The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1868-09-09
BEND TAXATION.

and is Replied 20 by Jay Cookies Organ
IFr0m Sandusky Register Jay Cookies organ
ON Saturday last Hon. George II. pendleton ad-
dressed tine democracy OF Huron county az Norwaik
Being DESTROYS Of receiving the pure milk OF demo-
cratic doctrine from the breast or its recognized ex
FOUNDER, we went twenty miles TO listen to his adj
dress Mr.. PendetOn uniformly begins his speeches
by dsolaimng all intention OF incorporating his
opponents and by concedng to them the same pa
tTiOtsm conscientiousness and honesty OF purpose
which he claims for himself inns at once disarms
hour. How erevously that same listener is
doomed TO be disappointed may be infer
red when we say that Mr.. Pendeton in
the body OF his speech distorts the truths OF his
OF fact viii suit his case and leaves the remain.
der unsaid; admits no wrong in his own party and
comedies no good to the opposing one. we regret to
Apply 10 so pleasant gentleman as Mr. Pendleton
so harsh title as that of demagogue but we fear
his Norwalk speech viii compel us to do this men
tally, whether we do 1t in public or not By dema-
gogue we mean an artful orator who seeks to innn-
ence and lead the unrehecting multitude by pander-
ing 70 popular and unworthy prejudices by the prac
hce 81 Specious arts and the telling of half truths.
Postponng more specific review of Mr.. Pende-
TONS statements TO another time we shall here refer
only TO his position on the question OF state and local
taxation OF government bonds. one of the leading
eounts In The speakers Indictment Of the republican
party was the fact that the bonds OF the national gov
eminent are exempt from State and local taxation.
lie dwelt upon this as republican outrage upon the
rights OF the people, wicked discrimination in favor
vi me rch ana against the poor, and an abuse which
ought not TO be tolerated. But he left the matter
Just there. He failed to state in what way a demo-
cratlc administration would remedy the alleged hard
ship. Yet the inference he intended to have ignorant
men draw from his language that the election OF
seymour and Blair would remove all cause for
complaint by securing the prompt and rigid taxation
of ali national securities. lie did not even hint that
there were grave legal and economical difficulties,
II not msurInountable obstacles In the wav OF local
taxation OF government bonds. He wished to profit
by half truth. This is the uniform course pursued
over. Feeling the injustice done the republican
party by Mr.. Pendeton's one sided statement OF the
case, ana wishing to have him publicly state what
remedy he would apply TO the evil of bond eXemp-
lion, the writer OF this sent the speaker note as
Mr. PendetonYou complain that the bonds the gene
La government are exempt from state and local taxation
the ey he ak 6S you
e United states Supreme Court three separate occasions
before nay Y sesas 10 pay the Sonas e
When the above reached Mr.. Pendleton he had
closed his address, and Mr.. Mckinney was speaking.
There was abundant time, however, after Mckinney
as tie subject did not require more than three
minutes time, but after reading the note to several
persons on the stand he placed It in his pocket and
the meeting adjourned. Ninetenths Of the democrats
present went away believing that bond exemption
was a piece of atrocious radical oppression, and
that there was not the slightest in the world
why states should not tax national securities.
AIterward, at the ST. Charles Hotel, Mr.. Pendle
ton sent for the writer and during an interview he
explained that the written question mad reached him
AFTER he had finished speaking, he would have
been pleased to answer it publicly. He then de.
hned his position in subs lance, and for the most
part. In words, as follows:-
"The usual argument against State taxation OF
government bonds Is that it Will not do for the gen.
erai government to give the several States control
over the market value of its securities by admitting
Their right TO tax them like other property. Bat the
practical difficulty in the way OF State and local tax
alton CO the bonds is the fact that the general gov.
erninenJ does not assent to such taxation. Now
would have the general government give this needed
assent.r
The question was here asked:-"But must not this
assent be given when the bonds issued so that
purchasers may know what they are buyingr' Mr..
