Watertown republican. [volume] (Watertown, Wis.) 1860-1906, 1868-10-14
WHY GOVERNMENT BONDS ARE
NOT TAXED.

/ 1. All Governments are accustomed to
exempt their bonds from taxation BY local
and municipal authorities. IF it was left
to the mercy of every State and corpora
ton to tax their bonds indiseriminately.
no capitalist could be induced to take
loan subject to such an injurious liability.
2. The .. S. Supreme Court has de-
cided three several times that the taxing
of Government bonds by local or NUM-
cipal authorities is unconstitutional.
3. In the present case the Government
made an especial contract that the bonds
should not be taxed This condition was
one of the considerations offered to CAPT.
tallsts by which they were induced to take
the loan. One thing which is always
considered in determining the rate of in.
terest is the value Of the security. First
class security will always obtain money at
less rate than that of doubtful quality.
In the present case the security offered
was the pledge of a nation that was in the
midst of tremendous civil war and
struggling with powerful enemy which
was striving to utterly destroy it. Had
the rebels in arms been the only foes of
the Government the case would not have
been so desperate, but they we're aided
and encouraged by the copperhead party
of the North, and thereby their chances
of success greatly increased Had these
enemies succeeded, the G overnment bonds
would have been worthless Capitalists
saw the risk and unusual inducements
were necessary to prevail upon them 10
| take the loan. Under til circumstance
we consider that the Government obtain.
ed funds on very liberal terms. Ill.
4. The question whether the Govern.
ment can tax its own bonds has never
been before the courts, and consequently
we have no decision on that point; but
the very nature Of the case precludes the
idea of such practice. It is universally
considered that tax laid by Government
upon its own bonds would be reputation
to the exact extent of the tax. A right
to lay tax of ten per cent. implies the
right to lay tax of twenty FIVE per cent
and of one hundred per cent. The right
to repudiate a part would allow repudla-
ton of the whole debt ID
5. But allowing that the Government
has the power to tax its own bonds, it
would be extremely bad policy to exercise
it at this time. There are only about
5000 100000 of them in this country
which are not already taxed. and the re-
suit of taxing them would be to drive
them abroad beyond the reach of taxatiun,
but where they would be liable to be sent
back TO us upon every disturbance in Eu-
rope, creating financial arrangements here
which would be of incalculable injury
Also if we tax these bonds now, which
were taken by capitalists upon the express
understanding that they should not be
taxed, the result can easily be foreseen in
case we ever need to effect another loan,
and are obliged to 60 into the markets of
the world with dishonored credit
In this connection we wish to call at
tention to the unresonableness and inius-
tice of the outcry against the bond hold
ers. The fact is that there is no one who
loans money who does not realize more
from it than the Government bond holder.
Suppose A has 81. 900 spare cash-he
loans it on farm security at 10 per cent
interest, is taxed 2 or 8 per cent. for va
rious purposes and nets. 7 or per cent
A laboring man scrapes together $50,
buys bond with it, becomes L" bloated
bond holder" draws per cent. interest
and paying no tax, nets per cent. What
| reason is there that the heavens and earth
should be raised that that mans bond
should be taxed, when;he IS really paying
an exhorbitant tax by receiving such
small interest. SuppOse.tho Government
should pay him 10 per cent. which every
man is willing to give who needs money,
and should allow the bond to be taxed, here
is not one year in twenty in times of peace
that he would not realize more from it
than he. does now. The fact is that all
this noise about taxing the bonds is mere
claptrap to catch the minimizing and has
no foundation either in sense or Justice
GRANTS SAGACITY. .~5. ....