Watertown republican. [volume] (Watertown, Wis.) 1860-1906, 1868-09-30
THE BOND QUESTION.
Letter of the United States treasure

SpeCltS VI property aoHoh"o 49,
value, including government bonds an'
other public securities" and you say tha
you wish to inquire what has been th'
practice of the government since Its foun
dation respecting the taxation OF govern
ment bonds
No,c, I do not 5e5teue that anybody o
8onnd mind ever believed that this or any
other ciUiZiaed gouernmeH on the face o
the earth evef tared ats O1cn stocks orPer
Daitted them to be ta1ed ly ANY othe'
po,oer acithin its Hnaats or Jurisdiction.
1t is true that the city of Charleston
South Carolina, exercising authority un.
der that State, did, as earl y as 1873, en-
act an ordinance whereby tax was I'M
posed upon the stocks of the United
States This was perhaps the beginning
of what became a notification afterwards,
and, more recently, open rebellion, Tbs
validity of this ordinance was contested /;
but the Constitutional Court of South
Carolina, then, as now, rebel state, de-
cided the ordinar ce to be valid. his
brought the question whether the ordin-
ance violated the constitution of the
United States, on a writ of error, to the
Supreme Court of the United States.
Here the case, after long and able argu-
ments on both sides, was decided IN 1929,
and the jud sment of the South Carolina
Cor stitutional Court reversed, MIR. JUS
tice Thompson and Mr.. Justice johnson,
of South Carolina, being the only dis
senting members of the court. Mr..
Chief Justice Marshall, in giving the
opinion of the court that the judgment
of the court of South Carolina "oughtto
be reversed and annulled," said: "Can
anything be more dangerous or more in
furious than the admission of principle
which authorizes every state and corpora
ton, in the Union, which possesses the
right of taxation, to burden the exercise
of this power at their discretion E'
The final judgment of the court con.
cludes in these words: "Whereas, it is
the opinion of this court that so much of
said ordinance as imposed the said tax. is
repugnant to the Constitution OF the
United States and void. Whereupon it
is considered, ordered and adjudged by
this court that the said judgment be and
the same is hereby reversed and an
nulled"
This decision of the Supreme Court Of
the United States nearly forty years ago,
seems to have settled the question that
United States stocks canhot be taxed by
state or by municipalities and it has
been acquiesced in by all parties from
that time until now. The question
whether the Government of the United
States can tax its own stock or not, has
never, to my knowledge, been adjudicated.
That it has not been, is probably due to
the fact that it is patent to the meanest
understanding, that any taxation by the
Government Of its own stock, would be
reputation to the extent of the amount
of such taxation.
You say that you remember that
bonds OR other evidences of Interest,"
bearing indebtedness, originating in loans
then contracted, were Issued by the gov
ernment during the administration of
President Buchanan, at rate Of interest
in gold of II per cent. per annum."
And you ask, "Were there public secur.
tiles subjected to taxation on an equality
with every other species of property 2"
[ have no means of knowing whether
these particular securities were taxed by
states or municipalities. They certainly
were not by the general government and
[ doubt whether any other ever attempted
such taxation in the face of the decision
of the Supreme Court of the United
States, to which [ have referred you.
But let that be as it may, there is a his
tory about this II per cent per annum
loan that the people should be slow to for
get 1t was part of the rebellion itself.
Howell Cobb, former Speaker of Demo-
cratic House of Representatives, late
Brigadier General in the late army of the
late Confederate States of America, and
then Mr.. Buchanan's Secretary Of the
Treasury, carried these securities in his
carpet-bag in blanks to the city of New
York, and after slandering the stocks.
traducing the credit of the government,
and announcing his opinion that thew
never would be paid, but that he must
have the money for them at any rate, Of
fered them on the market, and then filled
up the interest blanks at such rate as his
political friends chose to ask him to in.
sert.
Most of them were paid in gold, with
the stipulated .exhorbitant rate of inter.
est added, after came into this Office.
and after the war had begun, and when.
notwithstanding all this, the government
was then obtaining loans at six per cent.
per annum. This loan was made. too,
within very short time after the same
honest Democratic Secretary of the Treas
ury had been using the funds of the
Treasury intended for the current ex.
penses OF the government, in buying up
IN The market the SIC per cent. bonds Of
the United States, that had then many
years to run to maturity, at about 20 per
cent, about their par value. Think of
it. lie bought the immatured six per
cent. stocks at 1,20, and Immediately
thereafter, in an apparent time of pro-
found peace, and when money was abun.
dant, sold securities, receiving par and
stipulating to pay at the end Of one year
1,l2.
Was Cobb, fool, think you?
Not at all; he knew exactly what he
was driving at. He was already at that
early age traitor, and hoped by his
raseally management to so cripple the re-
sources and derange the finances of the
government IN whose service he then
was, and those Interest and honor he had
sworn, tor pay, to protect, as to make
secession easy and sure. This man. the