred and eighty thousand dollars.

Mr. PRICE. No; the gentleman is mistaken. There are $680,000 to start with, $500,000 of deposits and $180,000 of circulation.

Mr. HOOPER, of Massachusetts. And $200,000 capital.

Mr. PRICE. But the capital is in bonds. My friend counts that $200,000 twice.

Mr. PIKE. I would like to ask the gentleman whether such a bank as that pays. [Here the hammer fell.]

66

Mr. DAWES. I move pro forma to amend the amendment by striking out one twentyfourth," and inserting 66 one twelfth." Imake this motion merely for the purpose of inquiring of my colleague, [Mr. HOOPER, of Massachusetts,] who seems to have charge of this part of the bill, first, what reason has governed the Committee of Ways and Means in proposing to double the tax upon circulation without increasing the tax upon deposits; and secondly, what will be the effect of this change upon the country banks as compared with the city banks? Iyield my colleague the remainder of my time that he may answer these questions.

Mr. HOOPER, of Massachusetts. I will say frankly, in reply to the question of my colleague, that our reason for proposing to increase the tax upon circulation was that this circulation is furnished by the United States; the credit of this circulation is the credit of the Government, the Government being responsible for it; and we thought it not unfair, under the circumstances, that the Government should receive one third of the lowest rate of interest which a bank gets by loaning that circulation. If my colleague will look at the returns made by the Comptroller of the Currency, he will find that, with every national bank, the whole amount of its circulation (I say the whole, because it is so nearly that) is constantly out, constantly drawing interest for the bank. No bank gets less than six per cent, on the amount it has in circulation; and as this circulation is

furnished by the Government, circulated upon the faith and credit of the Government, the Government being responsible for it, it seemed to the committee perfectly just that the Government should receive as tax one third of the interest which the bank earns upon it at the lowest rates at which banks are in the habit of loaning money. Another consideration was that there had been a great deal of discussion in regard to the injustice of permitting the banks to have any circulation at all.

In reply to the other branch of my colleague's question, I will say that this proposed increase of taxation on circulation will, I think, operate in the same way upon the country and the city banks in proportion to the amount of their respective circulation. It appears to me that upon a city bank with $200,000 circulation the effect would be precisely the same as upon a country bank with $200,000 circulation.

Mr. DAWES. How are the comparative deposits of the city and the country banks? Mr. HOOPER, of Massachusetts. I presume the deposits are heavier in the cities.

Mr. BLAINE. Take, for instance, the Merchant's Bank of Boston, the largest bank in Boston.

Mr. HOOPER, of Massachusetts. I do not refer to individual cases.

[Here the hammer fell.]

Mr. ALLISON. I desire to oppose the amendment proposed by my friend from Massachusetts, [Mr. DAWES ;] and I judge from the question he asked his colleague that he himself lives in the region of country banks. Now, sir, I do not desire this controversy between the city and country banks shall result in reducing this tax upon circulation. I find from an examination of the report of the Comptroller of the Currency that the taxes paid by these banks average two and a quarter per cent. to the United States, and a like sum to the several States. That is the existing tax on the circulation of the national banks. I do not know whether he is seriously in favor of the reduction of that or not. The effect of this bill is to increase the tax on the circulation of national banks one per cent. They are now taxed one per cent. per annum on the circulation, and we propose a tax of two per cent. I think the answer of my colleague on the committee a good one. Mr. BLAINE. Does the gentleman argue, as the taxes now stand, that it is fairer to put double tax upon the circulation than upon the deposits?

Mr. ALLISON. If he is anxious to put a tax upon deposits

Mr. BLAINE. My question is whether if you are going to raise so much tax out of the national bank system which is the fairest way to get it.

Mr. ALLISON. That is a pertinent question. One way is to tax the circulation of national banks.

Mr. BLAINE. They are already taxed one per cent. upon circulation.

Mr. ALLISON. I understand that, and I have so stated that the circulation of the national banks is taxed one per cent. This circulation is an absolute gratuity to these banks. These banks in the cities as well as in the country issue every dollar of circulation that they are authorized to issue, and they send these notes out into circulation from Maine to the Gulf of Mexico. They do not redeem them, and if they did it would be in greenbacks, which, practically, is no redemp tion. My idea is that these national banks can maintain this tax so long as we do not resume specie payment. I am sorry that my colleague [Mr. PRICE] did not answer what the bank he cited received annually in the shape of dividends. I do not know of any national bank that has not divided semi-annually a respectable dividend. If he will turn to the report of the Comptroller of the Currency he will find that each one of them has a respectable surplus.

