not taxable on increase of stock, that is, the new shares are not taxable, until the certificate of increase is issued by the comptroller.1

Shares owned by a national bank in other national banks may be included in the valuation of the shares of the bank.2 Thus in the case last cited the court said, at page 70: "The manifest intention of the law is to permit the State in which a national bank is located to tax, subject to the limitations prescribed, all the shares of its capital stock without regard to their ownership. The proper inference is, that the law permits in the particular instance the taxation of the national banks owning shares of the capital stock of another national bank by reason of that ownership on the same footing with all other shares."

This principle has been applied to the case where a bank owns certain of its own shares, the value of which should be divided among the holders of the remaining shares in the assessment of the value of their respective interests.3 It was contended in a Pennsylvania case that national bank shares could not be assessed at more than par, because other moneyed capital, that is money at interest, was only assessed at par, and that par must therefore be the maximum. of taxable value of bank shares. But the Supreme Court held this position untenable, because money invested in a bank is not money put out at interest, and the par value of stock does not necessarily indicate its value. It is immaterial that the bank's property or surplus may be invested in property itself exempt from taxation, see infra, § 274. It is also immaterial that the bank holds stocks of other corporations acquired by it in the course of business, whether such corporations are located in and taxed by the

1 Charleston v. People's Nat. Bank, 5 S. C. 103.

2 Bank of Redemption v. Boston, 125 U. S. 60.

3 Dutton v. Citizens' National Bank, 53 Kansas 440.

4 Hepburn v. School Directors, 23 Wall. 480.

State or not.1 Deductions are not allowed on that account, unless required to conform to similar deductions allowed in the case of other moneyed capital in the State.

§ 272. Real estate in other States not deducted from value of shares.

The value of real estate, located in other States and assessed for taxation there under their laws, is not required to be deducted from the value for taxation of shares of national banks. This was decided by the Supreme Court in a recent case from Utah,2 where the refusal of the assessors to make such a deduction was made an objection to the validity of the tax. The court said that the State of domicil is entitled under the National Banking Law to collect taxes upon the full value of the shares of stock, and to permit a deduction for the real estate located in other jurisdictions, the value of which necessarily makes part of the value of the stock, would reduce the real value of the shares for taxation without compensatory equivalent. The language of a Maryland case was adopted, at page 561, as expressing the true rule: 3

The true criterion, as fixed by the statute, is the true value of the stock, without reference to the question where, or in what manner or nature of property or security, the capital stock may be invested. Whether that be invested in real estate, or other property beyond the jurisdiction of this State, the latter having control over the shares and their true value, the peculiar nature and value of the investment of the capital stock of the corporation, beyond the limits of the State, can form no proper subject. for specific deduction or abatement from the true value of the shares of stock, when presented to be assessed for pur

1 Pacific National Bank of Tacoma v. Pierce County, 20 Wash. 675. 2 Commercial Bank v. Chambers, 182 U. S. 556.

3 American Coal Co. v. County Commissioners, 59 Md. 185, 194.

poses of taxation. It is exclusively with the shares of stock, and their true value, as representing the entire corporate assets, that the tax commissioner has to deal, and not with the nature and locality of the investment of the capital stock of the corporation, except as to the real estate of the company situate within this State."

§ 273. Territories have same taxing power as States over national banks.

It was contended by a national bank of Montana Territory that Congress had only given consent to the taxation of stock in national banks by the States, and therefore such stock could not be taxed by a Territory. But the court said1 that, although this was true according to the letter of the statute, yet the word "State" in this section must be construed in connection with the other sections of the act, and that it was clearly used, not in contradistinction to Territory," but in its general popular sense, as including both the District of Columbia and the Territories.

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§ 274. No deduction on account of holding United States securities.

It was decided by the Supreme Court, reversing the New York Court of Appeals, soon after the adoption of the National Banking Act of 1864, that it is immaterial that the capital of a national bank is invested in obligations of the Federal government, which are expressly exempted by Congress from taxation under State authority, whether held by individuals or corporations.2 The tax authorized by Congress is therefore not upon the national banks, but

1 Talbott v. Silver Bow County, 139 U. S. 438.

2 Van Allen v. Assessors, 3 Wall. 573, Chief Justice Chase and Justices Wayne and Swayne dissenting, claiming that Congress did not intend to subject the national securities even by indirection to State taxation. See also Bradley v. People, 4 Wall. 459.

upon the interests of their shareholders, and the limited State tax authorized is one of the burdens annexed to the enjoyment of the rights and privileges conferred upon national banking associations. This ruling has been uniformly followed since. National bank shares are thus taxable by State authority at their full value like other property, whether the whole or a part of the capital of the bank is invested in Federal securities.

§ 275. Discrimination through taxation of State banks on capital or property.

As national securities, whether held by individuals or corporations, are exempt from taxation under State authority, it follows that the State banks when taxed upon their property or capital stock can claim exemption for so much of their property or capital representing their property, as is invested in such exempt securities. The statute of New York in force at the time of the adoption of the National Banking Act authorized the taxation of State banks upon their capital stock, and it was provided that the tax on the shares of national banks should not exceed their par value. But the Supreme Court held, in the case last above cited, all the judges concurring, that this taxation of State banks upon their capital stock involved a discrimination against the national banks. The court said at page 581: "Inasmuch as the capital of the State banks may consist of the bonds of the United States which are exempt from State taxation, it is easy to see that this tax on the capital is not an equivalent for a tax on the shares of the stockholders.'

This ruling was made prior to the amendment of 1868 and while there was an express provision in the Act of Congress against discrimination in favor of State banks; but this provision, as stated, is included in the more comprehensive provision retained in the amendment of 1868 prohibiting

discrimination in favor of moneyed capital in the hands of individual citizens.

§ 276. Other moneyed capital is other taxable moneyed capital.

After the decision in Van Allen v. Assessors, supra, § 274, the New York statute was amended so as to provide that no tax should be assessed upon the capital of either State or national banks, but that the stockholders in both should be charged upon the value of their shares, though not at a greater rate than was assessed on other moneyed capital in the hands of individual citizens in the State. This was also claimed to be invalid, because the personal property of individuals was allowed a deduction on account of their holdings of United States securities, and therefore there was a discrimination in their favor as against the national banks. The court held 1 that this was not such a discrimination as was contemplated by the Act of Congress. The true construction of the clause of the Act of Congress is that the rate of taxation upon the shares shall be the same and no greater than that upon the moneyed capital of individual citizens that is subject to taxation, and the argument really meant that Congress should have repealed the exemption of securities in order to effect equality of taxation.

While the statute of 1864 was in force, it was claimed that the taxation of national bank shareholders in Missouri was invalid, for the reason that the State by charters granted under the former constitution, authorizing exemptions from taxation, had made contracts of exemption with two banks and had thus disabled itself from taxing their shareholders in the same manner as those of national banks were taxed.

1 Van Allen v. Commissioners, 4 Wall. 244. See also Bradley v. People, 4 Wall. 459, applying the ruling of Van Allen v. Commissioners to the taxing laws of Illinois. See also Exchange Nat. Bank v. Miller, 19 Fed. Rep.