National bank

“ We say, therefore, in the words of the constitution, that a bank is necessary and proper, to enable the Government to carry into complete effect the right to lay and collect taxes, imposts, duties, and excises. We do not say that the existence of the Government absolutely depends upon the operations of a bank, but that a national bank enables the Government to manage its fiscal concerns more advantageously than it could do by any other means. ”

“ National banks are federal instrumentalities and the power of Congress over them is extensive. 'National banks are quasipublic institutions, and for the purpose for which they are instituted are national in their character, and, within constitutional limits, are subject to the control of Congress, and are not to be interfered with by state legislative or judicial action, except so far as the lawmaking power of the government may permit.' Van Reed v. ”

“ Assuming that we are all agreed as to the result of our talk last Wednesday night upon reserves, that they must be national to be equal and adequate, our conclusions now are inevitable, (1) we must give to the National banks the power to do a Savings bank business, as well as a Commercial business; (2) we must give our National banks the power to do a Trust Company business; (3) we must give our National banks the power to issue a pure credit Bank Note precisely like that issued by the Scotch Banks and the Canadian Banks, and was issued by the five hundred banks in New England before the war. ”

“ It appears to me that a national bank, with such modifications as experience has pointed out, and particularly such as would limit its profits, exclude foreign influence in the government of it, and give publicity to its transactions, is the only safe and certain remedy that can be adopted. The great want of the country is a general and uniform currency, and a point of union, a sentinel, a regulator of the issues of the local banks, and that would be supplied by such an institution. ”

“ A National Bank is forbidden to lend more than ten per cent. of its combined capital and surplus to any one firm or individual. "But the discount of bills of exchange drawn in good faith against actually existing values, and the discount of commercial or business paper actually owned by the person negotiating the same, shall not be considered as money borrowed." Also no National Bank can lend on its own stock as security. ”

“ A national bank enjoys such great advantages from the stability of its credit, and the regularity of its operations, that it is not easy for any other private company to establish themselves upon the same solid system. ”

“ Though the national banks' usefulness as an agency to provide for currency has diminished markedly, their importance as general bankers shows a constant growth. [15] We may assume that national banks possess only the powers conferred by Congress. ”

“ During the economic depression there was much agitation that bank failures were due to small undercapitalized rural banks and that these banks should be supplanted by branches of larger and stronger banks. The Comptroller of the Currency advocated that national banks be permitted to branch regardless of state law. ”

“ The act of February 25, 1863, with some subsequent amendments, was the beginning of the national bank system which has ever since prevailed and of which the London Times, not always a friendly critic of things American, said that "the genius of man has never invented a better system of finance." The creation of the national bank system was of great service to the government during the war inasmuch as it assured a certain market for the government bonds which were then issued. ”

“ The complaint is that the Eastern States have an undue amount of national-bank circulation, and therefore enjoy in a measure a monopoly. I admit this to be true. I will not discuss here the system of banking in all its aspects, but I will inquire how far the establishment of more national banks of issue in the West and South will remedy the real evil complained of—which evil consists in a lack of loanable capital there. If the remedy proposed is to serve any good purpose at all, then the establishment of new national banks of issue must increase the available amount of loanable money. ”

“ The act of Congress prescribes the conditions upon which National banks shall be created; the powers they shall possess; and the consequences of their failure to meet their obligations. All persons dealing with these institutions can only acquire and enforce rights against them under the limitations there designated.
The object of the act, as its title imports, was to create a National currency secured by a pledge of the bonds of the United States. ”

“ Much of the capital of the present bank was obtained from Europe. We are told in the report of the committee, that foreigners own stock to the amount of seven millions. Is it probable that these capitalists will be as ready to venture their money in the state banks, as in one chartered by the general government? Would they even venture it again in a national bank, after we had shown so vacillating a policy? We establish a bank of that description in 1791—we put it down in 1811, as unconstitutional—we charter another, five years afterwards, 1816, and discontinue that in 1836. ”

“ The principal checking accounts of the Government are carried today, not by national banks, but by the Federal Reserve banks. When a new issue of government securities is offered, the Federal Reserve banks receive the applications of purchasers. When government securities are to be redeemed or exchanged, the transactions are handled by the Federal Reserve banks. Those banks administer for the Treasury the tax and loan deposit accounts of the banks in their respective districts. See The Federal Reserve System: Purposes and Functions, supra, at 225-234, 274-277 ”

“ Because of pertinent congressional legislation in the banking field, we find it unnecessary to reach the constitutional question of whether today national banks should be considered nontaxable as federal instrumentalities.
As will be seen, Congress has been far from reluctant to pass legislation in the banking field. There are important committees on banking and currency in both Houses which continually monitor banking affairs and propose new legislation when changes are felt to be needed. ”

“ It would then be sufficient that the Bank should not receive the bills of any other bank, which issued notes of less than 10 or 20 dollars, or which received the bills of other banks, that issued notes less than the same minimum. In fine, a National Bank is an admirable instrument of exchange, and the most influential friends of the Administration are convinced of the necessity of an institution of the sort. ”

