ing capital of the State, were organized under special charters, granted prior to the commencement of the National system, which the State had no power to change. There was no discrimination as between National bank shares and those of State banks not so specially exempted. The court construed the clause of the Federal law in question to mean only that the State, as a condition to the exercise of the power to tax the shares of National banks, shall, as far as it has retained the capacity, tax in like manner the shares of banks of its own creation.

The Act of February 10th, 1868, was passed to further define the place and manner of taxation of National bank shares, amending Section 41 of the Act of June 3d, 1864. It may perhaps be regarded as superseding that section to the extent of dropping out the proviso that shares of National banks shall be taxed at a rate no greater than is imposed on the shares of State banks. This appears to be the view taken by Congress in 1873, when approving the Revised Statutes, as in Section 5219 as it now stands this proviso is not included.

The validity of State taxation on National bank shares is, under this section, to be determined solely by the inquiry whether it is at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens. There has, however, been great difficulty in so regulating the taxation of National bank shares by the States as to conform strictly to the intent of this law. As a consequence, in many of the States, National bank shares, in the assessment and collection of taxes, have, it is alleged, been in different ways subjected to severe and unjust discrimination, as compared with other moneyed capital. Some of the methods of discrimination are as follows:

"(1.) Differences are made in the valuation of National bank shares for purposes of assessing taxes as compared with the valuation of other moneyed capital for the same purpose.

(2.) The individual holders of other moneyed capital have been allowed to make deductions on account of certain exemptions, such as debts owed by such individual holders, when holders of National bank shares were not permitted to deduct their debts from the value of such shares.

(3.) In the different States distinctions are made in the taxation of various kinds of moneyed capital, other than National bank shares, in the hands of individual citizens, and the standard by which the taxation of National bank shares is to be legally measured becomes thus confused.

'Many forms of moneyed capital in the hands of individual citizens are altogether exempted by law from taxation, while National bank shares are taxed. The difficulty arises in deciding by which class of moneyed capital the tax on National bank shares is to be guided; whether there is to be no tax, as in case of exempted moneyed capital; a less tax, as in case of the class of moneyed capital taxed at a less rate; or a greater tax, as in case of the class of moneyed capital taxed at a greater rate.

"All of these forms of discrimination have been passed on in litigation which has come before the United States Supreme Court.

46

In Ohio the law provided certain State boards for equalizing the taxation on real estate, on railroad capital, and on capital invested in bank shares; but there was no State board for equalizing the taxation on personal property other than bank shares, railroad stock, or other moneyed capital. The equalization as to all other personal property assessed ceased with the county boards of equalization, but the county boards throughout the State fixed the valuation of moneyed capital for purposes of taxation at six-tenths of its true value, while the State board fixed the taxable value of bank shares at their actual cash value. The rates of taxation being the same, bank shares were discriminated against to the extent of four-tenths of their value. In New York the law permitted the deduction of just debts of an individual from his personal property, including his moneyed capital, excepting only his bank shares.

In Pelton v. Commercial National Bank of Cleveland, (101 U. S., p. 143,) and in Cummings v. Merchants' National Bank of Toledo, (101 U. S., p. 153,) the United States Supreme Court decided the question of discrimination arising under the laws of Ohio. In those cases it was held that a tax upon National bank shares valued for taxation at a higher rate than other moneyed capital was invalid, and that upon

payment of the amount justly assessable a court of equity would enjoin the collection of the residue, but that the bank must pay the portion of the taxes justly due.

"In People v. Weaver, (100 U. S., p. 539,) a case arising under the New York law, the Supreme Court decided that the word rate in the provision of Section 5219, United States Revised Statutes, that taxation shall not be at a greater rate than is assessed upon other moneyed capital in the hands of individuals applies to and includes as well the valuation of shares for taxation as the rate of taxes to be imposed, and that the law of the State of New York, which permitted a party_to deduct his just debts from the value of all his personal property, except his National bank shares, was void as to the taxation of such bank shares. The case of Evansville Bank v. Britton, (104 U. S., p. 323,) arising under the law of Indiana, taxing National bank shares, supports the same doctrine. These cases disposed of the first two forms of discriminations already mentioned, and pointed out the proper remedy to be pursued by banks in avoiding the payment of taxes illegally assessed. Supervisors v. Stanley (104 U. S., p. 305) decides questions arising as to the recovery of excessive taxes which have been paid by the shareholders of National banks.

