The House resolved itself into a Committee of the Whole on the bill
laying duties on stamped vellum, parchment, and paper, when
Mr. NICHOLAS moved to strike out the clause exempting bank notes from
duty, as he could see no reason why notes upon which a profit was made,
should be exempted from duty more than others. He trusted all notes
would be placed on the same footing.
Mr. W. SMITH hoped gentlemen did not mean, by moving to strike out this
exemption, to destroy the bill. He thought the observation of the
gentleman from Connecticut yesterday, against embarrassing the bill by
doubtful objects, had weight. On this ground, though he was before of
opinion deeds ought to have been inserted, he did not vote for inserting
them. He trusted the gentleman had not fully considered the subject, and
that when he did so, he would not persist in his motion.
Mr. NICHOLAS believed if the favorite object of every gentleman were to
be exempted, there would be nothing left upon which to lay a tax. If to
oppose this, were to defeat the bill, he meant to defeat it; as he
wished the tax to go to all objects of the same kind. He had no idea of
favoring one interest at the expense of another; he hoped, therefore,
his amendment would be agreed to.
Mr. LYON expected the gentleman from South Carolina was about to have
given some reasons why bank notes ought not to be taxed as well as
others; but he was disappointed. He believed those who issued these
notes got a good profit from them, and that it was, therefore,
reasonable they should pay their proportion towards the support of
Government.
Mr. W. SMITH thought the tax an improper one. Banks were taxed in
another part of the bill, on the transfer of their shares. A tax on
bank notes, he said, would introduce a vast deal of confusion throughout
the country. As for himself he did not care any thing about it; but he
believed, if it were agreed to, it would produce so many objections
against the bill as to prevent its passing.
Mr. BROOKS was against stamping bank notes, as they were not stamped in
any country whatever.[19] Indeed they were different from other notes,
as they were the representatives of specie; they might, therefore, as
well stamp dollars or guineas. In short, the subject was too important
and intricate to be gone into at this late period of the session.
Mr. VENABLE said, in proportion as the tax was general, it would be
just. What was the object of the bill? It was to tax that right which an
individual possesses in society, of transferring his property, and the
evidences of it; it was also to tax him for the right he had of using
his credit. Though the argument of the gentleman last up might appear
specious, that a bank note was the representative of specie, it was not
very solid; it was the representative of the credit of the bank, and
circulated for its interest. An individual, if he had sufficient credit,
might issue notes as well as a corporation; and, in that case, his notes
would be charged with the duty, whilst those of a corporation would not.
From whence, said Mr. V., is this reasoning drawn? It was drawn from the
doctrine of favoritism--it was meant to favor the moneyed interest,
which was already sufficiently encouraged by their incorporation. There
seemed to be no objection to the principle; but merely to the
convenience of the thing. If it could be shown that the tax would
materially operate upon the circulation of bank notes, so as to injure
the operation of money transactions, it might have some weight with him;
but it was none, to say this bill must pass, and therefore let us avoid
any thing in which there may be any difficulty. Such assertions went
only to this, where you can tax the property of an individual, do it;
but do not meddle with corporations, as this would be attended with some
difficulty. He wished, if the bill passed, that it should operate
equally.
Mr. COIT wished the gentleman from Virginia would withdraw his motion,
until he took the sense of the committee upon one which he proposed to
make, and which was calculated, if agreed to, to supersede the one he
had made. He would state what it was. It was his opinion that small
notes should be exempted from duty. He should propose, therefore, that
there should be charged on all notes exceeding fifty dollars and not
exceeding one hundred dollars, ten cents, and that all of less value
should go free.
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.
Mr. W. SMITH believed, if an original proposition had been brought
forward to tax bank notes, it would have been thought a very serious
thing, and they should have paused before they consented to the
proposition. Gentlemen who advocated this proposition, allowed it would
require many provisions to carry it into effect. What those provisions
were he could not pretend to say. He thought bank notes had been too
much confounded with notes of individuals, and they were quite different
things. Those of individuals were mostly larger, the greatest part of
bank notes were for five dollars. Notes of individuals, if not stamped,
could not be received in evidence; but he did not know what must be the
penalty on bank notes being issued without stamp. Besides, he said, to
lay a duty upon the notes issued by the Bank of the United States would
be a violation of its charter, for, by that charter, it was said, the
notes of that bank should be received at the custom-house in payment of
duties. It had been said a commutation might be allowed, but that would
be equally contrary to the charter; besides, if such a thing were to be
done, he did not know who could do it; it would not be the proper
business of the PRESIDENT, and that House would have difficulty in
saying what would be a proper sum to be paid for the purpose. He again
feared the introduction of this principle would destroy the bill.