Mr. DAWES. How do the dividends of the city banks compare with those of the country banks?

Mr. ALLISON. I will answer the gentle

Mr. PRICE. Are there not banks which have been compelled to wind up, and which do no business?

Mr. ALLISON. Of course. There was one in the oil region of Pennsylvania. It will not pay to do business if they are not well managed. These national banks have special privileges thrown around them. Their charters are valuable whether in city or country. They monopolize because of their charters all the business in the cities and drive out private bankers.

Mr. BENTON. I ask if this tax on circulation is not calculated to prevent circulation and to restrict it?

Mr. ALLISON. That is an answer to my friend over the way. If these national banks are not satisfied with their circulation, let them return it, and we will find others that will take it. I know several towns in my State without national banks, and they cannot get this circulation because it is monopolized by New York and New England. We propose a tax of $3,000,000 on the circulation of the national banks, and having this monopoly they can well afford it.

[Here the hammer fell.]

Mr. DAWES. I withdraw the amendment. Mr. SCHENCK. I move to strike out one twenty-fourth and make it one twenty-fifth, merely for the purpose of making a remark in reply to the gentleman from Iowa, [Mr. PRICE.] I will leave without comment the answer made by my colleague on the committee, showing that upon his own statement the bank that he had in his mind ought to make sixteen per cent. net. But there is another funny fallacy, if I may be allowed to make the alliteration, which he has been treating us to. What have we done? We have left the tax on deposits as it was, we have taxed the capital the same, one twenty-fourth of one per cent., and we have increased by this bill the tax on circulation from one twelfth of one per cent. to one sixth. Now, what is the gentleman's calculation? He says we have charged one twentyfourth on deposits, which is one half per cent. a year; one twenty-fourth on capital, which is another half per cent. a year, and we have charged one sixth on circulation, which is two per cent, a year; thus making, says he, three per cent. on the property of the banker. Now, suppose I had a pig, a horse, and a cow, and I paid twenty-five cents on the pig, one dollar on the horse, and seventy-five cents on the cow. Adding them all together the gentleman would say that I paid two dollars all round, on the pig, the horse, and the cow. That would be precisely his argument. charge so much on deposits, so much on capital, and so much on circulation-separate things. The gentleman adds them all together and makes three per cent. a year, and he says that we are charging three per cent. on all the property in the banks. It is precisely the case of the pig, horse, and cow. Although the tax is paid on each separate thing, he takes the aggregate and makes out his case.

We

I am merely giving this as a specimen of the gentleman's logic. Now, what we propose is, as we tax the privilege of supplying the country with money upon that franchise by which the banks furnish the circulation, we thought we might well afford, now that we extend this franchise to the national bankswhich are in fact all that are really worth considering, because the State banks have been driven pretty much out of existence-to add another one twelfth, and thus make it one sixth of one per cent. per annum instead of one-twelfth as before.

Mr. BLAINE. I desire to say, with all due respect for the Committee of Ways and Means,

that if they had attempted to make a most injurious discrimination against the country banks they could not have better contrived to do it than they have done in this bill. I am not here to oppose an increased tax or circulation, nor to oppose any tax on national banks which they can stand. But I do maintain that of all the banks in the land that are able to stand a heavy tax the class which can stand it the best are the large State banks which have an enormous line of deposits. And if you will put one half per cent. per annum upon their deposits, unless I am entirely mistaken in my statistics-and I take them now from memory-you will get as much as one per cent. will give on circulation. I think the average is about five hundred and forty million dollars; it may be six hundred million dollars. Now then, put one half per cent. on that amount, and it gives you $3,000,000. Now, in regard to the country banks, the case cited as an illustration by my friend from Iowa [Mr. PRICE] is no fair sample. A bank with $200,000 capital that has $500,000 deposits is a very rare thing. There are three banks in my little town. There is not one of them that begins to have a deposit equal to its capital. The entire capital of the three banks is only $450,000, and there was never more than $250,000 of deposits at any one time.

