As I understand it, charges of dishonesty and want of integrity in the conduct of their office have been made against two members and charges of obstructing the work and demoralizing the organization have been made against the other member. Also, as I understand it, the latter member is charged with openly defying your constitutional authority to take care that the laws be faithfully executed by refusing to answer your reasonable inquiries concerning the situation existing in the Authority.

I think I may state it is an unassailable proposition that if any of these charges is established, the power of removal ought to exist. Furthermore, the Tennessee Valley Authority being an executive agency, performing executive functions, and therefore in the executive branch of the Government, the power of removal ought to be in the President.

Under the principles announced by the Supreme Court in Myers v. United States, 272 U. S. 52, there would appear to be no question that the power of removal is in fact vested in the President. The later decision in Humphrey's Executor v. United States, 295 U. S. 602, limited the application of the Myers case but did not disturb the ruling therein as applied to executive officers.

In the Myers case the Court upheld the President's power to remove a postmaster notwithstanding a statutory provision that he should hold office for four years and should be removable by the President only with the consent of the Senate. In the Humphrey's case the Court held the contrary in the case of a member of the Federal Trade Commission, but relied upon the distinguishable fact that the Federal Trade Commission exercises quasi-legislative and quasi-judicial functions and is not a part of the executive branch; and it also laid great stress upon the legislative history of the Federal Trade Commission Act as indicating a purpose of the Congress to secure the maximum independence of the Commission from Executive interference and control.

These distinguishing factors are not present in the case of the Tennessee Valley Authority. It does not exercise

quasi-legislative or quasi-judicial functions, and the legislative history of the Tennessee Valley Authority Act contains no such indications of purpose on the part of the Congress to restrict the President's ordinary power to remove executive officers appointed by him.

The following provisions of the Tennessee Valley Authority Act (48 Stat. 58, 60, 63) are the only statutory provisions bearing upon the question:

SEC. 4 (f) "The board shall select a treasurer and as many assistant treasurers as it deems proper, which treasurer and assistant treasurers shall give such bonds for the safekeeping of the securities and moneys of the said Corporation as the board may require: Provided, That any member of said board may be removed from office at any time by a concurrent resolution of the Senate and the House of Representatives."

SEC. 6. "In the appointment of officials and the selection of employees for said Corporation, and in the promotion of any such employees or officials, no political test or qualification shall be permitted or given consideration, but all such appointments and promotions shall be given and made on the basis of merit and efficiency. Any member of said board who is found by the President of the United States to be guilty of a violation of this section shall be removed from office by the President of the United States [Italics supplied.]

*

The provision in section 4 (f) that members of the Board may be removed by concurrent resolution of the Senate and House does not, and could not have been intended to, provide an exclusive means of removal. This is demonstrated by the provision in section 6 that under certain conditions the President shall remove. Perhaps the most that can be said of the provision in section 4 (f), under the circumstances, is that it was intended to provide a method of removal by the legislative branch in addition to the more cumbersome method of removal by impeachment.

The provision in section 6 that the President shall remove members of the Tennessee Valley Authority Board for violation of the inhibition against appointments and promo

tions for political reasons, cannot be construed as an intendment with statutory force that he shall not remove them for other causes. To authorize the President to remove a director for mere consideration of a political endorsement in appointing a minor employee, and yet to deny him the power to remove a director for more substantial causes (perhaps amounting to malfeasance in the highest degree) would be an absurdity-and the rules of construction do not permit an interpretation which would attribute to the Congress the intendment of an absurd result.

It is my opinion that you have the power to remove members of the Tennessee Valley Authority from office. Respectfully,

ROBERT H. JACKSON,

Acting Attorney General.

LIABILITY OF NATIONAL BANK FOR TAX ON CIRCULATING

NOTES

1. Sec. 13 of the act of March 14, 1900, 31 Stat. 49, merely provides a lower tax rate under certain circumstances than is provided by sec. 5214 R. S.

2. The tax imposed by that section is a tax upon the actual circulation of the notes of national banks.

3. Such notes remain those of the issuing bank until deposit of lawful money with the Treasurer for redeeming them, when they become part of the public debt.