Pendleton satd:-
THAT Is an undecided question. MY own opinion
II, but hold IT subject to future modification that
the national government can change its rule and
rate OF taxation after the bonds have been issued
In my opinion there Is nothing amounting to a CON
tract that the present bonds shall not be taxed
higher than a specified rate. The government
changes Its rule and rate of taxation on other
property; why not on its bonds as well But If
there are good reasons why State should not tax
TO tax Its bonds to an amount equal to the tax both
State and national, which is levied on other
As Mr.. Pendleton had had nearly two hours to
consider the question submitted to him we presume
his reply Is one he is willing to stand by. Let US see
how II Will bear brief examination
The United States supreme Court has decided in
five distinct cases that state does not possess the
right to tax the bonds OF the United States first by
Chief Justice Marshall in the case OF McCulOch vs.
the State OF Maryland a Wheaton, 49,; again by the
same jurst In the case of Weston VS. the City OF
Charleston q Peters, 449) again in the OF Os.
born VS.. the United States Bank; again IN 1862, in
the case OF the Bank of Commerce vs. New York u
Black, 620; and again in the case OF Van Allen VS..
the Assessors Is Wallace, 5S5). Mr.. Pendeton does
not question the binding force OF these decisions
II we understand him, but he would have the ma
tional government confer the right OF local taxa
ton OF its bonds by act Of Congress. Now 1t is
by no means certain that this right be conferred
The question has never been adJudicated, but the
best authorities lean to the opinion that Congress
cannot legally authorize State Or municipality 10
tax the bonds OF the United States. The states are
restrained from levying such u tax by an implied
provision OF the constitution ITSELF as was affirmed
10y the Supreme Court In each OF the cases have
cted and an act OF Congress cannot repeal any pro-
vision of the constitution, express or implied.
In 1892 when a measure involving this same prin-
Cipe pending in the Senate, Daniel Webster
the defender Of the constitution" held that Con-
gress could not by enactment confer on a State
the right to tax the bonds OF the United states. lie
sald:-
Now SIR ask how States from this con.
s,utonal prohbiony Il true that this prohibition
imposed express terms but results from the general
ed,st In fun force This Is protection, them which the
this Congress deemed necessary to be
created in order TO carry on The So soon as
can we throw on from this government! this constitutional
he constitution We cannot say that every power erey
branch every institution aud every law Of government
tecon which the constitution gives II.
We give this view OF the case, not as necessarily
committing ourselves to Its soundness, but as
proof that 1t is by no means certain that
state can tax government bonds even alter
reer we nave ns uy 50 n 40 Lag go NO
George Pendleton on the other.
The reason why the constitution does not permit a
state TO tax United states bonds Is that the opposite
rule would place the credit Of the nation at the
mercy OF the several State legislatures and place IL
In the power OF the several States Thy excessive taxa.
Ton OF national securities) to prevent the general
government from borrowing money by rendering
government bonds worthless as an investment.
But waving the question whether Congress can or
cannot confer the right OF taxation upon the Saes
et us consider Mr. Pendletons proposition to have
TINS rlght conferred after the bonds have been sold
TO the people. Mr.. pendleton will excuse us for saw.
Ing that this Is nat reputation and we do him the
credit 10 believe he would abandon the theory N he
had control OF the legislation OF the country The
standing rule OF the constitution and government ia
that United States bonds shall not be taxed nv
States. Individuals buy them with this understand.
ng and accept lower rate Of interest in considera-
tiOn OF the exemption. Hence the bonds can only
be honestly taxed by States when their liability to
such tax Is made known at the time OF their issue
and sale. 10 "change the rule" after the bonds
have bee1 sold TO the people Is 20 obtain money
under false preenccs and perpetrate a swndle.
But the exemption OF the present United States
ponds from local taxation does not rest alone the
constitution and the failure OF Congress 70 give its