The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1868-07-03
.0heQt1tetII1jijg(etrr
The Proposed TAX ON Interest.

est on United States bonds ten per cent.
This is equivalent to reducing the In
teTest on the bonds one-half TO three
quarters of one per cent. On the hye
per cent bonds, 1t reduces the interest
to four and a halfp per cent. On seven
ty.sevenths per cent? Whether this bill
will pass remains to be seen. Its effect
Is as follows: Suppose Smith has loan
ed to the United States certain moneys,
for which the United States has agreed
to pay him i've per cent. interest. I'm
der this scheme, which provides that
the tax shall be deducted and retained
by the Treasurer, the United States on
" pays him four and a half per cent
one half per cent. less than his con.
tract calls for. In addition to this,
Smith has to reckon his interest in his
income returns, and pay an additional.
tax on 1t for income. This is how
ever perfectly just, as the people have
to pay income taxes also. But the
falling on particular class, by
whom 1t will be, of course, strong
ly opposed In Congress; and. per-
haps, before the courts. Nevertheless
Congress has, undoubtedly, power to
levy special taxes, and the question of
levying special tax Is generally one
of policy, Viewed from tho standpoint
of the general veal. What effect will
It have upon the funding of the debt at
a lower rate of interest? This Is one of
the main questions to be considered.
1t Is evidently the best policy for the
nation to get its debt reduced to the
lowest rate of Interest possible. II this
can be done under a special tax, not
exceeding fair rate, SO much the bet
ter. But If the special tax prevents a
decrease of interest. SO that as much
Is lost in Interest as Is gained by the
tag, the country will be no better OIL.
The question needs considerate and
wise handling, which, 1t will, we doubt
not receive. 1t Is pretty. certain that
even this resolution will depreciate the
value of United States securities, and
thus unfavorably affect the Govern
ment credit, II the bill shall pass. Cap
italIsts will, no doubt, reason that II the
interest be thus decreased by one Con-
Rress, there will remain for them no
security that future Congress may not
still further reduce the interest. All
these considerations need to be careful
IL scrutinfzed.
There is another aspect of this matter
which also needs to be considered. Is
1t morally right and honest for the Gov
eminent, after borrowing money, and
giving its bonds for certain speciti-
cally expressed rate of interest, to de.
clare that 1t will not pay the agreed
contract rate but, under the name of
tax, will only pay a considerably low
er rata3 Is 1t honest for the Govern
ment, after makinga solemn regal con-
tract with Mr.. Smith, whereby the
Nation has agreed to pay him, for the
use of borrowed money, one hundred
dollars a wear, to now declare that 1t
will only pay him ninety dollars?-for
this is exactly what the resolution pro-
poses to de. 1t is quite natural that
Smith will be careful not to lend such a
Government any more money, unless
at such high rate of interest TINT he
can afford to be taxed roundly;i and so
the credit OF the Nation Will be i'm
paired. But the honor of the Nation is
of much more importance; and what
will be thought of its honor If such u
proposition shall become law? This Is
serious question, and one that neither
Congress nor the people can afford TO
overlook. For IL is certain that the
Republic has solemnly stipulated, in
its bonds, by its laws, to pay certain
yearly interest for borrowed moneys;
and this resolution now proposes 10
keep back, and refuse to pay, one.
tenth part of theinterest thusprOmised.
This cannot be regarded as an honest
and honorable fultillment of the ma
tionnl contract obligation.
Mr.. Boutwell,, on Tuesday, showed
Congress and the people a much better
way OF alleviating their burdens. His
plan will require patience and honesty.
But, patience and honesty are essential
to ali financial success, and any plan
which ignores them will ultimately be
disastrous. Mr.. Boutwell, proposes TO
authorize the issue of eight hundred
millions OF dollars, payable in cnin in
terest at five and half per cent, in
tended only for the citizens of the
United States and valueless in other
hands. These are to be exchangable
for fve-twenty bonds. He also pro-
poses to issue five hundred millions OF
bonds bearing interest at four and q
half per cent, payable in gold and not
taxable, for foreigners. These are to
be oxohangeable for FIVE twenties until
July, 1869. BE also proposes to use
twenty. five millions OF gold, now lying
idle in the Treasury, to purchase five.
twenty bonds at the market price, to be
used as a sinking fund, and the interest
thereon to be applied TO the redemption
ofother bonds, OF course, the success
| of negotiating this new loan will de-
pend upon the credit of the Govern
ment. IfIt Is trif1ed with, these bonds,
with lighter interest, will fall dead
upon the market. If it Is kept sound,
the prospect of q long reliable loan in
exchange for bonds that viii be re.
deemed in few years will be regarded
as compensation for the difference in
Interest. Honesty and patience will
form the only satisfactory financial
policy that can possibly survive any
disaster or trouble.