“ Commercial banks are unique among financial institutions in that they alone are permitted by law to accept demand deposits. This distinctive power gives commercial banking a key role in the national economy. For banks do not merely deal in but are actually a source of, money and credit; when a bank makes a loan by crediting the borrower's demand deposit account, it augments the Nation's credit supply. ”

“ A duty has been imposed upon their issues so large as to manifest a purpose to compel a withdrawal of all such issues from circulation. In harmony with this policy is the construction we think should be given to the thirtieth section of the act of Congress we have been considering. It gives advantages to National banks over their State competitors. It allows such banks to charge such interest as State banks may charge, and more, if by the laws of the State more may be charged by natural persons. ”

“ A bank has a direct relation to the power of borrowing money, because it is an usual, and in sudden emergencies, an essential instrument, in the obtaining of loans to government.
A nation is threatened with a war; large sums are wanted on a sudden to make the requisite preparations; taxes are laid for the purpose; but it requires time to obtain the benefit of them; anticipation is indispensable. If there be a bank, the supply can at once be had; if there be none, loans from individuals must be sought. ”

“ Authorized to issue notes which will be received in all payments to the United States, the circulation of its issues will be coëxtensive with the union, and there will exist a constant demand, leaving a just proportion to the annual amount of the duties and taxes to be collected, independent of the general circulation for commercial and social purposes. A national bank will therefore possess the means and the opportunity of supplying a circulating medium of equal use and value in every state and in every district of every state. ”

“ From this it would appear that the banks must get immensely rich; and inasmuch as national banking is now free it is a wonder that not more of you go into so profitable a business, and a greater wonder still that about thirty millions of national-bank circulation has within a few years been withdrawn by the banks themselves. ”

“ All the provisions and operations of government, must be presumed to contemplate things as they really are.
The institution of a bank has also a natural relation to the regulation of trade between the states, in so far as it is conducive to the creation of a convenient medium of exchange between them, and to the keeping up a full circulation, by preventing the frequent displacement of the metals in reciprocal remittances. Money is the very hinge on which commerce turns. And this does not mean merely gold and silver; many other things have served the purpose with different degrees of utility. ”

“ Actions de la Banque de France, though subject, in common with all stocks, to the influence of the government, are, however, far more independent of it than any other, and are the more secure, as the National Bank is not only composed of all the first bankers, but also supported by the principal merchants in the country. ”

“ Senator Carter Glass held a similar belief and introduced a bill that would authorize national banks to organize branches irrespective of state law beyond and 'outside' the municipality of its principal banking house. ”

“ If we turn to the national bank act, which has been referred to many times as one of the most beneficent laws that the federal government has put upon the statute books, it will be noted that it had its origin in the necessities of the civil war, that it was developed as a revenue measure in the hope of forcing the banks of the day to buy the bonds of the distressed government. ”

“ Many persons who entertain sound views on the subject of credit, consider such an establishment as indispensable, whilst even those who are least acquainted with the subject—those who scarcely know what a bank is, and who are totally327 ignorant of the organization suitable to a national bank, seem to derive confidence, amidst the present want of credit, simply from understanding that the National Assembly contemplates the establishment of a national bank. ”

“ This other fact, that banks are an usual engine in the administration of national finances, and an ordinary, and the most effectual, instrument of loans, and one which, in this country, has been found essential, pleads strongly against the supposition, that a government clothed with most of the important prerogatives of sovereignty, in relation to its revenues, its debt, its credit, its defence, its trade, its intercourse with foreign nations, is forbidden to make use of that instrument as an appendage to its own authority. ”

“ All the Government need do to effect such change in the finances of the country, and to acquire all such advantages for the Government and the people, in my opinion, is to wipe 978out the whole system of National Bank Currency, and give such banks, or any banks, Government currency direct, upon the same securities and such other kinds of securities as the Government is willing to accept, and permit the banks to increase or diminish the amount it obtains whenever the business of the banks requires it; every bank to do no more than give sufficient security for the money. ”

“ As suggesting doubt and ambiguity concerning the contention that national banking associations are embraced within the enumeration of banks and bankers made in § 3411, whose outstanding circulation would become 'free from taxation' in the specified contingency, it is to be observed that the enumeration conforms generally to that made in other sections of the chapter, which other enumerations clearly relate only to state banks and private bankers. ”

“ Again, the credit of Government, which is immaterial to the other banks, is essential to the National Bank, for the annual interest of three-quarters of its capital, which must form a great share of its profits, will depend altogether on the credit of Government, and produce, on the part of the stockholders, the strongest attachment to it. ”

“ It is undoubtedly true, as contended by the defendant, that the national banking act is an enabling act for all associations organized under it, and that a national bank cannot rightfully exercise any powers except those expressly granted by that act, or such incidental powers as are necessary to carry on the business of banking, for which it was established. ”

“ Now this Court is asked to change what legislative history and prior decisions have established is the precise meaning of an Act of Congress. This we cannot do. For, as we pointed out above, the banking field has traditionally been an area of particular congressional concern marked by legislation responsive to new problems. This can be illustrated by the history of § 548 alone. It was originally passed in 1864 because the 1863 Currency Act [4] contained no provision for state taxation of national banks or their shares. ”