4. The calling of the 2-percent consols stopped interest and rendered them ineligible as security for circulating notes of national banks. 5. That a business is unlawful does not exempt it from taxation. 6. While the notes of a national bank remain its notes the bank is liable for the tax on their circulation notwithstanding they are not properly secured and hence not entitled to circulation.

The SECRETARY OF THE TREASURY.

MARCH 22, 1938.

MY DEAR MR. SECRETARY: I have your request of February 23, 1938, for my opinion upon the question "whether the Lincoln National Bank of Newark, N. J., is liable for a tax on its circulating notes from July 1, 1935, to December 31, 1937, under the provisions of section 13 of the act of March 14, 1900, 31 Stat. 49 (U. S. C., title 12, sec. 542)."

You state the following facts as giving rise to the question: The Lincoln National Bank deposited with the Treasurer of the United States to secure its outstanding circulating notes $600,000 face amount of 2-percent consols. The 2-percent consols were called for redemption as of July 1, 1935. Due to that fact, to the calling of the 2-percent Panama Canal bonds as of August 1, 1935, and to the expiration of the circulation privilege attached to other bonds of the United States bearing not in excess of 33% percent interest as of July 22, 1935, the Treasury Department took the position that after August 1, 1935, there were no bonds. eligible to be pledged by national banking associations for security of their circulating notes, and so notified such banking associations. All national banks with the exception of the Lincoln National Bank acquiesced in this view and accordingly made provision for the redemption of their outstanding circulating notes by depositing, or arranging for the deposit of, lawful money in the amount of such notes with the Treasurer of the United States. The Lincoln National Bank, however, did not make such provisions until the latter part of December 1937, shortly after the decision of the Supreme Court in Smyth v. United States, 302 U. S. 329, sustaining, in principle, the validity of the call of the 2-percent consols for redemption, at which time it authorized the redemption of its bonds deposited as security and the transfer of the proceeds to the Treasurer for this purpose.

The question of the liability of the bank for the tax in question arises in your Department at this time in connection with your duty to assess the tax, if due, against the bank.

By section 5171 of the Revised Statutes, national banks were authorized to issue their circulating notes upon depositing with the Treasurer of the United States any interestbearing United States registered bonds and otherwise complying with the statutes. Section 5214 imposed upon the issuing bank a tax of "one-half of 1 per centum each halfyear upon the average amount of its notes in circulation." Section 11 of the act of March 14, 1900, 31 Stat. 45, 48, authorized the Secretary of the Treasury to issue 2-percent

bonds (consols), payable at the pleasure of the United States after 30 years from the date of their issue, in exchange for certain outstanding United States bonds payable in 1904, 1907, 1908, and bearing higher rates of interest, and section 12 of that act authorized national banks to substitute such bonds for any bonds deposited with the Treasurer to secure their circulating notes. Section 13 of the act reads:

"That every national banking association having on deposit, as provided by law, bonds of the United States bearing interest at the rate of 2 per centum per annum, issued under the provisions of this act, to secure its circulating notes, shall pay to the Treasurer of the United States, in the months of January and July, a tax of one-fourth of 1 per centum each half year upon the average amount of such of its notes in circulation as are based upon the deposit of said 2 per centum bonds; and such taxes shall be in lieu of existing taxes on its notes in circulation imposed by section 5214 of the Revised Statutes."

It seems clear that the tax is imposed upon actual circulation, and that the effect of section 13 of the act of March 14, 1900, is merely to, provide that when bonds issued under that act, bearing the low rate of interest, have been deposited to secure circulating notes, the tax shall be onefourth of 1 percent for each half year upon the average amounts of the notes in circulation instead of one-half of 1 percent as provided by section 5214 of the Revised Statutes.

By the provisions of section 6 of the act of July 14, 1890, 26 Stat. 289 (U. S. C., title 12, sec. 122), the circulating notes of a national bank become part of the public debt of the United States after deposit of lawful money has been made with the Treasurer for the purpose of redeeming them, but until such deposit is made the notes remain those of the issuing bank. It is true that as a result of the calling of the 2-percent consols those bonds ceased to bear interest as of July 1, 1935 (Smyth v. United States, supra), and that under the statute the bank was not entitled thereafter to the circulation privilege (18 Op. A. G. 493); but the fact remains that the notes of the bank did continue to circulate as its notes, and that the bank continued to receive the bene