Green-Mountain freeman. [volume] (Montpelier, Vt.) 1844-1884, 1865-08-08
Taxation of Government Securities.

a -
Hon. Freeman Clarke, Comptroller Of the
Currency, has written the following letter to a
bank officer In Hartford, in reference to the re-
cent action of the Connecticut Legislature On
the taxation Of Government Securities
Treasury DEPARTMENT,
OFFICE OF CoMPT'E OF THE CURRENCY, ;
WASHINGTON, July %, 1865. J
Dear Sir Your letter of the 18Th inst. %
the Secretary Of the Treasury, has This day been
referred to me, with the request that should
answer 1t.
| csnnot but express my surprise that the leg
~lslature Of the State Of Connecticut should enter
tain d proposition virtually to confscate u por-
ton OF the Government Securities held by inhab-
ltants Of that State.
The law exemptng from taxation Government
SECURITIES is 30 specific ana clear that II cannot
be questioned. The bonds were disposed Of, and
purchased with the provision Vi law as a part ol
the contract, that they were to be- exempt from
taxation, and the country has received an equiv.
Rlent Tor such exemption in the additional price
received Tor the bonds
Can any one believe that the obligations Of the
government would have sold for any thing like
the price realized, or at any price at all com.
mensurate with their value, II it had been sup.
posed possible that they could be taxed by State
laws, directly or Indirectly If your LegIsla
ture can impose a tax Of Is per cent. on the IN.
come derived from Government Securities, IL Ii
Just as competent for 1t to impose i tax Vi 81 Of
100 per cent.
1t isa source OF regret that any northern
stat should for q single moment countenancC
an attempt to repudlate or nulllfy q c%onstitu-
tional act Of Congress, and one, too, that was
deemed neceesary to preserve the integrity Of
the nation. In one aspect OF the case, however
it may be regarded as u most fortunate occur
rance, as it will serve to show the people tina
1t will not be safe Tor the Government ~ allow
The southern states " be 30 reconstructed as %
permit their being represented N Congress as q
unit, as they would be-, by men who would be
but TOO wiling to unite with northern men OI
the character VI those %tavoring the measure IN
der consideration, to repudlate tne natonaI
debt, if not by direct action, oy an equally des
%tructlve want Of action III providing tue means
OF payment. | am glad to heal, and the whole
country have reason to rejoice that the Finance
COMMITTEES oil your State Senate stands opposed
10 this lnslduous measure. The effect Of the
proposed tax would be ~ reduce the value o
the Government securities in the hands Of the
people OF your State, 10 per cent, provided
there was an assurance that 10 further exac.iol
would be imposed, but without such ASSURANCE
would reduce tbs market value much more, az
the next, or any subsequent Legislature could
increase the tax to tie extent Oh destroying
their productive value entirely The State U
New hampshire has passed a law imposing
TAX OF rs per cent, On the income derived irOu
national securities.
Ii this action was confined to Ihe two States.
the result would simply he to deprive the people
of New Hampshire and Connecticut Of thI
privilege Of holding or owning government &c
%curities. IL is very clear that tue States wOul,
not get the tax, as the owners would sell ia,
securities TO parties out Of the States, or gO gu.
themselves with the securities.
II, however, other Northern states Should
follow their example, and it should be- conceded
that they had the right tO do ~, the credit o
the Government and oi the national currency
would be practically destroyed.
This, perhaps, Is the object Of the conieder
ales in this suicidal scheme. | think am Jusu
fed in saying that there Is not the least danger
of the proposed act, if 1t should become a law
being sustained by the Supreme Court Of tn,
United States.
1t Is, perhaps, proper also that | should say
that the Secretary OF the Treasury concurs il
my views as to the right OF the States to tai
United States securities, but Is otherwise ignor
ant OF the contents Cf this letter.
Referring to the proposed act to tax the stock
owned by individuals 10 national banks, | an
clearly OF opinion that such stock represented
by capital invested in whole or in part IN UnitoC
States securities, is liable to state taxation only
On the amount not 30 invested, and inclose here
with a printed slip, containing a letter writer
by f. q Spaulding, Of New York, and on
written by myself, both eoncuIrIng IN tho view
| have stated on the subject.
Yours very respectfully,
FRRFuAH CLAREE