cannot complain of such a statute, if he owes no debts, and that shareholders who do owe debts are not entitled to a release from the whole tax, but merely to a release to the extent to which they are entitled to a deduction of their debts.& To render a tax upon shares in national banks invalid because of the allowance of deduction of debts from the valuation of other moneyed capital, the extent to which such deductions are allowed must be so large and substantial as to constitute a material discrimination against the capital invested in such shares. It has been held, therefore, that, to defeat an assessment of taxes upon shares in a national bank, it is not enough to show merely that the statutes permit some debts to be deducted from some moneyed capital, but not from that which is invested in such shares.10 § 4602. Effect of exemptions. It has been said in some of the cases that the provision in the act of Congress that the taxation of national bank shares shall not be at a greater rate than is assessed upon other moneyed capital was not intended to, and does not, prevent a state from exempting any subject of taxation, including other moneyed capital, from taxation.11 This statement, however, is too broad. Shares in national banks cannot be subjected to taxation by 32 Neb. 834, 13 L. R. A. 614, 49 N. W. 787, overruling 25 Neb. 468, 41 N. W. 356. Where a statute allows a deduction of legal bona fide debts owing by citizens of the state to be made from credits held by them for purposes of taxation, but the courts of the state hold that such deduction is not allowable from shares in a national bank, this is a discrimination in favor of other moneyed capital and against national bank shares. The fact that the deduction is also denied in the case of shares of railroad, insurance and manufacturing companies is immaterial, for they are not "moneyed capital." Mercantile Nat. Bank of Cleveland v. Shields, 59 Fed. 952. Where a nonresident shareholder in a national bank is compelled to pay a tax at the place where the bank is located, as permitted by the act of Congress, he is entitled to all dedue tions from the valuation of his shares, on account of debts, that are allowed to resident shareholders. Mercantile Nat. Bank of Cleveland v. Shields, 59 Fed. 952. 8 Board Sup'rs Albany Co. V. Stanley, 105 U. S. 305, 26 L. Ed. 1044. 9 First Nat. Bank of Garnett v. Ayers, 160 U. S. 660, 40 L. Ed. 573. And see First Nat. Bank of Wellington v. Chapman, 173 U. S. 205, 43 L. Ed. 669; Bressler v. Wayne County, Neb. 834, 13 L. R. A. 614, 49 N. W. 787, overruling 25 Neb. 468, 41 N. W. 356; Chapman v. First Nat. Bank, 56 Ohio St. 310, 47 N. E. 54; Niles v. Shaw, 50 Ohio St. 370, 34 N. E. 162. 32 10 First Nat. Bank of Garnett v. Ayers, 160 U. S. 660, 40 L. Ed. 573. 11 See Gorgas' Appeal, 79 Pa. St. 149; Everitt's Appeal, 71 Pa. St. 216; McLaughlin v. Chadwell, 7 Heisk. (Tenn.) 389. the state, or to local taxation under the authority of the state, where a very material part, relatively, of other moneyed capital in the hands of individual citizens within the state, or within the particular taxing district, as the case may be, is exempted from taxation. To allow this would be to allow the discrimination against shares in national banks and in favor of other moneyed capital which it was the purpose of the act of Congress to prevent.12 A state cannot tax shares in national banks, where shares in state banks are exempted from taxation, and not taxed either directly or indirectly.1 13 The act of Congress, however, was not intended to curtail the power of the states on the subject of taxation further than to prevent unfriendly discrimination against shares in national banks. It was not intended to prevent, and does not prevent, a state from exempting particular kinds of property from taxation, if the exemption does not amount to a real discrimination against such shares.14 The mere fact, therefore, that the state has exempted some banks or moneyed capital does not prevent it from taxing such shares. So, a state is not prevented from taxing shares in national banks because in chartering a state bank it has exempted it from taxation.15 The fact that deposits in savings banks are exempted from state taxation on grounds of public policy, as is the case in some states, does not operate as an unfriendly discrimination against investments in national bank shares, and cannot affect the rule for the taxation of the latter.16 § 4603. "Other moneyed capital in the hands of individual citizens." The term "moneyed capital," as used in the statute, embraces capital employed in national banks, and capital otherwise em 12 Boyer v. Boyer, 113 U. S. 689, 28 L. Ed. 1089; McHenry v. Downer, 116 Cal. 20, 45 L. R. A. 737, 47 Pac. 779. 13 McHenry v. Downer, 116 Cal. 20, 45 L. R. A. 737, 47 Pac. 779. And see Wright v. Stilz, 27 Ind. 338; Craft v. Tuttle, 27 Ind. 332. 14 Adams v. Nashville, 95 U. S. 19, 24 L. Ed. 369; Hepburn v. School Directors, 23 Wall. (U. S.) 480, 23 L. Ed. 112; Lionberger v. Rouse. 9 Wall. (U. S.) 468, 19 L. Ed. 721; People v. Commissioners of Taxes & Assessments of City & County of New York, 4 Wall. (U. S.) 244, 18 L. Ed. 344; Gorgas' Appeal, 79 Pa. St. 149; Everitt's Appeal, 71 Pa. St. 216; McLaughlin V. Chadwell, 7 Heisk. (Tenn.) 389. 