The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1868-06-26
Taxing the Coupons.

mO0tu OIuci. II iC"uS 'hoS'
ResolUed, That the right of the Federal Gov
eminent 10 tax the income of the nationa
debt is clear in itself, and supported by prac
tice, and ought now to be effectively exercised
by collecting the tax on coupons of the nation
al bonds and that such a rate of taxation
should be imposed upon these coupons as will
subject capital SO invested TO its fair average
share OF public burdens, as compared with 9TH
er descriptions of property. r.-.-.
This proposition, adopted in lieu of the one
formerly so much in favor with the Democra-
cy, of direct State and municipal taxation of
government securities, is intended to reach
the same purpose indirectly, for the next res
olution proposes that the proceeds OF the taxa
ton of the coupons s..all be divided among the
States. 1t will be observed that the resolution
requires that the tax on the interest of the
bonds shall be heavy enough to compensate
for the exemption of the principal. The gov
ernment, in return for loan which it nego-
tiated in time of imminent peril, promised to
pay a certain rate of interest and to exempt
its securities from loca taxation. This pledge,
the sacred observance Of which is absolutely
essential for the maintenance of the national
credit and honor, the Democrats purpose to
violate by Withholding such part of the inter
distributing it to the States.
Curiously enough, on the very day of the
Augusta convention, Mr.. Blaine of this State
made speech in the national House of Rep
resentatives in which the very subject above
referred TO is treated with admirable concise
ness and force, as the following extract will
show: s.-.4 ..r--. ... r.lf.st..... E.-.
But it will be asked, why don't you tax
the bonds by national authority?" Granted, it
will be urged, that the power of local taxation
would be nugatory and valueless, that affords
all the stronger reason for taxing the bonds by
direct Congressional enactment" In answer
to this have only to say that tax levied di
rectly upon the coupon ~ simply an abate-
ment of interest, and that result can be reach
ed in a better and more satisfactory and more
honorable way. The determination manifested
by this Congress and by the great Republican
convention at Chicago TO maintain the nation
al faith has already worked a large apprecia-
ton in the value of the bonds, and with the
strengthening of our credit which results
from an honest and high-toned policy, we will
speedily be able to fund our debt on lower
scale of interest, running down TO five, four
and half, and ultimately to four per cent. per
annum. Should we proceed, however, in vio-
laton of good faith and of the uniform prac-
tice OF civilized nations, 10 hold back part of
the stipulated interest instead of effecting an
honorable exchange OF bonds to the mutual
advantage OF Tile government anu bu6 puU1lC
creditor, we should only punish ourselves,
produce calamitous results in the business
world, and permanently injure our national
fame.
To withhold one per cent. of the interest
under the plea of national tax this year
might be followed by Withholding two per
cent next year and three per cent the year
ensuing. To enter upon such a policy would
produce alarm at home and widespread dis
trust abroad, for every. man holding bond
uagllI ha ff,a mt crafa of int moi
on what was stipulated in the contract, but on
what might be the will and caprice of Con-
gress in its annual withholding of portion of
the interest under the pretence OF tax. I'm
der such policy our bonds would be return
ed upon us from Europe with panic-lke rapid
idtv, and the drain upon our specie re-
sources would produce an immediate and dis
astrous crisis in monetary circles. Ii even
one half our bonds held in Europe were sud-
denly sent home it would drain US of two
hundred and fifty millions of SPECIE and the
financial distress throughout the length and
breadth of the land would be beyond the pow
er of calculation or imagination. And yet
that is the precise result involved if we should
follow the policy advocated by those who urge
us to tax the coupon and withhold one or two
per cent. of the interest. Let us reject such
counsels, and adhere TO the steady, straight
forward course, dictated alike by good policy
and good faith. And let us never forget that
in the language of the Chicago platform, "the
best policy to diminish our burden of debt is
to SO improve onr credit that capitalists will
seek to loan us money at lower rates of inter-
est than we now pay and must continue TO pay,
SO long as reputation, either partial or total,
open or covert, is threatened or suspected.
We cannot torbear adding an abridgment
OF another part of Mr.. Blaine's speech in
which he disposes of this whole subject of
bond taxation in an unanswerable manner:
If the DO yer were fully and freely given to-
day to the States ard municipalities to tax
the bonds, scarcely any tax would be derived
there from. Counting out the i've per cent
bonds, about whose taxation there is no special
jealousy, the total amount of gold bearing
bonds is 81 ,900,000O00; but of this aggregate 1T
issknown that at least 100000 are held in
Europe leaving but 81 $50, 900, 900 in this coun-
try to which taxation could, in any event, ap-
ply; but of this 81 $50 900 900, more than one
third, or 1925 100000 are held by the National
Banks, and no form of property paws SO large
a ,neral tax as these banks. Besides pay
ing full local tax, at the highest rate, they
pay tax to the General Government,
amounting to 2 IL per cent. annually
this 6 99R 81 as an
lnve 'tment for their deposits, and these depos-
Its receive no exemption from taxation by rea-
son of being invested in United States bonds
This, then, reduces the sum total of the untax-
ed bonds TO S650,000000; but this sum is to be
further reduced by $3O,00OOOO held by the life
insurance companies, and still further by
$125, 600 900, held by the fire and marine insur
ance companies, the annuity and trust COM
panies, and numerous other corporations not
readily -classed. All these investments in
bonds, by institutions and corporations give
no exemption from taxation, and the sum to-
tai left untaxed is reduced to $495, 5000, 000.-
Allowing that 500 900 900 Of the 5 per cents
are in the various channels of investment here
named, it follows that less than $600000000 Of
government per cents in this country go
untaxed to-day.
GENERAL GARFEILDs denomination to repre-
sent the Nineteenth Ohio District in Congress