the bank, and you confer upon them the power to organize additional banks, which you call branch banks, in the United States, and as a matter of course and as a matter of law their power ceases at the limits of our country. They can not go any farther.

CONGRESS NOT AUTHORIZED TO CHARTER SUCH A BANK,

Now, then, when we get this proposition clearly stated and understood, it is granting a special charter (and in one sense a private charter) to certain individuals of the United States, and establishing a parent bank with eight branches, which are equivalent to nine banks, in the United States.

I raise this point at the outstart: That no lawyer can find any kind of authority under the decision of the Supreme Court that authorizes Congress to issue this character of charter. I have stated the propo sition exceedingly broad, and when you go back to the decision referred to in the argument of the gentleman this morning the whole power to charter a bank in the United States is based upon the naked proposition, and that only, that it is part of the fiscal agency of the Government, and you can not find an authority in the United States that decides otherwise. The national banking system and the old banking system rest on that point. That is a true proposition of law-that there is no authority to grant a charter to a bank unless it is part of the fiscal agency of the Government-and I submit to this committee to tell me in what part of this bill is there anything that assists or aids in the fiscal agency of the Government.

I can understand why national banks are chartered upon that doctrine. They use the banks for the purpose of selling their bonds. That was a mode of raising revenue for the Government, but there is not a law, and I assert it again, and I have the authority here in the book, there is not a clause in the Constitution that confers upon Congress the power to charter a bank, a special and private bank, where it confines its operations to certain citizens and does not make it general in its terms. There is no authority to be found under our decisions to charter a private bank unless-and the private bank could not well be that-unless it is part of the fiscal agency of the Government. That is the first point I make on it.

POWER TO REGULATE COMMERCE.

With great respect to my friend's legal learning, he was necessarily driven over to the power of regulating commerce between the States and foreign nations. Let us take a clear-cut view of that. The suggestion that was made by Mr. Black is pertinent: If Congress has the power to charter banks for the purpose of regulating commerce, it has got the power to run railroads for the purpose of regulating commerce between the States and foreign nations. If it has the power to do that it has the power to establish telegraph wires for that purpose, and where will you end with that power? Now, that clause of the Constitution didn't mean

Mr. BROSIUS. May I interrupt the gentleman?

Mr. Cox. One moment. That clause of the Constitution meant this: That when foreign nations bring their commerce into our country, we have a right to say how it should be done. Every government in the world does that.

Mr. BROSIUS. You can not do anything with banks there without their consent.

Mr. Cox. Yes.

Mr. BROSIUS. You raised the point on the logic of my argument that if it is necessary to incorporate a bank for the purpose of promoting international commerce it would be equally permissible to incorporate railroad or telegraph companies. Do you say that Congress has not the constitutional power to incorporate or take unto itself, in their control or management, telegraph companies, to create such a company and run it as a Government institution?

Mr. Cox. You mean to confine it to the limits of the United States? Mr. BROSIUS. I think they could do that.

Mr. Cox. That is an entire concession of the whole contention. Mr. BROSIUS. We are talking about building a Nicaragua canal. Mr. Cox. You can not build any Nicaragua canal without the concession of the Government through whose territory it passes. Now you come to the conclusion that because the Government of the United States, under certain powers, may build a telegraph line, that therefore it may run its line into another country.

Mr. BROSIUS. I do not say that. On the contrary, I have said repeatedly we could do nothing in any other country except with the consent of that country through whose territory we might wish to go, and the bill does not convey any such an idea as you suggest.

Mr. Cox. Then the limits of your bill and the extent of the power in the bill is to charter nine banks within the limits of the United States?

CONCESSIONS FROM FOREIGN GOVERNMENTS.

Mr. BROSIUS. With the power to establish branches in the South American Republics, obtaining concessions by those Governments. Mr. SPALDING. This bill has no reference to that.

Mr. BROSIUS. I know the eight branches are in the United States, but I refer to such concessions as are obtained by the Governments of the South American Republics.

Mr. Cox. Let me make this point plain. Suppose you pass this bill

Mr. BROSIUS. Eight branches in the United States

Mr. Cox. You pass this bill, and there is no foreign government that makes any concessions whatever to this corporation. You have no right to presume they will or will not. That is a matter resting in the discretion of those different governments. They decline to do anything. What have you done? You have chartered nine banks in the United States. Don't you find yourself in that condition?