Mr. COIT did not think it was quite so clear a thing as some gentlemen
seemed to think it, that bank notes ought to be stamped. He did not
believe the analogy between the bank and private notes was so strong as
had been represented. If the facts were as represented, that every bank
note was to be considered as producing a profit to the banker, there
would be good ground for the tax; but he was of opinion this was not the
case. For instance, if the bank gave their note for one hundred dollars,
it was equal evidence with the note of an individual, that they had
received the value of one hundred dollars. But if they went further, it
would be found the analogy did not hold. The note of the individual was
at a certain date, but that of the banker was on demand; and they were
every day liable to be called upon for the money of which the note was
the representative; so that they were obliged to keep the money, or
money at least to a great amount, ready to take up their notes whenever
presented. Banks could not, therefore, be considered as receiving a
profit on all the notes they issued; but only upon the difference
between the amount of notes issued, and the cash they are obliged to
keep by them to answer their demands. The analogy, therefore, did not
hold; and, if bank notes were taxed, it must be upon a different
principle from that on which the notes of individuals are taxed.
Mr. POTTER was in favor of the amendment, and he trusted that gentlemen
who were always ready to go into every species of expense, would not
flinch when the object was to raise money. He had this morning voted for
a bill laying additional tax on licenses, which he believed would be
found in some degree oppressive, but he did it because he knew revenue
was wanted. He hoped the gentleman from South Carolina would, on this
occasion, concur in the proposed tax. He doubted not unexceptionable
means might be devised for collecting it; if not, it might be given up.
Mr. HARPER was against the amendment, not because he was satisfied bank
notes were not a proper object of taxation, but because he did not wish
to embarrass the bill with a subject which they had not time to
consider.
Mr. SWANWICK again spoke in favor of the tax.
Mr. OTIS was against the amendment; not because he thought such a tax
would be improper, but from the difficulties which would attend the
carrying it into effect. Besides, he said, if the notes were to revert
to the bank every two or three years, it would cause a run upon them for
cash, instead of renewed notes, which might be very inconvenient.
Mr. VENABLE did not think the run upon the bank which the gentleman had
mentioned could take place, as the notes would have to be renewed three
years from the time issued, and all their notes would not be issued on
one day. Mr. V. again insisted that this tax should be general; and if
they had not time to make it so, it ought to be put off till they had.
Not to include bankers would be to lay a tax upon the people whose
complaints of its hardships could not be heard. He deprecated this as
unjust.
Mr. HARPER could not conceive that the great body of merchants and
farmers throughout the United States were people who could not make
their complaints heard, if they had them to make. The proprietors of
banks, Mr. H. said, already paid taxes in a variety of shapes; many of
them were merchants, and would, of course, pay the tax imposed on the
notes of individuals.
Mr. BROOKS was against going into a tax on bank notes at present, but
denied that there would be any cause of complaint from the people on
account of the taxes imposed by this bill. He wished to make a beginning
with a stamp tax at present; it might not be completed these seven
years. Gentlemen might as well go on and propose a tax on newspapers,
which, whatever might be said against it, he believed might be laid
without infringing the liberty of the press; but a thing of this kind
would require a great deal of detail.
Mr. CLAIBORNE was in favor of including bank notes; not to do this, he
said, would be to catch _small fish_, and let the _large ones_ pass.
Mr. GALLATIN said that the provisions for laying this tax would be by no
means difficult. Indeed, three-fourths of the bill was copied from the
British statute, and that part respecting bank notes could be as easy
copied as any other part. The observations respecting the charter of the
Bank of the United States, were not deserving of a reply. There was only
one of two things which could be done, either to tax bank notes, or to
excuse all other notes from the tax.
Mr. SITGREAVES could not submit to hear that it was the intention of
those who opposed this motion, to screen the moneyed interest of this
country from paying a tax. He had no such views. He had no objection to
tax the banks in proportion to the amount of their business; but he
could not agree to its being done in this way. If gentlemen would
estimate how much the stamp duty of a bank would produce to the United
States, he would vote for a sum of this kind by way of commutation.
Charges could rarely be made against the side of the House with whom he
generally acted, for not being willing to vote for revenue; a contrary
charge was more frequently made. He trusted the amendment would not be
agreed to; but that if the tax were laid, it would be by way of
commutation.
The question was taken and carried, there being 55 votes in favor of it.
The committee rose and had leave to sit again.
The resolution respecting an adjournment was received from the Senate,
and disagreed to. The disagreement being read, Mr. GILES moved the same
resolution filled with Monday next; but Mr. WILLIAMS opposed it, and
moved to adjourn.
THURSDAY, June 29.
_Stamp Duties._