direction as to induce a breakdown of the normal and necessary taxing functions of the states and a further and undesirable concentration of work in Washington and the subordination of the states to mere subdivisions in an over-centralized bureaucracy?

So much for the future policy in respect of the matter under discussion. We cannot forget that we are faced with many scores of suits instituted in several states for the purpose of recovering taxes already paid by the banks and expended by local communities; taxes to which both the taxpayers and the payees have long since adjusted themselves and with regard to which there is no question of unfairness or inequity, but merely a question of law, which has arisen since the Richmond decision.

To meet this question and quiet the suits the so-called validating clause of the Kellogg bill has been framed. The bill at lines 20-25, page 2, and lines 1-3, page 3, provides as follows:

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That the provisions of section 5219 of the Revised Statutes of the United States as heretofore in force shall not prevent the legalizing, ratifying, or confirming by the States of any tax heretofore paid, levied, or assessed upon shares of national banks or the collecting thereof, provided such taxation is not greater than the taxation imposed for the same period upon banks, banking associations, or trust companies doing a banking business, incorporated by or under the laws of such State. or upon the moneyed capital or shares thereof."

By this provision Congress would only give the permission which heretofore it might have given and was assumed to have given to assessment of national banks upon the same basis as banks, banking associations and trust companies doing a banking business, as they have in fact been assessed in the various states. In effect the provision, so far as Congress is concerned, simply authorizes the states by appropriate legislation to legalize, ratify, and confirm such assessments as of the date when imposed. By the provision Congress would be saying now what it could previously have said; that such assessments were proper and valid.

The provision is thus clearly within the power of Congress, since it attempts to do no more than precisely the same thing that Congress could previously have done, namely; permit the taxation of national banks as other banks, banking associations and trust companies doing a banking business are taxed. That which Congress could have granted or permitted it may surely authorize the states to legalize, ratify and confirm, so far as its grant or permission is essential. This principle has been universally recognized by the courts with respect to legislative power both of Congress and of states.

It was clearly stated and upheld as to congressional power in the

case of the United States v. Heinszen & Co., 206 U. S. 370, which was followed in the more recent case of Rafferty v. Smith Bell Co., 257 U. S. 226, decided December 6, 1921.

In the Heinszen case, action was brought to recover the amount of tariff duties exacted in the Philippine Islands on merchandise. the duties having been collected under authority of an order of the President before Congress, on March 8, 1902, had enacted tariff duties for the Philippines. The court had held that the duties complained of were illegal and the question presented was whether an act of Congress in 1906 (34 Stat. 636, June 30, 1906) legalizing and ratifying the imposition and collection of the duties prior to March 8, 1902, was within the power of Congress. It was held that Congress had such power and that the legalizing and ratifying act of 1906 was effective, citing Hamilton v. Dillin, 21 Wall 73. and Mattingly v. District of Columbia, 97 U. S. 687. In so holding the court quoted (page 384) from the decision in the Mattingly case which concerned the validity of an act of Congress ratifying certain void assessments for street improvements in the District of Columbia, wherein it was said:

"If Congress or the legislative assembly had the power to commit to the board the duty of making the improvements, and to prescribe that the assessments should be made in the manner in which they were made, it had power to ratify the acts which it might have authorized. * * * Under the Constitution, Congress had power to exercise exclusive legislation in all cases whatsoever over the District, and this includes the power of taxation. *** It may therefore cure irregularities, and confirm proceedings which without the confirmation would be void, because unauthorized, provided such confirmation does not interfere with intervening rights."

The court then states (page 384):

"It is then evident, speaking generally, both on principle and authority, that Congress had the power to pass the ratifying act of June 30, 1906."

In discussing the question whether money paid to discharge the illegally exacted tariff duties justly and equitably belonged to the claimants and that the title thereto continued in them as a vested right of property and hence the right to recover the money could not be taken away, the court said (p. 386):

"But here, again, the argument disregards the fact that when the duties were illegally exacted in the name of the United States, Congress possessed the power to have authorized their imposition in the mode in which they were enforced, and hence

from the very moment of collection a right in Congress to ratify the transaction, if it saw fit to do so, was engendered. In other words, as a necessary result of the power to ratify, it followed that the right to recover the duties in question was subject to the exercise by Congress of its undoubted power to ratify."

The court also quoted (p. 387) from Cooley on Constitutional Limitations (7 ed., p. 543):

"Nor is it important, in any of the cases to which we have referred, that the legislative act, which cures the irregularity, defect or want of original authority, was passed after suit brought, in which such irregularity or defect became matter of importance. The bringing of suits vests in a party no right to a particular decision *** and his case must be determined on the law as it stands, not when the suit was brought, but when the judgment is rendered."

It is thus apparent that while the Heinszen case did not present identical facts to those herein appearing, inasmuch as therein the subject of the validating act related to tariff duties which are imposed in a manner to be authorized by Congress and are actually imposed, either by Congress or by its agent, whereas here the subject of the validating act relates to assessments on national banks which are imposed in a manner to be authorized by Congress but are actually imposed by states or municipalities, there is no distinction in the principle applicable. In each case Congress, having the power to prescribe the manner in which the charges may be imposed, may authorize, ratify and confirm charges imposed in such manner.