Mr. PRICE. I know a bank on the sundown side of the Mississippi with $100,000 capital that has over half a million of deposits. Mr. BLAINE. Very well; that is in the West. The bank in Chicago that my friend alluded to which divided twenty per cent. is also in the West. But I know of no such bank in New England, unless it be in Boston. If there is any class of capital in this country that can stand an additional tax it is the large banks that have these enormous deposits, and while I am not arguing and do not intend to argue against putting an additional tax on circulation, I protest against allowing these enormous deposits to go untaxed. There is no class of property under the sun that can stand taxation so well as they can.

Mr. ALLISON. Does my friend know why there are large deposits in these banks?

Mr. BLAINE. Because the people put their money in them. [Laughter.]

Mr. ALLISON. Well, that is a very good

answer.

Mr. BLAINE. Why is it, then? Mr. ALLISON. It is because they are allowed to receive interest on deposits.

Mr. BLAINE. So much the more reason why they should pay a tax.

Mr. ALLISON. Your country banks, instead of loaning their money to their neighbors for business purposes, send it to the business centers and speculate in stocks.

Mr. BLAINE. And you propose to make it easier for them to do that by not taxing the deposits.

Mr. ALLISON. Why does not the gentleman propose to increase the tax on deposits instead of fighting the tax on circulation?

Mr. BLAINE. I make the proposition to put one per cent. on the city banks, and it ought to have been done long ago. You will find that the city banks are making ten times as much on their deposits as they make on their capital, and they make it out of their depositors, and that large sum ought not to be allowed to go free.

Mr. SCHENCK. ment.

Well, offer your amend

Mr. BLAINE. It is not in order now. You strike at the country banks and affect them injuiously, and allow the city banks, which are much more able to bear taxation, to go scot free of additional burdens. That is my complaint against the Committee of Ways and Means. Mr. SPALDING. What are the regular dividends of your banks?

Mr. BLAINE. I never knew them over ten per cent.

[Here the hammer fell.]

Mr. SCHENCK. I withdraw the amendment to the amendment.

Mr. PIKE. I renew it. I wish to suggest a solution of this difficulty to the committee. Some of these gentlemen seem to represent city banks and others represent country banks. For my part I do not represent banks at all. Mr. BLAINE. I do not either.

Mr. PIKE. I was going to suggest that we adopt the views of the country banks in relation to the city banks, and tax the city banks as much as the country banks think they ought to be taxed, and then tax the country banks what the city banks think they ought to be taxed. In that way we shall get a fair taxation all round. These gentlemen who are stockholders in these various institutions know, at any rate, and are entirely willing to confess, what their neighbors earn, and by the dupli cate confession, one confessing to the other's earnings-I was not going to say their sins, but their earnings-we get the earnings of both classes, and in that way get at a fair and proper basis for taxation. Now, sir, this whole system is a monopoly. Here are three hundred million dollars or more in the banking business. I represent a population that does not share in this monopoly. We have been endeavoring, from time to time, to get some share in this banking business, but up to this time we have been entirely unable to do so except in one or two small instances. Now, then, let the city banks be taxed and the country banks taxed, and then if these gentlemen will but give up the business and give the rest of us a chance to get in it will give my constituents an oppor tunity. For one I am desirous of placing such a tax upon this peculiar business which is thus monopolized as shall reduce it to such a fair business as compared with the other business. of the moneyed capital of this country as shall not make gentlemen so eager to monopolize the whole of it. Deposits are of course a very large source of income to city banks. Let the tax on those be increased to one per cent. Circulation is a large profit to the country banks particularly. Let the tax on that be increased. The imperial power is given them of furnishing the money of the country, and it is the creative power of money that we should tax. Then the taxes should be so as to reduce the earnings of the banks until they reach point where they will be willing to share the monopoly with others.

Mr. HUBBARD, of West Virginia. I rise to oppose the amendment, and I would suggest as a compromise that the tax on deposits be increased from one twenty-fourth to one twelfth of one per cent, per month, and the tax on circulation be reduced from one sixth to one twelfth of one per cent. per month. That would make the tax one per cent. per annum on deposits, and one per cent per annum on the circulation.

Mr. ALLISON. Would not the gentleman increase the tax on the capital from one twentyfourth of one per cent. per month to one twelfth of one per cent., and thus make it equal all round, one per cent. per annum?

