The Lancaster gazette. [volume] (Lancaster, Ohio) 1863-1886, 1865-09-14
EXEMPTION OF GOVERNMENT SECURITIES
FROM TAXATION.

money, we stipulated three things /;
First, that we should repay the prin-
cipal sum at a fixed time; second,
that we would pay q fixed rate of in
terest, specified on the bond; and
third, that the sums thus loaned us
should not be taxed by State, City or
county authorities. As the last stipu-
lation is important, | will read the
language of the law:
"All stocks. bonds, and other secu-
rites Of the United States, held by in
dividuals, corporations and associa-
tiohs within the United States, snail
be exempt from taxation by or under
State authorities" J."
This provision is as much q part Of
the contract as any other, and upon
the faith of it, the people OF the United
States loaned this money freely to the
Government. Only by this means
were we able to conduct the war. II
should be remembered that this was
done when the great mass of the Dem.
ocratic party in the South was in arms
against the Government, and when
Democrats in Congress were proclaim
ing that grecnbacks wosld be bought
and sold by the chord, and that Uni
ted States bonds were worth nothing
when the London Times, taking uT
this Democratic cry, said that the in
evitable end of the war for the Unior
was defeat and reputation. 1t j!
probable that if we had all been united
and had all sustained the fnancia
credit Of the Government, we coul(
have borrowed money on better terms
but we did get the money on these
terms, and, by means Of it, succeeded
and now the question is, whether W.
will comply with the contract. Inan
swering this question we should inquire
first, has the United States a right un
der the Constitution, to exempt its Sc
curities from State taxation; and sec
-ond, was this provision necessary tt
enable us to get the money.
Now affirm that this provision i
not only clearly Constitutional, bu
that even without it no State, county
or town could assess d tax upon Gov
erhtheht securities. This provision
was inserted IN the body Of the law
simply to give notice to the holders o
these securities Of what would be theil
legal rights. 1t has been repeatedly
decided by the Supreme Court of th,
United States that no State can lay O.
authorize a levy Of any tax whateve,
upon Government securities. Thi
question was first presented to tn
Supreme Court of the United States il
the celebrated case of McCulloof
against the State Of Maryland decided
in 1919. The case presented was an
attempt by the State of Maryland tt
impose tax on the Bank of the Uni
ted States and the Government securi
ties held by it. 1t is one of the mos
remarkable for the forensic eloquenc,
displayed in its argument, as well a
for tho great learning and ability o
the decision of Chief Justice Marshal
in announcing the opinion Of thu
Court. Among the points decided b.
the case was that the State Govern
ment had no right to tax any Of Lh
constitutional means employed by tn
Government of the United States t
execute its constitutional powers; tina
as the Constitution OF the United State
conferred upon Congress tho right t.
borrow money, all the money so bor
rowed, and all the agencies used fol
that purpose, could not be taxed b.
the States; that such tax would be al
authority to retatd, impede, btrthel
and control the operations of the law
Of Congress, and might be means G
nullifying them. This decision ha
been repeatedly referred to as the es
tablshed law the land. But as til
tax then was imposed hpoh Unite,
States Bank stock, and not dreGtl,
upon United States bonds, the ques
ton came again before the Suprem
Court of the United States IN 1929, il
the case of Weston against the Cit.
Council of Charleston, South Carolina
ahd the subject was again discussed a
great length,
Opinion OF CHIEF JUSTICE MARSHALL
lido not like, in public discussion
of this kind, to read decisions Of courts
but the argument OF Chief Justice Mar
shall in this is so clear upon the yer,
point at issue, that | will read u shor
extract .. .,..,
"Is the stock issued for loans made
to the, Government of the Unite'
States liable TO be taxed by states ant
corporations? r.. u .
Congress has power TO borrow mon
ey on the credit Of the United States
The stock it issues is the evidence Of
dobt created by the exercise of thi
power. The tax in question is q ia.
upon the contract subsisting betweeI
the Government and the Individual
1t bears directly upon that contrac
while subssting and in full force
The power operates upon the contrac
the instant it is framed, and must i'm
ply a right to affect that contract.
''If the States and corporation
throughout the Union possess the pow
er to tax contract for the loan c
money, what shall arrest this princi
pie in its application to every othe
contract? What measure can Gov
ernment adopt which will not be OK
posed to it's influence?
"But it is unnecessary to pursu
this principle through its diversifie
application to all the contracts and t
the variods operations Of Government
No one can be selected which i'd c
| .....u i~..Iol :nknuoek A. Al. 1919, 49, "a