Senator Law himself will recall, as a member of the senate, and Senator Lord, when he was a member of the Minnesota senate will appreciate, that it is quite improper for those outside-particularly bodies of this sort-to indicate the manner in which the legislation should be passed. I urge you on this particular issue, that we confine ourselves to what the constitution provides, and that is to simply announce our sound judgment on economic problems, and not to go into the legislative business.

If time would permit, I would take up some of the decisions Senator Law referred to. In his paper reference was made to the Hinson case and the District of Columbia case. It is quite plain that those cases involved taxes and assessments which were entirely under the jurisdiction of the United States Government and that you have an entirely different situation when it comes to a tax assessed by the states. I am quite satisfied that the conference should stand upon its resolution of last year and refrain from telling Congress what they shall do; in other words, to sit here and legislate is entirely outside of our province, and I will rest by asking that we go back to first principles-the intent and purpose of these conferences and confine ourselves entirely to announcing sound economic principles, and not enter upon a field which is entirely foreign and which was never intended by those who have the best interests of the association at heart.

I am quite satisfied as a delegate and a member interested in banks to have the resolution of last year reaffirmed, but to go further than that I think is a mistake, and one of those mistakes to block us at a later time a precedent created that you will have trouble with if you make it a precedent at this time.

I urge that we go back to first principles; examine our constitution and be satisfied to keep ourselves within our proper scope, and not attempt to legislate. Bank taxation will be the burning question of this conference. Next year it will be something else. In view of the fact that the bank acts in a sort of a dual capacity, in that it pays the tax for the taxpayer, I feel that we should go slow in making a record here which concerns a large number of taxpayers in the states. I have in just a brief way indicated that there is a sharp difference of opinion as to what should be paid by the banks of New York, as demonstrated by this legislative committee. There is the further fact that we have in New York a billion dollars of money invested in banking, in competition with banks, which pays nothing and which will not be covered if the Kellogg bill is passed.

It is one of those big jobs we ought to move slowly on, and not say this is so and so, because we have an immediate need for it, but satisfy ourselves with the task, as Professor Adams well stated, of keeping to fundamental facts and moving along in educational work. Thank you very much.

CHAIRMAN HAIG: The chair would like to impose for the privilege of making one remark with regard to the material which Mr. Tobin has quoted. It is true that we began in New York to look into this question of bank taxation, before the Richmond decision was handed down. We were then concerned to know whether the tax which we were imposing on national banks was high or low, as compared with business generally. This tax had come to occupy a position in the New York system which was perhaps a little different from that of some other states, in that it was quite distinctly a business tax, in the sense of the term business tax as used in our model plan, and we wanted to see how the thing measured up as compared with the 42% on business corporations. It is true that we found national banks were taxed high, as compared with business corporations generally, but it does not seem to me that that fact justifies the conclusion that is drawn by Mr. Tobin at all; that there is any doubt about what should be done. The committee was quite prepared even to recommend that the rate of business tax on banks be adjusted to the rate of business tax on business generally, which would be fair enough, but it does not seem to us fair to conclude that because the national banks have under an arbitrary business tax unfortunately for a long time been paying a little more than all other businesses, they should forthwith be permitted to hide behind 5219 as it now stands.

MR. TOBIN: I should like, if it may be permitted, that you take the conclusions of the committee as a matter for the record. I intended to ask that, but there seems to be some little hesitancy because of time. I should like to ask that the conclusions of the committee, as concerns national banks, be made a part of my statement.

THOMAS S. ADAMS:, I should like very much, for my own personal satisfaction, and I think many others here would also like in due course, to study the strongest arguments that may be made against the recommendations of our committee, and President Lord's conclusions expressed last night. In other words, I should like to hear the other side expressed in its strongest form. Now, why would it not be within the purposes of this organization to have the other side printed in the report? It has seemed to me somewhat of a one-sided case, but I thought that about other cases in the past, and in considering the best statement of the side I considered weak, I have changed my mind. Now, I should like to see the strongest argument that can be made.

CHAIRMAN HAIG: Well, how would you suggest that be done? MR. ADAMS: That we authorize leave to print, and I am sure Mr. Tobin, who is given leave to print, will construe that properly. CHAIRMAN HAIG: Will you make a motion to that effect?

MR. ADAMS: I move then that Mr. Tobin, or someone to be designated by him, or the members of this Association, who believe in the retention of section 5219 be given leave to print their side of the case in the forthcoming proceedings.

JOHN E. BRINDLEY: Motion seconded.

OSCAR LESER: But they are not to absorb the whole volume.

MR. BRINDLEY: Not more than the space taken up by Mr. Law's report.

MR. ADAMS: Yes.

MR. TOBIN: I don't want it understood that I am opposed to the amendment of 5219, or that I am opposed to this conference going on record. I helped in a way in the preparation of the resolution of last year. My whole point is: don't let us go astray in this conference on a proposition of this kind, because it is bank taxation. My point is that we should not legislate here; we should be content with announcing sound economic propositions and stop there. If we are going on to tell Congress what it must do, we shall find our purpose will be cut very short. I want to thank the conference for the permission.