Mr. HUBBARD, of West Virginia. I will come to that in a moment. My proposition would make the tax upon the deposits and upon the circulation one per cent. per annum. The bill as it now stands also has a clause imposing a tax upon the capital. But what is that tax, and upon what amount of capital? As this is in my line of business I ask gentle men to pay a little attention to what I say in regard to it. The provision of the bill is as follows:

And a tax of one twenty-fourth of one per cent. each month, as aforesaid, upon the capital of any bank, association, company, or corporation, and on the capital employed by any person in the business of banking, beyond the average amount invested in United States bonds.

Now, the capital of most all these banks is all invested in United States bonds, so that under this provision there would be no tax at all paid upon the capital. Therefore, this tax of one half per cent. per annum is no charge against the banks, under this bill as it now stands, except upon that portion of the capital not invested in United States bonds, which in most cases amounts to nothing at all.

The tax of one per cent. per annum upon the circulation and deposits would make the tax, according to the estimate of the gentleman from Iowa, [Mr. PRICE,] two and a half per cent. to the national Government. Then there would be two and a half per cent. for State and municipal taxation, and two per cent. per annum for the expenses of the bank. That would make seven per cent. in all.

Now, all admit that upon the capital invested in United States bonds the bank, with the present price of gold, draws interest that is equivalent to at least eight per cent. in currency.

The average amount of deposits in country banks is about equal to their capital, or a little over; taking all the banks of the country it will average at least one and one half times the amount of the capital. There is no use in a bank where the deposits do not equal in amount the amount of the capital stock.

Now, assuming the deposits to equal in amount the amount of the capital, and hold one fourth of the deposits as a reserve, and allowing the banks to make their loans at only six per cent., and we have four and a half per cent. as interest on loans from deposits, and a like amount of four and a half per cent. as interest on loans from circulation after making allowance for the proper reserve, and we have nine per cent. upon the capital as interest on loans. That, together with the eight per cent. interest upon the capital received as interest upon the United States bonds in which the capital is invested, makes the total income of the bank equal to seventeen per cent. upon its capital. From this deduct the seven per cent. for taxes and expenses, and there is left of net income the sum of ten per cent. on the capital. That is evidently a fair percentage of profits on the capital employed in banking, and a larger percentage than is paid by a large majority of the manufacturing or other productive interests of the country.

Now, these banks, it must be borne in mind, are not required to redeem their circulation, but can count all the profits their circulation gives them, for the redemption of that circulation costs them nothing. These banks will not only pay ten per cent. to their stockholders, but will add to their surplus, as they have been doing hitherto, from five to twenty per cent. throughout the country.

I am, therefore, well satisfied that the banks can well afford to pay the increased tax which I propose by my amendment. And after that

I will indicate another amendment which I think all will admit the propriety of making. [Here the hammer fell.]

Mr. BENTON. I will state my position upon this question, and while doing so I desire the attention of the chairman of the Committee of Ways and Means. I think the effect of this increase of tax upon the circulation will be to diminish the circulation. Now, so far as the public is interested in banks, it is interested in the circulation. The public is not interested in the amount of money which the banks make in their speculations in stocks and in all sorts of ways. You ought to put a tax not only on the circulation of the bank, but on its deposits, which are invested in stocks and various kinds of speculations. By this bill it is proposed to put an increased tax on circulation, but scarcely any tax whatever on these deposits, of which the banks have the use for purposes of speculation. By such a provision you exert a direct influence to prevent the banks from extending accommodations to the people.

Mr. Chairman, I have no fear that the banks will be taxed too much. These national banks have, since their establishment, paid their semi-annual dividends of ten, fifteen, and twenty per cent.; and any gentleman who stands up here and talks about these banks not being able to bear the taxation which we propose may address himself to men who do not understand how these banks make their money, but he should not talk to men like my friend from Massachusetts, [Mr. HOOPER,] who know the utter fallacy of any such remarks.

I think with the gentleman from Maine [Mr.

BLAINE] that the increase of our taxation upon these banks ought to be mainly upon their deposits. These deposits are not only loaned out, but are invested in various profitable ways; and they can readily bear a heavy taxation for the support of the Government. I would not take away from these banks their circulation, a measure which has been advocated by some; but I would adopt such policy as to compel them to perform their legitimate function and accommodate the people. Now they do not do that. There are many of our banks, both in the cities and in the country, whose officers, when a loan is applied for, ask the applicant, "How much can you pay? What per cent. can you give?" They do not govern their operations by the law which in ordinary business regulates the transactions of men in regard to the use of their money, but they take all they can get; and I say, let the Government compel them to pay their full share of the

taxes.

