Mr. SHERMAN. Instead of non-concur ring in this amendment, which I had intended to propose, I think my object will probably be better accomplished by striking out the word “ 7, ” in line 20, and inserting “six, ” so as to leave the tax to go into cTTcct on the lst of July, 1866, according to the present law. The phraseology of this amendment is better than that of the corresponding section of the present law. I am opposed to extending the time allowed to the State banks to retire their circulation. The existing law provides “that every national banking association, State bank, or State banking association, shall pay a tax of 10%. on the amount of notes of an State bank or State banking association paid out by them after the 1st day of July, 1866." Under the gresent law there is no discrimination against State banks on the circulation now outstanding; but all banks are to pay a tax of 10%. on State bank notes which they pay out after the 1st of July. The purpose of the enactment was to compel the retirement of the State bank circulation. The effect of the legislation of Congress has been substantially to get rid of the State banks. According to a statement which I have before me, their circulation has been reduced to about 15 million dollars; but in some of the most glaring cases the purpose of Congress as evinced by its legislation has been abused, so that one bank has now in circulation about 8 times the amountof its capital stock. Some of these banks exist in Maine, some in Massachusetts, some in NewYork, some in Ohio, and some in the western States. I am informed by the Comptroller of the Currency that he fears that if this time is extended one year longer, and the right is given to these State banks to issue notes without restraint, they will largely increase the amount of their present circulation. Some of the banks have actually increased it within the last month or 2 so as to have it outstanding. I have here a letter from a cashier of a national batik in NewYork, showing how this privilege has been abused in that State. He gives a list of some 14 State banks in the State of NewYork, with a capital of $866, 320 whose circulation is now $2, 500, 996. The Bank of Watertown, with a capital stock on the 30th of December, 1805, of $110,000, had a circulation of $504, 371, and it appears that by the 1st of May last that circulation had been increased $257, 645, making the circulation of that bank (with a capital stock of $110,000) $852,017. I have a statement from the superintendent of the banking dept of the State of NewYork, showing that the circulation of that bank is $852,017. I have no doubt that many of the othEr banks in this list have increased their circulation. If we should repeal section 6 of the act of last year, or extend the time for retiring the State bank circulation, I fear not only that the present State banks will keep out their existing circulation to the detriment of the public credit, inflating Hie currency of the country to that extent, but that all the State banks now in recess of liquidation will again commence issuing paper. In the State of Ohio we had a very excellent bank system when the national act took effect, and most of our banks went into the national banking system; but some of the State banks are still in existence, not many, but some which have made no cfforts to retire their circulation. While under the general banking law those who went into the national banks were limited in their circulation to 90%. of their actual stock, those that kept out of the national banking associations, those that refused to come in under the general system and kept out their notes, are only liable to pay the same tax as is imposed on the other banks. They were prepared, and prepared themselves to retire the whole of their circulation and redeem the whole of their circulation on the 1st of July next; but if you extend the time one year they will undoubtedly reissue a portion of the circulation they have now retired; they will make no effort to draw in that which is now outstanding; but if you leave the law stand as it is, no national bank and no State bank dare pay out these notes, because if they do they would be liable to a tax of 10%. They wouldbe bound to make a return showingit. The effect would be that every State bank would by the 1st of July next redeem the great body of its circulation. because no such circulation could possibly be used to any profitable extent. I know that the argument has been made that this will be inconvenient in particular 10 calities, and es)ecially to the State banks themselves. The Senfrom NewYork [Mr. Haunts] tells me that in certain communities where they have relied upon State circulation, it will deprive them of circulation. So I am informed by the Senfrom Maine will be the effect in certain localities in Maine. But it seems to me it should be remembered that all these State banks had for a year or 2 an opportunity to come into the national bankin system. They did not do it in time; they waite until the amount of circulation was taken, until other banks, new and old, absorbed the amount fixed by law, and now, after they have been guilty oflaches, they come in and claim an exemption that is not extended to the other banks. It must be observed, again, that by this bill we have assessed 3%.