I suppose there is no judgment of our Supreme Court which has been more admired than that in the case of M’Culloch v. The State of Maryland.[332] It was pronounced by Chief Justice Marshall, and is as good a specimen of that “pure reason” which belonged to this magistrate as any that can be named. In the course of this elaborate judgment all the topics were considered which enter so peculiarly into this debate. It was there insisted that the tax was unconstitutional. But the words of the Chief Justice seem intended for the present occasion. His object, from beginning to end, was to keep the bank safe from the hostile acts of the States. It was a great effort to uphold a national institution against State Rights. It was, permit me to say, an answer in advance to the Senator from Vermont. I do not like to trouble the Senate, but there are passages so pertinent that I will read them. Here, for instance, the Chief Justice considers the ground of exemption.
Mr. Sumner then proceeded at some length to analyze the judgment of Chief Justice Marshall, reading important parts of it; and he then said:—
Now, Sir, every consideration, every argument, which goes to sustain this great judgment, may be employed against the proposed concession to the States of the power to tax this national institution in any particular, whether directly or indirectly. The reason of the judgment is as strong against an indirect tax as against a direct tax.
After showing the character of the new system as an instrument of national credit, as the Navy-Yard and the Mint are instruments for the public service, he proceeded:—
The very measure under consideration seeks to create a new currency by a system of national banks which shall supersede the existing State banks as agents of currency. Of course the new system must begin in rivalry with the State banks, which in many cases will be hostile. This is no inconsiderable impediment. But this impediment will be increased, if the national banks be exposed to local taxation. It is an untried experiment upon which you are entering. On every account it should be made under the most favorable circumstances,—precisely as when we put stock in the market. The national banks should be commended in every possible way. But, instead, it is proposed to fasten upon them a liability, which, if it do not cause people to avoid them, will at least keep them in rivalry with the State banks, so that the new system cannot become truly effective. It seems to me that there is but one practical course. Naturally, all who are against the proposed system will favor any limitation or burden to impair its efficiency. But all who are for the system, and wish to see it doing all the good it can, will take care that it is not compelled to carry weight. The whole case may be briefly summed up. Would you place the national credit on a sure foundation? Are you for the national banks as a proper agency to this end? If these two objects interest you, then, I say, do not allow them to be sacrificed in subserviency to State Rights.
Mr. Fessenden followed in an earnest speech, vindicating the report of the Committee, to which Mr. Sumner replied.[333] The debate continued for several days.
May 5th, as a substitute for the amendment of the Committee, Mr. Sumner moved the following:—
“In lieu of all other taxes on the capital, circulation, deposits, shares, and other property, every association shall pay to the Treasurer of the United States, in the months of January and July, a duty of one per cent each half-year from and after the first day of January, 1864, upon the average amount of its notes in circulation, and a duty of one half of one per cent each half-year upon the average amount of its deposits, and a duty of one half of one per cent each half-year, as aforesaid, on the average amount of its capital stock beyond the amount invested in United States bonds; and in case of default in the payment thereof by any association, the duties aforesaid may be collected in the manner provided for the collection of United States duties of other corporations, or the Treasurer may reserve the amount of such duties out of the interest as it may become due on the bonds deposited with him by such defaulting association. And each association shall, within ten days from the first days of January and July of each year, make a return, under the oath of its president or cashier, to the Treasurer of the United States, in such form as he may prescribe, of the average amount of its notes in circulation, and of the average amount of its deposits, and of the average amount of its capital stock beyond the amount invested in United States bonds, for the six months next preceding the first days of January and July, as aforesaid; and in default of such return, and for each default thereof, each defaulting association shall forfeit and pay to the United States the sum of two hundred dollars, to be collected either out of the interest as it may become due to such association on the bonds deposited with the Treasurer, or, at his option, in the manner in which penalties are to be collected of other corporations under the laws of the United States; and in case of such default, the amount of the duties to be paid by such association shall be assessed upon the amount of notes delivered to such association by the Comptroller of the Currency, and upon the highest amount of its deposits and capital stock, to be ascertained in such other manner as the Treasurer may deem best. Provided, That nothing in this Act shall exempt the real estate of associations from either State, county, or municipal taxes, to the same extent, according to its value, as other real estate is taxed: Provided, also, That all taxes imposed by this or any future Act on banking associations organized under national legislation shall be applied exclusively to the payment of the interest and principal of the national debt of the United States.”