After a few remarks upon this motion, in which it was observed that it would defeat the bill entirely, as it would only be to make so many more notes at fifty dollars, if the sum were larger, Mr. Coit consented that the fifty should be struck out and left blank; when the question was taken and negatived, there being only twenty-five votes for it.
Mr. Nicholas renewed his motion.
Mr. Sitgreaves hoped it would not prevail. It had been admitted that if it could be proved that the stamping of bank notes would embarrass their circulation, it would be a good objection to the tax. He believed he could easily show that it would not only impede their circulation, but depreciate their value. The tax would not certainly be made to operate upon notes already issued, but upon those issued after the act took place; so that it would be necessary that every citizen throughout the United States should be acquainted with the date of their law, which would do away all confidence in bank paper. The result of this uncertainty would be that the banks would have to call in all their outstanding notes, which would cause an immediate depreciation of their value. He trusted, therefore, that so objectionable a measure would not be entered upon.
Mr. Gallatin said, he had had his doubts with respect to the propriety of stamping bank notes; he was not sure whether it might not have a dangerous effect on their circulation. On a further consideration of the subject, however, all his doubts had vanished. He now thought this amendment essential, just, and right. Indeed, when they proposed to lay a stamp duty upon all bills and notes, there appeared to be no good reason why the notes of any incorporation whatever should be excepted. He had heard only one objection; which was, that these notes differed essentially from others, because they were the real representatives of specie kept in the bank from whence they were issued. He could not see the distinction endeavored to be drawn. Private notes were always given for some consideration, whether for cash or other property, was of no consequence to them. Indeed, if they turned their attention to the nature of bank notes, they would be found to be a very fair object of taxation.
Where an individual gave his note, it was not likely that he would derive any profit from it; many of such notes were what was called "accommodation notes;" all were acknowledgments of debt, and therefore no proofs of wealth; but bank notes were never issued except to produce a profit to the bank; therefore, to exempt them from duty, would be to exempt those which were best entitled to pay.
The only objection would be, any inconvenience which might take place to counterbalance the benefit to be derived from the tax. It had been supposed that a depreciation would take place in the value of the notes in consequence of this tax. In order to show that this was not probable, he supposed the tax would be laid.
Bank notes were issued and re-issued; but when an individual gave a note, after it was paid, there was an end of it. Bank notes might be issued twenty-times, or oftener; it was necessary, therefore, to tax them in a different way from other notes. He supposed the same provision might be adopted here as was adopted in England. They might be allowed to be issued for a certain number of years—say three. This would remedy every kind of inconvenience arising from reissuing. As to notes now in circulation, the way to prevent inconvenience would be to fix the time after which all notes should be renewed by stamped notes. The consequence would be, that all notes would, by degrees, be returned to the bank, and no difficulty would arise from doing so. Six or nine months might be allowed for this purpose. This was the way in which all the banks in England, except the Bank of England, were subject to the stamp duty; that bank, he believed, had paid a certain sum to be excused from the tax. Perhaps the same privilege might be allowed here.
Mr. Nicholas noticed what had fallen from the gentleman from Pennsylvania on the subject of depreciation, and showed by the regulations under which the tax would be paid, that it could not take place.
Mr. Rutledge thought bank notes a proper object of taxation, and had not heard one good reason why they should be exempted from the proposed duty. The arguments of his colleague (Mr. Smith,) that bank notes now in circulation would be affected, and their currency checked, he would answer, by observing that the duty could not operate upon notes now in circulation; it was not proposed to have them called in, but to have those stamped which shall be issued after a certain day. He did not think the weight and importance which generally attach to the observations of the gentleman from Pennsylvania (Mr. Sitgreaves) attach to those now offered by him. With respect to the circulation of bank notes being embarrassed by the necessity there would be for the people at large being acquainted with the date of the law, the objection would apply to private as well as bank notes. The people throughout the country must inform themselves, and the most ignorant will inform themselves of the date of the act; and whenever a bank note or a private note shall be offered to them, they will always inquire if it was issued subsequent or previous to a certain day. The gentleman from New York (Mr. Brooks) was certainly incorrect in saying that "bank paper was not stamped in any country whatever." In Great Britain, Mr. R. said, the paper of all private banks is stamped; that of the Bank of England has been exempted from the stamp duty, by the bank having paid the Government a sum, in gross, by way of commutation. Although the moneyed interest has always been well and largely represented in England, yet bank notes are taxed there, and the circulation of them has not been embarrassed by this duty; on the contrary, the system of banking has been wonderfully extended throughout that kingdom. In every part of it bank notes are current; every town and village has its banks; they are as universal as their churches. Mr. R. asked, where would be the propriety of taxing notes issued by fifty individuals in their individual capacity, and exempting those issued by them when they associated, called themselves a Banking Company, and issued notes to three times the amount of their capital? The measure seemed to him unwise, and he was sure it would be unpopular. He could not conceive why people who had no other property than stock, which, in many instances, yielded an interest of fifteen per cent., should not contribute to the support of Government.
Mr. Swanwick.—The greatest objection which the banks in England seemed to have to the tax, was, that it might ascertain the quantity of notes they had in circulation. In order to prevent this, the Bank of England commuted with Government for a certain sum; but the notes of all the private banks were stamped. He thought it reasonable that this kind of notes should be stamped as well as others, though he would have the tax low; for he saw no reason why merchants should pay, and bankers be excused from the duty, since great emolument was derived from these notes, by the consent of the community, and the community, in return, had a right to expect assistance from the banks.