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TAXATION OF NATIONAL BANKS

WEDNESDAY, APRIL 11, 1934

HOUSE OF REPRESENTATIVES,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C.

The committee met at 10:30 a.m., the Honorable Henry B. Steagall (chairman) presiding.

The CHAIRMAN. Gentlemen, the committee will come to order. The older members of the committee, of course, are familiar with the history of recent legislation amending section 5219 of the statute which gives the right to States to tax capital in national-banking associations. It seems that our attempts heretofore to relieve the difficulties involved have not been successful in some States. from time to time there have been requests and appeals to the committee to open up that subject again and permit the gentlemen interested in the subject to be heard by the committee.

So

In response to those requests I have called the committee together this morning, and we have before the committee at this time two bills, one introduced by Mr. Hancock, H.R. 5045, and another introduced by myself, H.R. 9045.

I introduced this last bill, H.R. 9045, because I thought the committee might well consider the subject within the widest range, going into all of the legislation that would face the States in the matter of the right to tax investments in national banks, so long as the legislation was not discriminatory as between State banking institutions and national-banking institutions.

The two bills before us, with the legislation already passed, or with the law as it stands, would open up before this committee, I think, the whole subject within its widest range.

Now, addressing the gentlemen interested in this legislation who desire to be heard, I am sure the committee would be glad to devote such time as may be necessary to enable every member of the committee to understand fully the contentions of the different parties interested, and the facts necessary to enable members to act with complete information.

I am going to suggest you gentlemen attempt to outline and limit. the discussion before the committee so that we may not take your time unnecessarily, nor the time of the committee unnecessarily. So I suggest that you gentlemen agree, if you can, on a division of the time and the amount of time and the number who desire to be heard, and then let us see if we can meet your wishes.

Mr. GOLDSBOROUGH. Mr. Chairman, Mr. Blinn made a statement to me yesterday that he did not know whether he was prepared at this time, and I am going to suggest that he be permitted to make

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some statement to the committee, expressing his point of view on this suggestion.

Mr. LUCE. Before we get to the statement, I would like to say I was informed yesterday when the House adjourned there was a roll call pending, and it would be held today, so that we will have to leave by a quarter past 12.

The CHAIRMAN. Mr. Blinn, would you care to say anything?

Mr. BLINN. In response to Congressman Goldsborough's statement, I will say that I had no knowledge until yesterday morning that the hearing was to be held, and I have not seen a copy of the bill, H.R. 9045, on which the hearing will be held. I have seen H.R. 5045, but not H.R. 9045.

I should like to take this thing up with the committee of the association and get the view of the committee on these two measures and prepare a statement, and be prepared to meet the question from our standpoint. That would require a little time, and in addition, unfortunately, the executive council of the American Bankers' Association will meet at Hot Springs, Ark., next week, and we will be down there all week. We are going down there Friday, and it would not be possible for us to prepare our statement here until the adjournment of that meeting of the council.

The CHAIRMAN. Let me ask you this: Is not this a matter with which all of you gentlemen are familiar already, so that you do not need advice or action from the association?

Mr. BLINN. I do not need advice from the association, since the matter is in the hands of the committee; but on the other hand, while I am chairman of the committee, I would like first to discuss the matter with my committee, and they are scattered all over the country. I will meet with them next Monday at Hot Springs, Ark., and the matter can be discussed with them at that time.

The CHAIRMAN. How many of you desire to be heard in order to present your views of the matter?

Mr. BLINN. This is a matter which affects the whole country, and I should think there should be men from the various sections of the country to discuss the matter from the standpoint of those sections. I should think we would have to have at least five to go over the situation.

The CHAIRMAN. I will say this, if we should have five on each side of this matter it would take more time than the committee would be inclined to allow at this time. I should think if you had as many as two to a side you ought to be able to give us your different views. I am sure the committee does not want to be arbitrary. am just making this suggestion.

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Mr. HANCOCK. Mr. Blinn, has your committee had opportunity to consider H.R. 5045?

Mr. BLINN. Not fully.

The CHAIRMAN. In that connection is it not true that the bills here do not involve anything that is new to you gentlemen who have been living with this problem for years?

Mr. BLINN. That is true; but you are presenting a subject that has come up against us on 24 hours' notice.

Mr. GOLDSBOROUGH. According to my understanding, there is a bill that has already passed the Senate; is that correct?

Mr. BLINN. It is out of the committee and on the calendar; yes.

Mr. GOLDSBOROUGH. That is a bill your committee is interested in? Mr. BLINN. That is correct.

Mr. GOLDSBOROUGH. You are prepared to discuss that bill, but not this bill before us?

Mr. BLINN. That is probably true, Mr. Congressman.

The CHAIRMAN. That is not before us; and while we would be glad to have them discuss that bill on the general subject, yet what we are here for is to discuss this bill before us in all its aspects. The bill before the Senate, as I understand, touches only one phase of the matter.

Mr. BLINN. It touches other taxes, and embodies the principle which brings banks under the Federal Reserve System under the tax provisions applying to National banks only.

The CHAIRMAN. Is that all that is in the bill?

Mr. BLINN. That, coupled with the amendment to section 1 (b), which changes the tax method. This bill, H.R. 5045, as I understand, introduced by Congressman Hancock, is practically the old Stevenson bill, H.R. 11805. This bill H.R. 9045 is identical with the Shipstead bill in the Senate, with the additional clause defining what State banks are.

We are familiar with the subject matter here, but I think our committee should meet and discuss this thing and agree on a matter of policy. I feel justified in speaking for the committee without getting a statement of their policy.

Mr. REILLY. Mr. Chairman, we had this matter up for discussion a year ago, and my understanding was that both parties agree on the Stevenson bill.

Mr. BLINN. That is not so. Our committee is on record at a meeting in March 1933, if my memory serves me, as being opposed to two principles involved in the Stevenson bill.

The CHAIRMAN. We have never been able to get these gentlemen to agree so that they will stay agreed very long.

Mr. LUCE. Mr. Chairman, we have sat in this committee for a dozen years discussing this matter, and the older members of the committee are perfectly familiar with it, although the younger members are not.

For 10 or 12 years the American Bankers' Association has been unwilling to make any reasonable compromise with the tax-collecting authorities. Again and again we have tried to get them together, and with all due respect to the American Bankers' Association my judgment is that the time has come for this committee to sit in executive session and take it away from the people who will not agree, and decide what is the proper thing to do.

We have volume after volume of testimony on the subject, and anybody who desires to familiarize himself with it can consume several days reading what has been heard by this committee and printed.

For one, I am fatigued by hearing this thing over and over again. The CHAIRMAN. It was that thought that brought forth my suggestion that there should be a limit to this discussion, and I am going to say I think this committee would desire that it be limited to two speakers on each side, and we will deal then with the question of time allowed them.

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