New-York tribune., 1868-06-11
TAYLNG NATIONAL BONDS.

The project of taxing National Bonds has been
for several years persistently agtated, mainly
by Democratic demagOgues, for want OF better
pabulum on which to nOurish popular discon-
tent. The unconstitutionality of taxing them
by State, city, or other local authority has been
too plainly and repeatedly decided by the Su-
preme Court to make this mode OF attack on
these securities feasible. The resolution offered
by Mr. Holman of Indiana in the House, and
which was decisively disposed of on Monday,
is as follows:
Resolred That in the Judgment OF the House the bonds
and other securities issued by the United states and
which are exempt by law from State and municipal taxa
ton ought taxed for national purposes In amount
severai States for local purposes in such
may substantially equaze the taxation; the tax to be
the Committee OF Ways ana Means instructed 10 report
a bill for the purpose above specined
The resolution was sent to the Committee of
WAYS and Means (Which Mr.. Holman declared
is equivalent to its defeat) by SO Yeas to "a
Nays. On this test question but three Demo-
crats-McC cCormick, Sitgreaves, and Wood
voted in the affirmative, while ten Republicans,
viz: Ashley New, Baker, Calhoun, Graveley,
Ingersoll, Loughridge, McClurg, Peters, Polsley,
and Windham, voted in the negative.
The House has done well to put the quietus
on this proposition. 1t will aid much in edu-
eating public opinion upon a question vital to
the public credit The whole effect of taxing
National Bonds is very plain, and ought to be
easily understood. If the tax is authorized at
the time the bond is issued, the creditor who
makes the loan adds the tax to the rate OF
interest, and it is paid not by the public cred
itor, but by the ordinary taxpayer. If the
bond is issued before the tax is authorized,
then it is an attempt by the Government tolessen
the rate of interest they have agreed to pay
by the amount of the tax. In short, 1t Is re-
pudiating to that extent the payment OF the
interest. A very small reputation of interest
is equal to very large reputation OF principal
Thus an annual tax of one per cent on our
bonds is a reputation of one per cent OF the
interest, which is equivalent to repudiating
one sixth or 1854 per cent of the principal. This
would lower the value of our bonds and cur
rency from 70 in gold-where they now stand
to 81 3-5, which would DO expressed by rise
of gold to 1886. A tax Of two per cent would
be equal to a reputation of two-sixths OF the
principal, which would be expressed by the fall
of our bonds and currency to - in gold, and
the riso of gold TO o0ss in currency. A tax of
six per cent, winch tne OoVernmenV Wouu
have Just as much right to impose as one of
less, would be repudiation Of the entire prin-
cipal. The effect of imposing these taxes and
reducing the gold value of our debt and cur
rency would be that when we came TO renew
our bonds, or to borrow again, it would require
a larger sum of debt to express the principal
and larger rate of interest to carry it. On
the other hand, as the national debt is q debt
due from the taxpayers to the bendholders,
whatever lessons the rate of interest or amount
of principal must of necessity benefit the tax
payers exactly in proportion to their liability
to pay taxes AS exempting National Bonds
from taxation does lessen the rate of interest
and the amount of principal exactly in proper
ton to the pecuniary value of the exemption,
it follows that the benefits of the exemption
are divided among the taxpayers precisely in
proportion to their taxable liability. What can
be farer than thisi An attempt of govern
ment to derive revenue from its debts would
be on par with the Vagabond's policy Of liv-
ing on the interest of what he owes.