Mr. BROSIUS. My answer to that is that it is very true if the South American Republics have no desire to promote intercourse with the United States and will have nothing to do with these facilities for exchange, that will be the end of it; but this bill

Mr. Cox. Pardon me

Mr. BROSIUS. Let me explain this.

Mr. Cox. That is not the end of it.

Mr. BROSIUS. That is the end of that. If they will have nothing to do with us, then we can not go outside of our own territory. Mr. Cox. We will have eight banks here.

Mr. BROSIUS. Yes. This bill is predicated on the assumption that the republics on the south of us are equally desirous of having intercourse promoted in this way, and at the international conference in 1889 the representatives of all those South American Republics invited the United States to do just what we are seeking now to do, in order that

they might enjoy the benefits of improved facilities for exchange with the view of promoting commercial intercourse. That is the whole of it. Mr. Cox. Now he assumes-and that is the point of the argument upon that branch of it-that unless these other different Governments take advantage of something we have done here and extend concessions there to this company all that can result will be the establishment of nine banks in the United States. That is clear.

Now, let us assume that they do make concessions. To whom will they make them? They will make them to a corporation chartered by the United States.

Now, see where you will land in a moment. This Government makes certain concessions. What do those concessions consist in? Foreign countries make concessions to these individuals. You can not treat them as a corporation.

Mr. HILL. Why?

Mr. Cox. Because a corporate power does not extend to these foreign countries at all.

Mr. HILL. It does, if they recognize it as such.
Mr. Cox. That is their legislation, not ours.

The CHAIRMAN. American insurance companies are recognized.

DUAL CHARTERS.

Mr. Cox. I will not go into the question of insurance companies. You understand that and so do I. Let us come to the point of the question. Whatever they get in a foreign country, this corporate authority you have chartered here, is conferred by the legislation of that country. It can not be otherwise. Now, the moment you do that, that becomes a corporation of that country, and you can not escape it. Now, you have a corporation in the United States that is called à certain thing; you have a corporation in a foreign country that may be composed of the same individuals: it is called another thing. They are acting under two charters-under the charter of the United States in the United States and they are acting under the charter of the foreign country in the foreign country, and you can not escape the conclusion to save your life.

Let us follow it a step further. I assume that in the United States, under the police provisions provided in the bill-for they are nothing more nor less than police provisions-the United States, so far as its jurisdiction is concerned, conducts these banks in the United States properly. Assume it as strong as you can make it, but tell me what kind of an assurance have you got that in the foreign countries the banks will be conducted that way?

Now let us follow it another step. Suppose the United States has conducted its banking system properly with its police powers, and of course the whole object of that is to keep the bank in a solvent condition; but take Mexico, if there is a branch bank there, and under the power conferred by the Mexican Government there are no police regulations that the United States can extend there. You can not reach it with our law. They adopt a police system in Mexico, and the branch bank as you call it but it is not a branch bank, it is a bank authorized by the laws of Mexico-breaks up and becomes insolvent. Now you have your home bank here. Where will the assets go? How are you going to do in such a case? What will you do with your assets? Suppose the home bank here, if the authorities confer it, transfers its assets into Mexico and that branch bank becomes insolvent. What are you going to do?

Mr. SPALDING. Exactly the same case comes up in the case of deceased persons.

Mr. Cox. Allow me to follow this thought one step further and I will leave that branch of it. These banks outside of our home government will be worthless unless they are under the control of the same directors in the home bank, for if you have different sets of directors in these different banks, which you call branch banks, look what confusion there will be at once. How are you going to manage it?

Now, then, I bring your attention to the point. If these directors of this home bank can not control these branch banks, as you call them, in these foreign countries no good can result. Then the very moment you confer the power upon the home directors to control the branch banks in foreign countries, they are subordinated to the laws of that country, and you can not avoid that.

So your banks, at last, outside of the United States will depend upon the legislation of half a dozen or a dozen governments. Suppose a bank in Mexico fails and its assets are squandered, so far as the bank in Mexico is concerned, what are you going to do with the assets of the home bank-transfer them over there to make that bank good? Suppose I put another case to you under this kind of double legislation here: If the home bank fails, what are you going to do; how are you going to manage it?

