The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1866-05-29
TUESDAY, MAY 20, 1866.
Shall United States Bonds be Taxed

IuB TcCtub SptbCh VI uDus JOHN SHERMAN uuNll
an authorized copy of his address should come
TO hand. Such a one has been placed before us,
but at the same time so able a com pendlum OF
the whole address fIom the New York EOening
Post, that we cannot do better than merely
repubish the synopsis as given in our New York
contemporary
"Mr. SHERMAN first laid II down as settled law, be-
yond all question that no state tax the bonds of
the United states, unless the right to do so is ex
power In the States he sald rs entirely inconsistent
with the supreme power OF the General Government
70 t9ow h And moit t Po any ne natn says rs s
constitutional Jaw which has ever been mooted IN
"He refers. for general principles TO the noted
case of 'MCCULLoCH against the State OF Mary.
land;' and for a specific decision to the case OF
WESTON against the City of Charleston" I'd
Peters, 449 The City of Char eston, in 1899 un ier
authority of q state law LEVIED tax upon United
States bonds the hands OF a ciizen. The
supreme Court of the State decided in favor of
the validity of the tax but Judge HUGER dlssented on
the ground that If the states can tax the stock of
the Uned States, 1T Is impossible not to per-
ceiye that the fiscal operations of the general
Government may be completely frustrated bV the
for loans, but who will lend, If the States
can appropriate the whole 70 their own use2 Ihe
case came before the supreme Court of the United
states, and the Judges concurred unanimously in
the decision which was gwen 0y JUDGE MARSHALL,
that 70 allow the taxation oil government securities
would enable the states destroy the power of the
National Government, prevent it II, m prosecuting
war, aud from maintaining the authority of the
United States MS view has been acquesced in
by every Judge that has ever sat upon that Dench
and has never since been contrOverted by any state
"The question was brought up while Judge fancy
was on the bench, in 'DoBBINs vs. The Commas
Tearmed ed Also in tbe BANK Bnu 'Ge o PnSse was
Tax Commissioners of New York City IN 1862 In
one case OF later date, the Court held by majority
that shares in The national banks may be taxed, Oe-
cause 1t was evidently the intention OF Congress not
TO exempt the shares from taxaron, if the States
choose TO tax them 1t Is, therefore, settled prn
cIpe of law whether il inserted in the ac or nos
that United Sta es bonds cannot be taxed by the
states Congress chooses to make tan express
part of the contract at the time of making the loan
On the question whether Congress should moor
poiate IN the act PERMISSION to the states to tax
the bonds, he asked whether il would be wise now
to allow to the States such power the public
credit. All the bonds outstanding are guaranteed
against being taxed. If the new bonds are not thus
eXemp ed who would sur ender an existing bond
for new one at five per cent, liable to taxation at
the pleasure of every Safe?
On the argument that 1t is unjust to exempt so
much properly II ON Local taxes, ne said 1t was not
privilege to the holder of the bonos but right of
the supreme power OF the whole country to borrow
money on the most avorab terms IN its power. If
the esent rate of ineret were to be continued the
taxpayer MIGHT justly complain But II sueh terms
are offered will induce the boDdhoder TO be sats
fed with five per cent Tor his money, while tbe tax
peyer gets X or seven per cent for his the bond
holder may say with truth II pay my tax in ad.
vance" This Iolcv in England has reduced the
rate OF Interest on public ties IRON to three
"Mr SHERMAN closed this part'of his argument in
these words 81 say, therefore, that IN every view
in which can take OF this bill 1t wise measure,
intended to save interest The puOlc debt 60 ad:
just correct principles EQUALITY of taxation and
TO tighten the enormous burdens upon our people
find there is another feature which commends 1t 10
my favor. 1t this bill pass IN the form IN which it
now amos, the tnndhOders will the mseves pay off
the principal OF the pubic debt The one per cent.
saved on the rate of interest will pay off every
When the fundholder and the Taxpayer stand
before the public musings, and TINS matter is
dragged into politics as 1t will be- and the tax payer
n hn nRnn rfuN o. arnVf
and nee from all tax, the fundholder may say, NO,
my t11end, it is not; your money you can loan to
your neighbor at six per cent interest, and the law
enables you to collect the principal at pleasure; L
have already paid for this privilege by deducting
One-sxh OF my income; have surrendered the
principal sum loaned By me for an annuity for
thlrtYsiX years and my share OF the taxes VIII paw
off every dollar OF the debt within one Generation"
From the able speech FROM which we have
quoted so fully, two conclusions can be lde
duced:-1st. The United States have right to
prevent State taxation on the bonds; ID. Such
an exemption is an act of no injustice to non
holders. We may add another statement to
those already made which go SO far as to deny
that the non.taxaton clause Will in the least
decrease the popularity of the bill. A recent
article in opposition to the funding plan declared
that those who were unable to buy the Consols
would dislike this discrimination in favor OF a
special kind of investment. We do not think
that such dislike will amount to more than an
insignificant faction. The sum to be absorbed
is over thousand millions within the next two
years, besides twice that sum as soon as posi-
ble This thousand millions will naturally draw
into its investment hundreds of thousands of
people. Parties who have but Elittle,
and desire to have that little safely
put away, will flock to secure these
long-running bonds OF course, the smaller each
investment the larger the number of persons
interested, and within this class will be included
all those who pay the most taxes, and attend to
he finances of the nat on. As the loan is offered
to all, why should those who are either debarred
by necessity or unwllingness from invest.
ing, be indignant. We consider the non.taxa.
tion clause as one of the greatest evidences Of
its popularity, and as an indispensable requisite
to the success of the plan.
Too much credit cannot be given to Mr.
MCCULLoCH for the careful devlsing of the sys-
tenn, and to Senator SHERMAN for the ability
with which he has urged its claims. Whatever
may be the difference of opinion in regard to
the Secretary's political course, there can be no
denial to him of the elements which make the
able finance minister. Despite the unexpected
opposition from certain powerful quarters, we
predict the adoption OF the plan which of all
others meets the popular wishes.
A Peuured Judge.
THE dogma of State supremacy seems to prevail