"Under the third class of discrimination, where doubt as to the proper taxation of National bank shares arises from the fact that under State law a discrimination is made in taxing different classes of other moneyed capital in the hands of individual citizens, the important cases decided in the United States Supreme Court are Lionberger v. Rouse, (9 Wall.,) already mentioned; Hepburn v. School Directors, (23 Wall., 480,) and the recently decided case of Boyer v. Boyer. In Lionberger v. Rouse a discrimination was made by the State in taxing shares of banks organized under its own laws, one class of banks being taxed at a higher rate than another. At that time, as has been seen, the law in force measured the taxation of National bank shares by the taxation of State bank shares, and in this case the United States Supreme Court held a tax on National bank shares to be valid which did not exceed the tax imposed upon the larger bulk of State bank shares. In Hepburn v. School Directors (23 Wall., 480) it was held by the United States Supreme Court that the exemption by State law from taxation of a small portion of other moneyed capital in the hands of individual citizens was not a reason for exempting National bank shares from taxation. In this case also it was held that shares of National banks might be taxed at an amount exceeding their par value if their market value exceeded their par value.

"In the case of Boyer v. Boyer the Supreme Court decided that if the great bulk of moneyed capital in the hands of individual citizens is exempted by State law from municipal taxation, that under the law of Congress National bank shares must be exempted also. The court says that cases will arise in which it will be difficult to determine whether the exemption of the particular part of moneyed capital in individual hands is so serious or material as to infringe the rules of substantial equality that a proper construction of the Act of Congress forces the conclusion that capital invested in National bank shares was intended to be placed upon the same footing of substantial equality in respect to taxation by State authority with other moneyed capital in the hands of individual citizens, however invested.

"The question is frequently asked whether National ́bank notes in the hands of individual citizens are liable to State taxation. Section 3707 of the Revised Statutes provides that all stocks, bonds, Treasury notes, and other obligations of the United States shall be exempt from taxation by or under State, or municipal, or local authority. In Section 5413, Revised Statutes, the words 'obligation of the United States is held to include National bank currency. The question of the taxability of National bank currency arose in the case of the Board of Commissioners in Montgomery County v. Elston, (32 Ind., 27,) and it was decided by the Supreme Court of the State that National bank currency is not exempt from taxation by the State. The court held that the provision of law making National currency an obligation of the United States only intended to throw around National currency the same guards against counterfeiting that were by law provided for obligations of the United States, and not to generally define National currency. as an obligation of the United States.

"In the case of Horne v. Greene, in the Supreme Court of the State of Mississippi, (52 Miss., 452,) it was decided that the circulating notes of National banks

are not subject to State taxes. The question, therefore, still appears to be an open

one.'

It only remains to add that under various decisions a license tax imposed on National banks by State or municipal authority has been decided to be illegal and void, a tax on shares being the exclusive way in which such banks may be taxed by State authority.

96. Bank Examiners: Duties, Powers, &c.

SECTION 5240.—The Comptroller of the Currency, with the approval of the Secretary of the Treasury, shall, as often as shall be deemed necessary or proper, appoint a suitable person or persons to make an examination of the affairs of every banking association, who shall have power to make a thorough examination into all the affairs of the association, and, in doing so, to examine any of the officers and agents thereof on oath ; and shall make a full and detailed report of the condition of the association to the Comptroller. All persons appointed to be examiners of National banks not located in the redemption cities specified in section five thousand one hundred and ninety-two of the Revised Statutes of the United States, or in any one of the States of Oregon, California, and Nevada, or in the Territories, shall receive compensation for such examination as follows: For examining National banks having a capital less than one hundred thousand dollars, twenty dollars; those having a capital of one hundred thousand dollars and less than three hundred thousand dollars, twenty-five dollars; those having a capital of three hundred thousand dollars and less than four hundred thousand dollars, thirty-five dollars; those having a capital of four hundred thousand dollars and less than five hundred thousand dollars, forty dollars; those having a capital of five hundred thousand dollars and less than six hundred thousand dollars, fifty dollars; those having a capital of six hundred thousand dollars and over, seventy-five dollars; which amounts shall be assessed by the Comptroller of the Currency upon, and paid by, the respective associations so examined, and shall be in lieu of the compensation and mileage heretofore allowed for making said examinations; and persons appointed to make examinations of National banks in the cities named in section five thousand one hundred and ninety-two of the Revised Statutes of the United States, or in any one of the States of Oregon, California, and Nevada, or in the Territories,

shall receive such compensation as may be fixed by the Secretary of the Treasury upon the recommendation of the Comptroller of the Currency; and the same shall be assessed and paid in the manner hereinbefore provided. But no person shall be appointed to examine the affairs of any banking association of which he is a director or other officer.

