Burlington free press. [volume] (Burlington, Vt.) 1827-1865, 1865-08-11
Treasury DEPARTMENT,
Office OF [ oMPr'R OF TEE CURRENCY

UFFECE OF oMPr n OF TEE URRENCI,
WAsHiSuToS, July -. 1866. y
Dear Siry Your letter % the 18th inst, IL
the Secretary Of the Treasury, has this day beon
referred 10 me, with the REQUEST that / should
answer it.
| cannot but express my surprise that the leg
islature OF the State Of Connecticut should enter
tain a propos ton virtually TO eon6seate pOr-
iion Of the Government Securities held by inhab-
itants OF that State
The law exempting from taxation Government
Securities is SO specific and clear that II cannot
be questioned. The bonds We're disp6 SD Of, aud
purchased with the provision Of law as a part OF
the contract, that they were 10 be exempt irUm
taxation, and the country has received an equiv
slent tor such exemption in the additional pr.ce
received for the bOnds.
Can any one telieve that the obligations Of the
government would have sold tor any thing like
the price realized, or at any price at all cUm-
meusurate with their value. If it had heen cup
posed possible that they could be taxed by State
laws, directly or indirectly? Ii Your Legisla-
ture can impose a tax OF 10 per cent on the III
come derived from Government Securities, it is
Just as competent for il 10 impose a tax Of 90 OF
100 per cent
IL is source of regret that any Northern State
should for single moment couutenInce an at
tempt 10 repuiiate or nulliy constitutional
act of Congress, and one, too, that WAS deemed
necessary 10 preserve the integrity ofthe nation.
Ia one aspect Of the case, however, 1t may be
regarled as a most fortunate occurrence, as il
will serve 10 show the people that it will not BE-
safe for the Government to allow the Southern
States 10 be 60 reconstructed IS to permit their
being Represented in Congress as a unit, as they
would be, by men VINO would be- but too willing
10 ante with Northern men Of the character o:
those iavoring the measure under consideration,
10 repudiate the national debt, II not by direct
action. by an equally destructive want Of action
in providing the means of payment. am glai
10 hear and the whole country have reason 10
reioce that the Finance Committee OF our State
Senate stands opposed to this insldious measure.
The effect Of the proposed tax would be TO reduce
the value Of the Government Securities in the
hands Of the people of your State, 10 per cent.
provided there was an assurance that no iur
ther eIaciion would be imposed, but without
such assurance would reduce the market value
much more, as the next, or any subsequent
Legislature could increase the tax 10 the extent
Of destroying their productive value entir'ly
The State of New Hampshire has pissed Il law
imposing a tax Of % per cent. on the income de-
rived fiom national securiti's
If this action was confined 10 the two States,
the recult NOulu ucpiiNt AhN
of New Hampshire and Connecticut Of ihe prlVl-
lege Of holding or owning government securities.
Il is very clear that the States would not get
the tax, as the owners would sell the securite'
to parties out OF the States. or 60 out themselves
with the securities
II, however, other Northern States Should fol
low their example, and it should be conc~l' d
that they had the right to do so, the cred; Of the
Government and Of the National currency would
be practically destroyed.
This. perhaps. is the object Of the confeierates
in this suicidal scheme. | think | am justified
in saying that there is not the least danger Of
the proposed act, il it should become lar, be-
ing sustained by the Supreme Court OF the Uni
ted States.
II is, perhaps, proper also that shouli say
that the Secretary OF the Treasury ooncurs in
nv views as to the right Of the States TO tax
United States securities, but is otherwise igno-
rant Of the contents of this letter.
Referring to the proposed act 10 tax the stock
ownei by individuals IN national banks. am
clearly Of opinion that such stock repre-eBted
by capital invested in whole in part IN Unite'l
States securities, Is liable State taxation only
on the amount not so invested, and inclose her,
with printed slip. containing letter written
by E. G. Spauld.ng. Of New York, and one
written by myself, toh concurring in the views
| have stated on the subject.
Yours very respectfully,
FREEMAN CLARKE.