[Here the hammer fell.]

Mr. PIKE. I withdraw my amendment to the amendment.

Mr. HUBBARD, of West Virginia. I will modify my amendment so as to strike out "twenty-fourth," and insert "twelfth;" making the rate of taxation on deposits one twelfth of one per cent.

66

Mr. PRICE. I modify my amendment so as to insert "one twelfth." This will make the rate of taxation the same that it is at present. Mr. MILLER. I move to amend the amendment by striking out " one twelfth," and inserting one fifteenth." I rise, Mr. Chairman, to say a word in regard to a question which seems to excite interest on all sides of the House. Some gentlemen think that these banks are merely of advantage to the stockholders and to no one else. These gentlemen are mistaken. I do not know about city banks, but I do know about the country banks, and I know that they are not only of advantage to the stockholders, but of advantage to the people generally. If this tax is increased, as it is proposed here, it will tax the country banks out of existence.

Gentlemen say if they are taxed out of existence they will take the circulation. If they are taxed out of existence it would not be long before we should hear of broken banks in the country. In the country the banks make money out of the circulation. I know, so far as the banks in my country are concerned, they make little money out of deposits. They depend upon what money they make on circulation. In the cities it is far different. The deposits there are large and they make a great deal of money on the deposits. But it is not so in the country. The proposition here is not only to tax the deposits, but to put a double tax upon the circulation. What will be the result? The result will be in many sections of the country that the banks will have to wind up. If they cannot make some money they will not run the risk.

Mr. STEWART. What amendment does the gentleman from Pennsylvania propose?

Mr. MILLER. I move to strike out one twelfth and insert one fifteenth.

Mr. Chairman, I am in favor of the amendment of the gentleman from Iowa. As I was saying, so far as the banks in the country are concerned, this tax bill will be onerous. They cannot stand this tax. Gentlemen say let them go. They want to monopolize the banking business in the cities, but country people must be accommodated as well as those of the cities. Gentlemen must recollect that there are great losses in the banking business. Not only the drawers but the indorsers of notes fail, and large amounts of money are lost in that way. And as the banking system is not established the circulation is limited. When we had the State banks, before they were legislated out of existence, we could increase our circulation and the country people become accommodated. It is not so now.

[Here the hammer fell.]

Mr. SCHENCK. I hope by unanimous

consent all further debate on this section will be terminated.

Mr. HOLMAN. I object.

Mr. SCHENCK. I move that the committee rise for the purpose of closing debate. Mr. BLAINE. You cannot do that. There is no quorum.

Mr. SCHENCK. Then I hope gentlemen will soon run out.

Mr. LYNCH. I rise to make a suggestion to the gentleman from West Virginia, and that is this: the particular case which has been brought before the House by the gentleman from Iowa [Mr. PRICE] of a bank which has $180,000 circulation and $500,000 deposits will not be much relieved by double taxation.

Mr. MILLER. I withdraw my amendment. Mr. LOGAN. I merely desire to suggest an amendment for the consideration of the committee. It is this: I propose after the word "money" to insert "except on desposits of the Government, and on deposits of the Government there shall be a tax of four per cent." The CHAIRMAN. That is not in order now. Mr. LOGAN. On the deposits of individuals, I do not know how it is in the East and New York, but in the West a great portion of the banks pay an interest of six per cent.; but on the Government deposits there is no interest paid whatever. At different times the Government has had millions of dollars on deposit for months from which it derived no interest whatever, while the banks derived from six to nine per cent.

Mr. LYNCH. Does not the Government have for every dollar of deposit in the banks ample security, while the individual depositors have no security?

Mr. LOGAN. Well, sir, I would like the gentleman to explain to me what amount the Government derives, so far as it is concerned, from the securities. They do not pay the Government one cent interest. There is a banking institution in this city that has had as high as $6,000,000 on deposit at a time, and it never paid one cent to the Government on that deposit.

Mr. LYNCH. The point I wished to make was the difference between the deposits of individuals who have no security whatever, who take their own risk, and the deposits of the Government, which are entirely secure; more so than if made in the sub-Treasury.