In other words, it was within the power and authority of Congress to prescribe for taxing national banks as stated in the bill, just as it was within the power and authority of Congress to prescribe for imposing the tariff duties which were collected. Accordingly, in both cases it has the power to authorize the taxing authority to ratify and confirm that which was done so far as its permission and authority is necessary to the imposition of the tax.

As stated in Cooley on Taxation (3rd ed., 517):

"The general rule has often been declared, that the legislature may validate retrospectively the proceedings which they might have authorized in advance."

The same rule is stated in the Exchange Bank Tax Cases, 21 Fed. Rep. 99 (affirmed 122 U. S. 154). At page 101 the court stated:

"And it is immaterial that such legislation may operate to

divest an individual of a right of action existing in his favor, or subject him to a liability which did not exist originally. In a large class of cases this is the paramount object of such legislation."

Upon affirmance by the United States Supreme Court it was said (122 U. S. 166):

*

"The plaintiff and the other shareholders were bound, as owners of property, to bear their just proportion of the public burdens, and * * it would seem but just that the defect should be cured, if practicable, and the shareholders not be allowed to escape taxation, and thus entail the burden they should bear upon other taxpayers of the community.”

And in the case of Mattingly v. District of Columbia, 97 U. S. 687, cited and discussed in the Heinszen case, the court quotes (p. 690) as "accurately stated," the rule asserted by Judge Cooley, in view of the authorities, as follows:

"If the thing wanting, or which failed to be done, and which constitutes the defect in the proceeding, is something the necessity for which the legislature might have dispensed with by prior statute, then it is not beyond the power of the legislature to dispense with it by subsequent statute. And if the irregularity consists in doing some act, or in the mode or manner of doing some act, which the legislature might have made immaterial by prior law, it is equally competent to make the same immaterial by a subsequent law. (Cooley Const. Lim. 371)."

Thus in Shuttock v. Smith, 6 N. D. 56; 69 N. W. 5, where the state board of supervisors levied without authority a state tax which the legislature might have levied or ordered the board to levy, it was held that the legislature could validate a defective levy which it might have authorized to be made in the manner in which it was laid.

In Marion County v. Louisville & N. R. Co., 91 Ky. 388; 15 S. W. 1061, where a county had authority to levy a head tax for county purposes and levied an ad valorem tax, it was held that the legislature, by subsequent enactment, might validate the levy.

In Kettelle v. Warwick & C. Water Co. (R. I.), 49 Atl. Rep. 492, where a township tax was void as exceeding the statutory town tax limit, it was held that the legislature had power to pass an act validating the assessment so erroneously levied and such an act was constitutional.

As said, however, in Exchange Bank Tax Cases, 21 Fed. Rep. 99, at p. 100:

"Undoubtedly, the legislature could not validate a tax which was prohibited by the laws of the United States; but it was competent for them to sanction, retroactively, such proceed ings in the assessment of the tax as they could have legitimately sanctioned in advance."

The case of Forbes Pioneer Boat Line v. Everglades Drainage Commissioners (42 Sup. Ct. 325; April 10, 1922) is not authority to the contrary. There the attempted validating act referred to tolls for passing through the canal and the supreme court pointed out that the legislation was invalid, because toll charges could not be imposed retroactively and therefore could not be validated if illegally collected and distinguished taxes from tolls in this particular.

Thus only by permission of Congress may the states, by retrospective legislation, validate taxes not authorized under permission previously given. The necessity for the validating provision of the bill thus appears.

Unless this permissive provision of the bill is retained the states will be powerless to validate taxes imposed on national banks which are in accord with the proposed amendment and there can be no relief to the states with respect to taxes heretofore imposed, and undoubtedly there will be increasing litigation as to the taxes imposed, and recoveries of taxes paid and non-payment of taxes, seriously jeopardizing the state and municipal revenues. For many years taxes have been imposed and paid without complaint by national banks, where the tax compared with that paid by state banks and trust companies but differed from that imposed as to individuals. Thus the situation is critical and calls not only for authority to levy such taxes in the future, but for the retroactive permission of Congress authorizing the states to validate taxes heretofore levied or collected.

As stated in the authorities above cited, no vested right exists to recover such taxes where no judgment has been rendered, and the legal effect of the provision would be not to disturb judgments entered but to remove any cause for similar judgments. Such validating permission therefore, being within the power of Congress and essential to the states and municipalities and fair and equitable as to the banks themselves, should be enacted.

The question of amending section 5219 of the federal statutes was carefully considered and discussed at the fourteenth annual meeting of the national tax conference, held at Bretton Woods, N. H., September 16, 1921, and the following resolution was adopted by an overwhelming vote:

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Be it Resolved, That in the opinion of this conference, Section 5219 of the United States Revised Statutes should be so