15 Lionberger v. Rouse, 9 Wall. (U. S.) 468, 19 L. Ed. 721. 16 Aberdeen Bank V. Chehalis County, 166 U. S. 440, 41 L. Ed. 1069; Bank of Redemption v. Boston, 125 U. S. 60, 31 L. Ed. 689; Davenport Bank v. Davenport Board of Equalization, 123 U. S. 83, 31 L. Ed. 94; Mercantile Bank v. New York, 121 U. S. 138, 30 L. Ed. 895. ployed by individuals, when the object of their business is the making of profit by the use of their capital as money,-as in banking, loans, etc. But it does not include moneyed capital in the hands of a corporation, even if its business be such as to make its shares moneyed capital when in the hands of individuals, or if it invests its capital in bonds or other securities payable in money.17 Such term, it has been said, does not mean all capital the value of which is measured in terms of money, for in this sense all kinds of real and personal property would be included, since they all have an estimated value as the subjects of sale. Nor does it necessarily include all forms of investment in which the interest of the owner is expressed in money. Shares of stock in railroad companies, mining companies, manufacturing companies and other corporations are represented by certificates showing that the owner is entitled to an interest, expressed in money value, in the entire capital and property of the corporation; but the property of the corporation which constitutes its invested capital may consist mainly of real and personal property,18 which, in the hands of individuals, no one would think 17 Mercantile Bank v. New York, 121 U. S. 138, 30 L. Ed. 895; Mercantile Nat. Bank of Cleveland v. Shields, 59 Fed. 952. Discrimination between national banks is not forbidden, but only discrimination between such banks and state banks or other moneyed capital in the hands of private individuals. Merchants' & Manufacturers' Nat. Bank v. Pennsylvania, 167 U. S. 461, 42 L. Ed. 236. 18 Mercantile Bank v. New York, 121 U. S. 138, 155, 30 L. Ed. 895. In this case the court reached the conclusion that 'moneyed capital in the hands of individual citizens' does not necessarily embrace shares of stock held by them in all corporations where capital is employed, according to their respective corporate powers and privileges, in business carried on for the pecuniary profit of shareholders, "Ithough shares in some corporations, according to the nature of their busi ness, may be such moneyed capital," and, thus holding, said: "The key to the proper interpretation of the act of Congress is its policy and purpose. The object of the law was to establish a system of national banking institutions, in order to provide a uniform and secure currency for the people, and to facilitate the operations of the Treasury of the United States. The capital of each of the banks in this system was to be furnished entirely by private individuals; but, for the protection of the government and the people, it was required that this capital, so far as it was the security for its circulating notes, should be invested in the bonds of the United States. These bonds were not subjects of taxation; and neither the banks themselves, nor their capital, however invested, nor the shares of stock therein held by individuals, could be taxed by the states in which they were located without the consent of Con of calling moneyed capital, and its business may not consist in any gress, being exempted from the power of the states in this respect, because these banks were means and agencies established by Congress in execution of the powers of the government of the United States. It was deemed consistent, however, with these national uses, and otherwise expedient, to grant to the states the authority to tax them within the limits of a rule prescribed by the law. In fixing those limits it became necessary to prohibit the states from imposing such a burden as would prevent the capital of individuals from freely seeking investment in institutions which it was the express object of the law to establish and promote. The business of banking, including all the operations which distinguish it, might be carried on under state laws, either by corporations or private persons, and capital in the form of money might be invested and employed by individual citizens in many single and separate operations forming substantial parts of the business of banking. A tax upon the money of individuals, invested in the form of shares of stock in national banks, would diminish their value as an investment and drive the capital so invested from this employment, if at the same time similar investments and similar employments under the authority of state laws were exempt from an equal burden. main purpose, therefore, of Congress, in fixing limits to state taxation on investments in the shares of national banks, was to render it impossible for the state, in levying such a tax, to create and foster an unequal and unfriendly competition, by favoring institutions or individuals carrying on a similar business and operations and investments of a like character. The language of the act of Congress is to be read in the light of this policy. The Applying this rule of