(Senator Law rises for recognition)

All

CHAIRMAN HAIG: There is a question before the house, Mr. Law. Professor Adams' motion has been heard and seconded. in favor say aye.

(Ayes and noes)

(Motion carried)

SENATOR LAW: I wanted to refer to one other paragraph from this same New York report. It says at page 90, "the adoption of the recommendations outlined above "—that was for amending the state laws relative to taxing banks-"must await congressional action upon the proposed amendment to section 5219 of the Revised Statutes. If a reasonable amendment is blocked through the shortsighted opposition of a small section of the financial community, the committee proposes a plan to prevent the evasion by the national banks of their fair share of the governmental burden, through a return to the taxation of such moneyed capital as competes with national banks, at the same rate as that imposed upon national bank shares."

MR. TOBIN: That wants to go in. I am quite satisfied it should go in, because that is the main issue. It is this other moneyed capital-$1,000,000,000 of it-that is not paying taxes in New York

today.

MR. LAW: I cannot agree with the conclusion that it is not taxed. I will agree that it is not taxed as high as it ought to be, but the remedy for that is not to exempt still more property.

MR. TOBIN: I am for that.

MR. LAW: The remedy is to increase the tax on the co-partnership banking capital, and a bill to accomplish that was introduced in our legislature last winter.

MR. TOBIN: I am for that, and we are all for it.

DR. ADAMS: I hope that before this discussion is over, if any person here believes in the preservation intact of section 5219, he will get up and state his side of the case.

CHAIRMAN HAIG: I think the forum is open. If anybody wishes to make a statement on that at this time, I will recognize him.

(Mr. Link rises for recognition)

CHAIRMAN HAIG: If not, Mr. Link, I recognize you.

MR. LINK: Mr. Chairman; ladies and gentlemen of the conference: I should first like to ask Senator Law if it is not true under the Kellogg bill that if we assess the stock, under the property tax, we are barred from the addition of an income tax?

MR LAW: The Kellogg bill does not change the existing situation in that particular. Does that answer your question?

MR. LINK: Certainly. I was concerned about that feature. I was afraid, from the way it read, that if we taxed the stock, under the property tax system, we could not in addition tax the holder of the stock under a personal income tax in the state.

MR. LAW: It is doubtful if you could do that now, but whatever the situation is under section 5219, as it exists today, it will be the same if the Kellogg bill passes. In that, the Kellogg bill is different from the original McFadden bill.

MR. LINK: Members of the conference: That seems to me quite unfair, because we are proposing, at least some states have now proposed and others are now proposing, to adopt a personal income tax. We have that matter up in Colorado at this time. We are struck from all sides for offsets. The farmers are contending very seriously that if they are going to continue to pay these high taxes. on their land, that it is not fair, if they have a good year and make a profit, to make them pay another tax, and therefore they want the offset feature. The livestock men ask it; others ask it.

I understand, of course, that in Wisconsin there is now an offset feature on personal property, and I was very glad to notice in the press yesterday that the farmers themselves in Wisconsin - the

Non-Partisan League, I believe at a meeting recommended that that offset be repealed; they have found that it is not correct in principle. I fear now that we are about to be bound under the bank situation. There is some doubt, to say the least, so that shows that even under the Kellogg bill we may have our hands tied by the unfortunate situation of Congress locking up the states, so that we cannot get a fair personal income tax.

Mr. Chairman, and members of the conference: I wish to say just a word about our worthy president Lord's record in this matter. We of course all know what a splendid man he is, and what a splendid state official he is, but to let some of you know how fair he is about this matter, I want to say that his life's savings are invested in bank stocks. I happened to learn that a year or two ago. See how impersonal he is; how fair he is about it. It is not a matter of philanthropy, of course. He used to be a farmer; he used to be engaged in other business; he found out wisely that that was the best investment he could make. I mention that just to show his splendid spirit in this whole fight.

As I see it and I hail from an old general property state, where we are still trying to assess intangibles, under the property systembank stock is different from all other kinds of intangibles-intangibles in the hands of private individuals for this reason; that when an aggregation of men organize a bank and put in capital of, say, a million dollars; as soon as that bank opens its doors and gets to running normally, they have deposits running from five to no less than twenty times their investment, and thereby become a commercial concern. Their large profits, their chief earnings, are made from other money, not their own, that they hold. Therefore, it seems to me most unfair to advocate any system that won't permit the value of bank stock to be assessed under the property system in the location where the bank is, at the regular real estate rates.

Now, further than that, I of course would not go, and I want to say that I certainly hope that I shall never be a party to this everlasting idea of wanting to hit corporations with special taxes.

MR. H. C. MCKENZIE of New York: I just want to say, Mr. Chairman, that I have a strong sympathy for the position just taken by Mr. Link. As a matter of fact, I suggested that same thing last night to President Lord and to Mr. Law; I asked them whether, in their judgment, it would be a satisfactory solution of the problem if we could get the American Bankers' Association to agree to treat the banks the same as real estate is treated, in the locality where the banks are located.

In a conversation I had with a representative of the bankers' association a couple of weeks ago, I was told that the thing that was especially objectionable to them was being put in a class by themselves, where they could be discriminated against. Now, as