The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1868-07-05
TIE TAX on GOVERNMENT BONDS,


To THE EDITOR OF THE HERALD
simultaneously with the movement at Washington
to the interest the bonds OF the United states
comes the news that precisely similar measure OF
financial reform has been adopted by the empire OF
Austria and the kingdom OF Italy, The organs OF the
bondhoders In this city-who, by the way, appears
10 have purchased the consciences and souls of not
few of the journals OF both parties-are crying out
against Mr.. Cobbs resolution as II 1t were an I'M
heard-of atrocity, when the fact is that there is
scarcely nation in the world which has ever en-
joyed the national blessing Of national debt"
which has not been constrained to prevent the
injustice and discomfort that arose from the
.avortism shown by exempting its creditors
from bearing their share Of the burdens OF govern
ment and which did not do just what a majority Of
the House Of an interval OF lucid
good sense-have proposed to do. In few days.
mo doubt, we shall find the English newspapers
eamenting over this fresh evidence that the people
lof the United States bent upon ''repudiation."
But England has done the very same thing, and Is
now doing it.
When the laws for the adjustment OF the income
tax in Great Britain were being framed there was
cry there as there Is now here that the holder OF
consos should be exempted from all taxation upon
these securities But the best financial authorities
OF Great Britain backed up by the common sense OF
the people, rejected the idea. They decided
chat these bondholders should be taxed
not as creditors but as men In the
enjoyment of an income; that as the
State took a certain share OF the interest or
profits arising from investments In other shapes, 1t
had the same right to take the same share OF the In
come arising from investments in the funds; that
Nhe man who put his money into bank stock and
the man who put his money In consols were both
liable to contribute to the expenses OF the govern
ment, and that 1t was intolerably unjust that one
should pay and that the other should go free. No
distinction was made between the bondholders who
were citizens and the bondhoders who were foreign
ers, since the foreigner. by purchasing English
bonds made himself Justly liable to English taxa
xion; and It was moreover seen that but little tax
would be collected II the payment thereof could be
Invaded by putting the stock in the name of for
eigner. This has been so long ago that the English
newspapers seem to have forgotten 1t, and are now
Sienouncing Austria and Italy for doing what Eng
land did aud does to-day, as. no doubt they will de-
nounce the United states II we venture 10 follow In
The same path.
The empire Of Austria has been in hot water about
der financial AFFAIRS for half a century. Napoleon
blundered her freely; her wars with France cost
much more than the sums lavshly given to her as
PEELED to make a sort Of composition with her cred
4tors. This gave her relief, and In 1918 she was
aeSs only sl ,ne nan sss Of our
own has been for the last three years for In 1880 her
debt had arisen to $780, 000 In 1S4e the Imperial
Bank OF Austria suspended specie payment, and the
empire then began to borrow money freely from her
own citizens and from foreigners, and by 1854 she
had borrowed $3.50 000 thus swelling her indebt
edness to nearly $500 600, 000 All this while she had
Deen running to eeward, her expenditures exceed
ing her revenues the deficit in the ten years from
Ss4s to 1858 amounting to $685. 000 and in the last
Ten years even exceeding this amount The present
rebt OF the empire Is 1850, 600 000 and her bonds
are chiefly held In Frankfort Paris, Amsterdam and
Hamburg She seems now to have resolved TO restore
her finances TO healthfu condition and to
start upon new career OF retrenchmen'
and reform. Principal among the measures which
Hhe mas adopted to this end Is the evyng Of q tax
upon the coupons Of her bonds Of sixteen per cent In
some cases and twenty per cent in Others efectinp
shis partly by reduction In the amount of the nom
nal principaI OF her bonds and partly by substitute
ING Tor her present securities new bonds bearing q
lower rate o interest The Austrian Parliament the
Reichsrath) were in favor OF making the tax even
larger than this but the Ministry deemed that with
this additional revenue secured they could at least
Commence the work OF stopping the empire on its
downward road to bankruptcy, and turning II into
fne path which would lead TO financial prosperity
and solvency They wisely determined that as gene
raj taxation had reached It's unit the people should
not lie asked 10 bear any. additional burdens, and
mat the bondhoders should now be compelled to pay
their share from which they have been 80 long exempt
The regular income tax in Austria. on incomes other
than those arising from investments IN the FUNDS, i
seven per cent aud now the AK on the "oo'neS OF