Overview

Veazie Bank v. Fenno


Related Overviews

 

'Veazie Bank v. Fenno' can also refer to...

 

More Like This

Show all results sharing this subject:

  • Law

GO

Show Summary Details

Quick Reference

8 Wall. (75 U.S.) 533 (1869), argued 18 Oct. 1869, decided 13 Dec. 1869 by vote of 7 to 2; Chase for the Court, Nelson, joined by Davis, in dissent. This important case arose out of the need for revenue to finance the Union effort in the Civil War. In 1866, Congress enacted a statute that increased a 1 percent tax on state bank notes to a rate of 10 percent. The Veazie Bank of Maine refused to pay the increased tax, and a case ensued between the bank and Fenno, a collector of internal revenue. The bank contended that the 10-percent levy was excessive and threatened it with extinction. Congress, the bank argued, could not use its taxing power to destroy the bank. Such an action was an unconstitutional use of Congress's power to tax because the levy was a direct tax forbidden by the Constitution and because the levy was a tax on a state agency, as Veazie Bank had been chartered by the State of Maine.

Justice Salmon P. Chase held that, consistent with Hylton v. United States (1796), the tax on bank notes did not constitute a direct tax within the meaning of the Constitution. Nor was the levy a tax on a state instrumentality. Finally, he ruled that the tax was not unconstitutional simply because Veazie Bank thought the tax excessive. Congress's authority in this matter was clear, Chase concluded, and the remedy for excessive taxes was through the political process, not the courts. Indeed, Chase concluded that the act could be viewed not as a tax but as an action to control the national currency, clearly a congressional function. Chase's explanation of the power to tax would prove to be an important landmark in the years ahead, as the taxing power became a powerful instrument of public policy.

In dissent, Justice Samuel Nelson insisted that Congress had overreached its authority. Nelson thought that the statute impaired the authority of the states, as constitutionally sovereign bodies, to incorporate and control the banks that operated within their borders.

Augustus M. Burns III

Subjects: Law.


Reference entries

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.