Mr. HILL. Just as I would with any other bank; and I understand this would stand in just the same position precisely.

Mr. Cox. The bank fails at home and you are operating in Mexico. Is it justice to this man in Mexico that as a creditor of the bank he should not be made whole? If you put this brand on it and indorse it and send it out I think he should be made whole. I think that would be right. But the moment you transfer those assets you transfer them out of Mexico to make good what is lost in the United States.

I want to present another point; if American citizens under this bill get charters and establish their branch banks and put them all over the world, suppose one of those foreign governments finds it necessary to confiscate the assets of that bank, taking an extreme case, for some violation of local law. Is the United States bound to protect its citizens in the investment of their money there? If it is not, they would be in a worse position than private citizens. You are getting into complications here.

Mr. BROSIUS. Citizens of the United States doing business in foreign countries are liable under the laws of those countries.

Mr. Cox. Suppose a foreign power seizes the property of an American citizen. Is not the Government responsible

Mr. BROSIUS. It depends on circumstances. If he contracts a debt in the foreign country, of course he is subject to the law in that country regarding the payment of debts.

Mr. Cox. I am surprised that you do not see the point of this argument. These are outlines of thought, and there are a good many more that present objections to my mind which are very serious ones.

WAR POWER OF THE GOVERNMENT.

Mr. HENDRICK. If I have understood you correctly, you have given the impression that the United States, in your opinion, has the constitutional power to build a railroad or telegraph line?

Mr. Cox. That has been decided, under the war power-nowhere else. Mr. HENDRICK. There is no constitutional right of that kind resting in the Government?

Mr. Cox. None except under the war power.

Mr. HENDRICK. They have aided them, but have never undertaken to construct one in the name of the United States Government. The United States Supreme Court last week decided, in the case of an express company brought up from the State of Indiana and a telegraph company of the State of Ohio, that the States had a perfect right to tax and double tax

Mr. Cox. There is no doubt about that. In the exercise of the war power General Grant undertook to cut that canal around Vicksburg; but that was simply an exercise of the war power.

Mr. HENDRICK. I did not want you to appear in the record as saying the Government had a right under the Constitution to build a railroad or telegraph line.

Mr. Cox. I put it on the technical ground, and the ground it has always belonged to, that it is a war power. There can be no question about it at all.

BRANCH BANKS IN OTHER COUNTRIES.

Mr. BROSIUS. Under the terms of this bill no branch bank can break up without the institution breaks up, because it is all one institution, just like the branch bank of Scotland, or France, or any other country where they have branch banks. A branch is simply a child of the parent institution and the parent institution is responsible for all the obligations of the branch. So, if there were a branch established, as there may be, by obtaining a concession in a South American country, that branch could not break up unless the parent bank broke up. The directors, the stockholders, of that entire institution, which includes all its branches, are liable for the liabilities of the bank and for double amount of their stock for the debts of the bank, which includes all the branches.

Mr. FOWLER. We must go into every other country under the laws of that country.

Mr. BROSIUS. That is true, but under the laws of the country, within the powers of the corporate articles. Our corporation could not exceed the powers given in its charter. For instance, if there is a provision in the charter prohibiting it from owning real estate beyond its needs it could not buy half of Brazil.

Mr. FOWLER. But you see Brazil controls down there, and if the Brazilian Government did not like anything about our charter

Mr. BROSIUS. You do not understand me. The point is this: That there are two limitations upon the actions of this bank in Brazil, one limitation by the powers or rights given in Brazil and the other limitation by the charter itself. So you could not break this bank down there by going into the real estate business, for instance.

Mr. FOWLER. Oh, no; what I rose to say was that the branch is a part of the parent bank.

Mr. BROSIUS. But I inferred from what Mr. Cox said that he thought it would have a distinct power.

Mr. Cox. Pardon me one moment. The only way I have to judge of a conclusion is to try it theoretically in my mind. These men are incorporated. They go into Brazil. The authority of Brazil confers upon them the right to own real estate. Now, it seems to be in your mind that they could not acquire that right because the charter of the United States prohibits that.

Mr. FOWLER. Nor could they prevent them from buying it, but they have to act under this charter that gives them their life.