Veazie Bank v. Fenno, 8 Wallace (75 U.S.) 533; 19 L. Ed. 482 (1869)
Facts—In 1866, Congress passed an act imposing a tax of 10 percent on notes of private persons, state banks, and state banking associations. The Veazie Bank paid the tax under protest, alleging Congress had no power to pass such an act. This was a suit by the bank against the collector, Fenno, for reimbursement.
Question—Is this an unauthorized use of the taxing power of Congress?
Decision—No.
Reasons—C.J. Chase (5–2). Congress had just undertaken to provide for a uniform currency for the country. To protect the newly established national bank from undue competition from the state banks, Congress was using its power indirectly when it could have used a direct method. Congress had to protect the newly established bank notes and restrain the notes of the state banks as money. Under its power to regulate the circulation of coin, it was able to do this. “It cannot be doubted that under the Constitution the power to provide a circulation of coin is given to Congress. And it is settled by the uniform practice of the government and by repeated deci- sions, that Congress may, constitutionally authorize the emission of bills of credit. . . . Having thus, in the exercise of undisputed constitutional powers, undertaken to provide a currency for the whole country, it cannot be questioned that Congress may, constitutionally, secure the benefits of it to the people by appropriate legislation. To this end, Congress has de- nied the quality of legal tender to foreign coins, and has provided by law against the imposition of counterfeit and base coin on the community. To the same end, Congress may restrain, by suitable enactments, the circula- tion as money of any notes not issued under its own authority. Without this power, indeed, its attempts to secure a sound and uniform currency for the country must be futile.”
J. Nelson, dissenting, argued that states had power under the Tenth Amendment to create banks and that national taxation of such entities gave the national government undue control over such institutions.