Mr. LOGAN. That only adds to what I said of the necessity of taxing the individual who makes deposits and receives his six or four per cent. as the case may be.

Mr. LYNCH. And takes his risk.
Mr. LOGAN. Takes his risk.

A MEMBER. Where do they pay six per cent.?

a great many instances there is no sub-Treasury and no place to keep the money in but the banks.

Mr. LOGAN. They can express it to the Government sub-Treasury very easily.

Mr. PRICE. Not every day.

Mr. LOGAN. The express runs every day, and there are sub-Treasuries all over the country where money can be deposited. Mr. PRICE. Oh, no.

Mr. LOGAN. There is a sub-Treasury in New York and in every large city.

Mr. FARNSWORTH. I would ask the gentleman from Iowa [Mr. PRICE] whether the deputy collectors in the different districts deposit in the banks every night?

Mr. PRICE. I am happy to tell my friend that they do, so far as my knowledge is concerned.

Mr. LOGAN. If you have no bank what becomes of the money the collector has? Mr. FARNSWORTH. They must have to travel a long distance.

Mr. O'NEILL. I rise to oppose the amendment of the gentleman from Illinois, [Mr. LOGAN.] I understand it is impossible in many instances for the Government to have its money deposited in Government depositories; that is, in the sub-Treasury. Now, I presume, as a matter of course, the deposits must be made somewhere for the convenience of the Government. Let me illustrate it. In the State of Pennsylvania there is a vast amount of money collected by local taxation. The money is deposited in the State banks all over the Commonwealth, evidently to the convenience of the State.

Mr. LOGAN. Let me ask the gentleman a question. This Congress has passed a law requiring deposits to be made in the Government depositories or the sub-Treasury where the collection was made within five miles of the sub-Treasury. Is such a deposit in violation of law?

[Here the hammer fell.] Mr. TROWBRIDGE. Imove that the committee do now rise.

The motion was agreed to-ayes 35, noes 34. So the committee rose; and the Speaker having resumed the chair, Mr. POMEROY reported that the Committee of the Whole on the state of the Union had had under consideration the state of the Union generally, and particularly the special order, being the bill (H. R. No. 1060) to reduce into one act and to amend the laws relating to internal taxes, and had come to no resolution thereon.

CLOSE OF DEBATE.

Mr. SCHENCK. I move that when the House next resolves itself into Committee of the Whole on the state of the Union on the special order all debate on the pending sec

tion shall close in three minutes.

Mr. HOLMAN. I hope the gentleman will confine his motion to the pending amendment. This is a very important section.

Mr. SCHENCK. No, sir, on the section; but I will say in ten minutes instead of three minutes. Closing debate will not cut off amend

ments.

Mr. LOGAN. They do it in my part of the country to my certain knowledge. But the Government, in depositing, gets collateral; but on that collateral the Government pays six per cent. in gold. It does that for the advantage of having its money deposited in a bank out of which many a banker derives six per cent. interest beside the interest on the collateral. Now, sir, I purpose, in order to make this fair, that upon the Government deposits in the banks they shall be required to pay four per cent. Then as regards individual deposits the House may determine the percentage as it sees fit. I do not propose to change that part of the bill. This is all I desire to say. I shall ask a vote at the proper time. Mr. O'NEILL. I desire to ask a questioning thereto, and the motion of the gentleman of the gentleman. Does not the Government receive some benefit from the convenience or advantage of having deposited its money in the banks of the country?

It

Mr. LOGAN. None on God's earth. only gives these men a chance to turn the money and make a fortune out of it without giving the Government a particle of benefit.

Mr. PRICE. That happens to be a mistake. Mr. LOGAN. Well, now, let us see. Mr. PRICE. All over the country there are collection districts. The collectors must necessarily deposit their money somewhere, and in

Mr. HOLMAN. I move to amend the motion so as to limit debate only on the pending amendment.

The SPEAKER. That amendment is not in order. The rule gives authority to close debate on sections and on amendments pend

from Ohio [Mr. SCHENCK] being the larger motion, must be voted down before the vote can be taken on the motion of the gentleman from Indiana.

Mr. ROBINSON. I rise to a question of order. Was it not the understanding when the House took a recess this afternoon that no business was to be transacted to-night except in Committee of the Whole on the state of the Union?

The SPEAKER. It was not; on the contrary the Chair stated that such an understanding would require unanimous consent.