Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1858-03-12
VIRTUAL REPUTATION.


VIRTUAL REPUTATION.
m al, tina ,b;ft, and con,rivsnces which have re
suited from narrow and to-,uous policy, that which
taxes our State credit the most reprehensible MOI
only did the Legislature Of 1856 arrange financial
scheme. by which the State OF Virginia ehoud im'
nose tax on her own bonds, but in addition TO ths
every municipal corporation throughout the State
WAS permitted aad invited to lay additional bur
den on our State securities. We are aware that THE
system was initiated without consideration on the
part Of many senators and delegstes-that The pro-
posers of the scheme were probably the only men
who had dgested it's prospective effect, and that u
was instituted for concealed purpose which they
did not venture to expose to general recognition
But when ts object has been discovered ana lid ope
ration tested by experience. each OF tue sooVe renee
tions adds new reason for it's prompt and entfe ap-
rogation.
Propsrly conducted the system OF finance indicated
by our present State constitution would afford the
heat possibls guarantee of limtess State credit
which would leave our government entirely indepen-
dent of foreign capital, by rendering State stock the
most desirable investment which could tempt our
own capitalists. State stock yielding an interest OF
six per cent, and with the payment OF the prncpai
within thirty four years, secured by SINKING iaho'
would furnish the safest least troublesome ana IL"
deed the most profitable investment which could OF
devised. The average rate OF investments Will scarce-
~ weld the same interest, and every other invest
inent within our reach either involves rs k OF Inc
principal invested, requires, in addition to the &C
tual purchase money, serious many instances
an aabsor bling investment OF the time aud laoor Oh
the capitalist himself. Farmers, renters ana mer-
chant. must risk the loss both of principal and inter-
est must apply all their time and labor to secure
profit, aud when the profit is secured 1t will hardly
average annually ak per cent. nett on the first IN
vestment of capital Let the State creditor have his
loan secured from all risk of delay or failure OF pay
ment, enable him 10 devote his labor to profitable
pursuits unconnected with the investment, ensure
him clear interest of ak per cent, and is ma'he-
mstcaly denous,rabls that the floating capital o!
the State will necessarily compete for investment in
the State debt until Virginia bonds will become ire
exclusive property Of her own citizens Will Constant
" remain above par, and afford perpetual faci''y
of accommodation, limited only by the hnane'a' re-
sources of our entire population
This is amply demonstrated by the ex'stng s'a'e
Of facts Virginia bonds are now quoted IN hch-
moud at "a. The State and corporation taxes i'm
posed on Virginia skies amount together to l4o FER
cant. on the bonds themseives-hus leaving to The
,,ockholder net revenue of only $3.50 on every 500
worth of securities in his possession Now $4tO is
the e1ac. amount of years interest, at ak PER
cent on $685. and if Virginia skies were now quo
ted at 763 at Richmond, they would really be at par.
Instead of this, they quoted at 94-i. g. nearly
to :nty three per cent ADORE par.
This lie calculation which a child could under
stand. The inference is unavoidable. that stocks
yielding but $50 per cent. and standing at ~ would
inevitably rise above par, if the interest were raised
to six per cent.
And what is the result OF this tax State credit
Plainly this the State must either consent to cell her
bonds below par, and thus enter upon course which
will tend TO the further depreciation of her credit and
tax her citizens to pay heavy surplus in addition 10
the amount actually applied to the benefit OF the State
or the Siste precludes her citizens from thepur
chase of stock and becomes entirely dependent on
the stock of other States of foreign ua'ions
A few stocks. indeed, may finally be purchased at
second haud by our own ctzous at prices 80 reduced
az to exhibit the shameful degradation of the Stat"
credit and the pa.iry derived from the tax
imposed on these furnishes the only pretence OF bene
St which can result-a miserable satisfaction to be
Seghed against the injury done 10 the interests
Of our own capitalists, the embarrassment and de-
sangenent of our finances at home, aud the morti-
tying depreciation Of our State credit abroad.
Aud tn, systen is a. immoral as it i, iue1pedien.
Il il TO be described by word in our langusge--a
ha.sk word, indeed, and painful to the honest pride
of every Yirginisn but furnishes the Gully just ce
s,ipton which be applied, and it ia the duty OF
honest msn to probe this political ulcer to the quick
Whenever a State imposes tax on her own credit,
to The extent ofthat tax she s guilty OF REPUTATION
The State of Virgiunis now paying but "a Gu cen's
to creditors, under contract by which she has pro.
missed to pay %. 1t is useless to seek an excuse in
refined distinctions Such conduct would be Gishonorn
BILE in an individual citizen. and can be considered ia
no other light where government is concerned
Es.u the palliative suggestion that the creditor las
entered into the contract with full Knowledge OF the
condition to be imposed, is not in this Instance ad
sn;ss;ble. The stock. Issued anterior 10 1882 We're
SOLD at time wAsu such tax was imposed, or even
contemplated. And even with regard 10 all stocks
subsequently issued, tho principle the sams II one
Legislature has the power to lay tax OF one per cent
succeeding Legislature may ra,se the tax to four per
cent or may even repudate the payment of interest
altogether, by imposing tax of six per ee0. More
over, the power of taxation granted to corporations
esaoves the extent Of taxation even from the contrCi
a the Legislature itself Richmond, Wheeling Alex
aIdris and Norfolk, each may exclude entirely The
sale of Virginia stock w;tGin the limits OF corpora
ton. Place the waiter in whatever light we may, ihs
State is involved in transaction which would dis.
grace priva,e citizen, and which would not be per-
suited in the of citizen by any aesrt OF equity
~ 81. sndon. The State is not only placing her
seed, aud houor at tho mercy OF oil her mnnicp.l
corporSt;ouc bat she is engaged in Sharing her or"
paper.
The history of this unfortunate Innovation is not
devoid Of Instruction. 1t furnishes Developments
which have not yet been made apparent to the public
The new Constitution OF Virginia provides that taxa
ton shsll be equal, uniform and ad raloyGn.
This provision i, qualified by the discretion awar.i
ed to the General Assembly of deciding what pro.
psry shall BIZ exempted from taxation. The Cous,i.
tuition thus recognises the necessity of some exemp
ttons aud necessarily contemplated that Of the State
credit-tLs most important and necessary exemption.
The Legislature of 1875 passed general provisions
,oe taxation under which the State credit WAS
strued to De subject to Thus the present. odous
syseIn had its origin in legislative OMISSION which
y. are disposed to consider purely accidental and tn
Intentional. The Legislature of 1856 fire: gave
press recognition 20 this novel financial arrangement
Strange tu say the report o. the financial committee
which embodied the suggestion, Immediately became
the subject of e1,ravagsn putfs. being generally re
ceived by the press and the politicians, even by ihc
advocates OF internal improvements as most states
naaliks specimen of astute 6nancssring. We can