See Act of February 19th, 1875, amending Rev. Stats., page 99. Also Act of July 12th, 1882, sec. 3, page 108.

The examinations mentioned in this section are, as a rule, made about once a year in the case of each National bank. There is no provision as to the number of persons who may be employed as examiners by the Comptroller, or the number of times he may examine each bank within a given period. In practice, the territory of the United States is laid off into districts, which districts are, however, varied from time to time to suit the convenience of the Comptroller's office, or to conform to its views as to the efficiency of the service.

A National bank examiner receives a regular appointment and then awaits orders from the Comptroller. He may be assigned to a district, or may be employed at large. An examiner may be employed steadily in one district, or he may be shifted from one district to another. There is no fixed salary. The amount earned each year depends on the number of banks which each examiner has assigned to him for examination. When the reports are received from the examiners they are scrutinized in the Comptroller's office, and if they iudicate faults in the management of the banks, letters are addressed usually to the president or cashier calling attention to the points where improvement is necessary; sometimes, in bad cases, the directors are addressed either singly or collectively. The examiners from time to time send in their bills to the Comptroller, who, finding such bills correct, assesses each bank of which examination has been made according to the legal rule. When the money is paid in to the Comptroller by the banks it is sent to the examiner. The examiner has no right to ask a bank for any money in any way, shape, or form. His dealings are with the Comptroller, from whom he receives his directions and to whom he renders his bills.

97. Limitation of Visitorial Powers.

SECTION 5241.-No association shall be subject to any visitorial powers other than such as are authorized by this Title, or are vested in the courts of justice.

Section 5242, page 70.

The only visitorial powers mentioned in the Act are those mentioned in the preceding section and in Section 5210, which permits officers authorized to assess taxes under State authority to inspect list of stockholders during business hours. There are, also, the general visitorial powers of the Comptroller of the Currency. The courts of justice have of course the same power as they have over other persons or corporations, and subject to the same limitations of jurisdiction.

98. Use of the word "National" in the Title.

SECTION 5243.-All banks not organized and transacting

business under the National currency laws, or under this Title, and all persons or corporations doing the business of bankers, brokers, or savings institutions, except savings banks authorized by Congress to use the word "national" as a part of their corporate name, are prohibited from using the word "national" as a portion of the name or title of such bank, corporation, firm, or partnership; and any violation of this prohibition committed after the third day of September, eighteen hundred and seventy-three, shall subject the party chargeable therewith to a penalty of fifty dollars for each day during which it is committed or repeated.

The penalty under this section is a general one. If any one has knowledge of a violation of this provision he can lay a complaint before a United States commissioner, or the attention of the United States attorney of the district where the offense has been committed can be called to it.

DISSOLUTION AND RECEIVERSHIP.

99. Voluntary Liquidation.

SECTION 5220.-Any association may go into liquidation and be closed by the vote of its shareholders owning two-thirds of its stock.

Stockholders owning two-thirds of the stock of a National bank have it in their power to close their association at any time. As a vote is necessary a meeting must be held. Due notice of a meeting for this purpose should be given to each stockholder. Legal notice under the laws of the State where the bank is located is all' that is required. This may be by mail or by publication. A stockholder who receives legal notice and who does not attend the meeting, either in person or by proxy, cannot protest against anything legally done at that meeting. Two-thirds of the stock must vote for the liquidation, and it is best to keep a complete and accurate record of the proceedings of the meeting. In the conduct of the meeting the by-laws of the bank, if any have been adopted, should be strictly observed. There is no need of consulting the Comptroller's office in regard to this action; it is one that can be taken by the stockholders of their own volition.

100. Notice of Intention to go into Liquidation. SECTION 5221.-Whenever a vote is taken to go into liquidation it shall be the duty of the board of directors to cause notice of this fact to be certified, under the seal of the association, by its president or cashier, to the Comptroller of the Currency, and the publication thereof to be made for a period of two months in a newspaper published in the city of New York, and also in a newspaper published in the city or town in which the association is located, or if no newspaper is there