tolerated, except our own, in which it was not taxed. In Great Britain – that country from which we borrow the banking system – the banking interest pays its fair and full proportion of the public taxes: it pays at present near four millions of dollars. It paid in 1836 the sum of $3,725,400: in 1837 it paid $3,594,300. These were the last years for which he had seen the details of the British taxation, and the amounts he had stated comprehended the bank tax upon the whole united kingdom: upon Scotland and Ireland, as well as upon England and Wales. It was a handsome item in the budget of British taxation, and was levied on two branches of the banking business: on the circulation, and on bills of exchange. In the bill which he intended to bring forward, the circulation alone was proposed to be taxed; and, in that respect, the paper system would still remain more favored here than it was in Great Britain.
In our own country, Mr. B. said, the banking interest had formerly been taxed, and that in all its branches; in its circulation, its discounts, and its bills of exchange. This was during the late war with Great Britain; and though the banking business was then small compared to what it is now, yet the product of the tax was considerable, and well worth the gathering: it was about $500,000 per annum. At the end of the war this tax was abolished; while most of the war taxes, laid at the same time, for the same purpose, and for the same period, were continued in force; among them the tax on salt, and other necessaries of life. By a perversion of every principle of righteous taxation, the tax on banks was abolished, and that on salt was continued. This has remained the case for twenty-five years, and it is time to reverse the proceeding. It is time to make the banks pay and to let salt go free.
Mr. B. next stated the manner of levying the bank tax at present in Great Britain, which he said was done with great facility and simplicity. It was a levy of a fixed sum on the average circulation of the year, which the bank was required to give in for taxation like any other property, and the amount collected by a distress warrant if not paid. This simple and obvious method of making the levy, had been adopted in 1815, and had been followed ever since. Before that time it was effected through the instrumentality of a stamp duty; a stamp being required for each note, but with the privilege of compounding for a gross sum. In 1815 the option of compounding was dropped: a gross amount was fixed by law as the tax upon every million of the circulation; and this change in the mode of collection has operated so beneficially that, though temporary at first, it has been made permanent. The amount fixed was at the rate of £3,500 for every million. This was for the circulation only: a separate, and much heavier tax was laid upon bills of exchange, to be collected by a stamp duty, without the privilege of composition.
Mr. B. here read, from a recent history of the Bank of England, a brief account of the taxation of the circulation of that institution for the last fifty years – from 1790 to the present time. It was at that time that her circulation began to be taxed, because at that time only did she begin to have a circulation which displaced the specie of the country. She then began to issue notes under ten pounds, having been first chartered with the privilege of issuing none less than one hundred pounds. It was a century – from 1694 to 1790 – before she got down to £5, and afterwards to £2, and to £1; and from that time the specie basis was displaced, the currency convulsed, and the banks suspending and breaking. The government indemnified itself, in a small degree, for the mischiefs of the pestiferous currency which it had authorized; and the extract which he was about to read was the history of the taxation on the Bank of England notes which, commencing at the small composition of £12,000 per annum, now amounts to a large proportion of the near four millions of dollars which the paper system pays annually to the British Treasury. He read:
"The Bank, till lately, has always been particularly favored in the composition which they paid for stamp duties. In 1791, they paid composition of £12,000 per annum, in lieu of all stamps, either on bill or notes. In 1799, on an increase of the stamp duty, their composition was advanced to £20,000; and an addition of £4,000 for notes issued under £5, raised the whole to £24,000. In 1804, an addition of not less than fifty per cent. was made to the stamp duty; but, although the Bank circulation of notes under £5 had increased from one and a half to four and a half millions, the whole composition was only raised from £24,000 to £32,000. In 1808, there was a further increase of thirty-three per cent. to the stamp duty, at which time the composition was raised from £32,000 to £42,000. In both these instances, the increase was not in proportion even to the increase of duty; and no allowance whatever was made for the increase in the amount of the bank circulation. It was not till the session of 1815, on a further increase of the stamp duty, that the new principle was established, and the Bank compelled to pay a composition in some proportion to the amount of their circulation. The composition is now fixed as follows: Upon the average circulation of the preceding year, the Bank is to pay at the rate of £3,500 per million, on their aggregate circulation, without reference to the different classes and value of their notes. The establishment of this principle, it is calculated, caused a saving to the public, in the years 1815 and 1816, of £70,000. By the neglect of this principle, which ought to have been adopted in 1799, Mr. Ricardo estimated the public to have been losers, and the Bank consequently gainers, of no less a sum than half a million."
Mr. B. remarked briefly upon the equity of this tax, the simplicity of its levy since 1815, and its large product. He deemed it the proper model to be followed in the United States, unless we should go on the principle of copying all that was evil, and rejecting all that was good in the British paper system. We borrowed the banking system from the English, with all its foreign vices, and then added others of our own to it. England has suppressed the pestilence of notes under £5 (near $25); we retain small notes down to a dollar, and thence to the fractional parts of a dollar. She has taxed all notes; and those under £5 she taxed highest while she had them; we, on the contrary, tax none. The additional tax of £4,000 on the notes under £5 rested on the fair principle of taxing highest that which was most profitable to the owner, and most injurious to the country. The small notes fell within that category, and therefore paid highest.
Having thus shown that bank circulation was now taxed in Great Britain, and had been for fifty years, he proceeded to show that it had also been taxed in the United States. This was in the year 1813. In the month of August of that year, a stamp-act was passed, applicable to banks and to bankers, and taxing them in the three great branches of their business, to wit: the circulation, the discounts, and the bills of exchange. On the circulation, the tax commenced at one cent on a one dollar note, and rose gradually to fifty dollars on notes exceeding one thousand dollars; with the privilege of compounding for a gross sum in lieu of the duty. On the discounts, the tax began at five cents on notes discounted for one hundred dollars, and rose gradually to five dollars on notes of eight thousand dollars and upwards. On bills of exchange, it began at five cents on bills of fifty dollars, and rose to five dollars on those of eight thousand dollars and upwards.
Such was the tax, continued Mr. B., which the moneyed interest, employed in banking, was required to pay in 1813, and which it continued to pay until 1817. In that year the banks were released from taxation, while taxes were continued upon all the comforts and necessaries of life. Taxes are now continued upon articles of prime necessity – upon salt even – and the question will now go before the Senate and country, whether the banking interest, which has now grown so rich and powerful – which monopolizes the money of the country – beards the government – makes distress or prosperity when it pleases – the question is now come whether this interest shall continue to be exempt from tax, while every thing else has to pay.
Mr. B. said he did not know how the banking interest of the present day would relish a proposition to make them contribute to the support of the government. He did not know how they would take it; but he did know how a banker of the old school – one who paid on sight, according to his promise, and never broke a promise to the holder of his notes – he did know how such a banker viewed the act of 1813; and he would exhibit his behavior to the Senate; he spoke of the late Stephen Girard of Philadelphia; and he would let him speak for himself by reading some passages from a petition which he presented to Congress the year after the tax on bank notes was laid.
Mr. B. read:
"That your