construction, we are led, in the first place, to consider the meaning of the words 'other moneyed capital,' as used in the statute. Of course it includes shares in national banks; the use of the word 'other' requires that. If bank shares were not 'moneyed capital,' the word 'other' in this connection would be without significance. But 'moneyed capital' does not mean all capital the value of which is measured in terms of money. In this sense, all kinds of real and personal property would be embraced by it, for they all have an estimated value as the subjects of sale. Neither does it necessarily include all forms of investment in which the interest of the owner is expressed in money. Shares of stock in railroad companies, mining companies, manufacturing companies, and other corporations, are represented by certificates showing that the owner is entitled to an interest, expressed in money value, in the entire capital and property of the corporation, but the property of the corporation which constitutes its invested capital may consist mainly of real and personal property, which, in the hands of individuals, no one would think of calling 'moneyed capital,' and its business may not consist in any kind of dealing in money, or commercial representatives of money. So far as the policy of the government in reference to national banks is concerned, it is indifferent how the states may choose to tax such corporations as those just mentioned, or the interest of individuals in them, or whether they should be taxed at all. Whether property interests in railroads, in manufacturing enterprises, in mining investments, and others of that description, are taxed or exempted from taxation, in the contemplation of the law, kind of dealing in money, or commercial representatives of money. would have no effect upon the success of national banks. There is no reason, therefore, to suppose that Congress intended, in respect to these matters, to interfere with the power and policy of the states. The business of banking, as defined by law and custom, consists in the issue of notes payable on demand, intended to circulate as money where the banks are banks of issue; in receiving deposits payable on demand; in discounting commercial paper; making loans of money on collateral security; buying and selling bills of exchange; negotiating loans, and dealing in negotiable securities issued by the government, state and national, and municipal and other corporations. These are the operations in which the capital invested in national banks is employed, and it is the nature of that employment which constitutes it in the eye of this statute 'moneyed capital.' Corporations and individuals carrying on these operations do come into competition with the business of national banks, and capital in the hands of individuals thus employed is what is intended to be described by the act of Congress. That the words of the law must be so limited appears from another consideration; they do not embrace any money capital in the sense just defined, except that in the hands of individual citizens. This excludes moneyed capital in the hands of corporations, although the business of some corporations may be such as to make the shares therein belonging to individuals moneyed capital in their hands, as in the case of banks. A railroad company, a mining company, an insurance company, or any other corporation of that description, may have a large part of its capital invested in securities payable in money, and so may be the owners of moneyed capital; but, as we have seen, the shares of stock in such companies held by individuals are not moneyed capital. The terms of the act of Congress, therefore, include shares of stock on other interests owned by individuals in all enterprises in which the capital employed in carrying on its business is money, where the object of the business is the making of profit by its use as money. The moneyed capital thus employed is invested for that purpose in securities by way of loan, discount, or otherwise, which are from time to time, according to the rules of the business, reduced again to money and reinvested. It includes money in the hands of individuals employed in a similar way, invested in loans, or in securities for the payment of money, either as an investment of a permanent character, or temporarily with a view to sale or repayment and reinvestment. In this way the moneyed capital in the hands of individuals is distinguished from what is known generally as personal property. Accordingly, it was said in Evansville Bank v. Britton, 105 U. S. 322 [26 L. Ed. 1053, 1054]: The act of Congress does not make the tax on personal property the measure of the tax on bank shares in the state, but the tax on moneyed capital in the hands of the individual citizen. Credits, money loaned at interest, and demands against persons or corporations, are more purely representative of moneyed capital than personal property, so far as they can be said to differ. Undoubtedly, there may be said to be much personal property exempt from taxation without giving bank shares a right to similar exemption, because personal property is not necessarily moneyed capital.'' Quoted in First Nat. Bank of Aber |