The Eaton Democrat. (Eaton, Ohio) 1875-1903, 1886-04-22
STATE BONDS.
A Letter from Governor Foraker
Showing that They Are
Taxable.
Constitutional Debates Quoted from to
Show the Intention of Its Provisions
An Exhaustive Reply to Criti-
cisms Of His Recent Message
on Taxation.

cisms Of His Recent Message
ON Taxation.
COLUMBUS, O., April 10. 1885.
To the Editor of the Ohio State Journal:
Up to the time of sending my special mes
sage to the Leg Stature it had never seemed
to me possible that any intelligent man IA
miliar with the requirements of the Consti-
tuition could honestly believe that the bonds
of the State were non-taxable. Since then I
have been compelled to change my mind and
believe that Mr. Noble and Mr.. Parsons do
honestly entertain that opinion. Inasmuch
as they do they must be exonerated from all
intentional wrongdoing in withholding their
bonds from the assessors and from the ap-
plication of any criticisms my message may
contain that would otherwise apply to them.
Such criticisms were only for those who
fraudulently defrauded the State of it's rev.
enue and not for men who honestly believed,
as Mr.. Noble and Mr.. Parsons d. that their
securities were not subject to taxation.
But all this does not settle the question
whether or not those bonds are taxable.
That remains to be determined, and ii N the
end it is established that they are taxable 1T
is hoped all back taxes that have not been
collected, because of this mistaken belief,
will be promptly paid by the gentlemen who
in that event will be shown to have uninten-
As to the question whether or not the
conceded by all that it was competent for
be taxed, although prior to its adoption they
had not been. Concediug, therefore, for the
sake Of argument, that the bonds issued prior
to 1850 were not taxable but expressly ex-
empt therefrom by the statutes authorizing
their issue, the only question remaining is as
article Il. Of our Constitution, which
says that "all bonds, stocks, ETC., shall be
taxed" applies to them and make them SUBJ
that that such is the eject Of the language en-. en-
ployed. As to what the convention meant to
say on 1T the subject; light can be gathered
vention. II any one will take the trouble to
look at volume Of the Debates of the Con-
sttutional Convention Of 1s5J-5l he will nnd
volume there 10 scarcely any other subject
considered. He will also f1nd that the ma
ershfp of Judge Ranney and Mr.. Groesbeck
and others, acknowledged to have been the
ablest men Of the convention, voted on sew
ion to be adopted should provide for the tax
alton of "all,bonds. stocks, etc, of the State :"
Judge Ranney, in order that this might
the provision that was to have been adopted,
the language, all bonds, etc of the State
now or hereafter to be issued" It was
language that If adopted it would require
the taxation of such of the bonds and certid-
Gates as had been issued under statutes ex.
pressly exempting them from taxation. and
of the plighted ia tn of the State; but not
withstanding this objection the convention
voted, by decisive majority, so to tax them.
This was done in Committee of the Whole.
When this section was reported to the con-
ton until the last day on which the CONVEX
tion sat. and was not disposed Of,
as the record will show. until just be-
s day Se of ISL sss time
stitution was agreed upon and adopted. 1t
hereafter issued" that had been incorpor-
ated in the Committee of the Whole and sew
eral times sustained by tie votes of the con-
will take the trouble to look at page 852 of the
second volume Of these debates, he will see
adoption % Of this sec section, Mr.. = Lsxrence spoRe
as follows:
Mr.. PREs1DENr-I have one word to say
before for tn this report passes beyond our action
stocks, where they first occur in the section,
are now insert ed in place of the terms used
So ts
several occasions. Why was this change
nader As l understand, and as have no
hestation in saying t il is 50 understood by
was made to obviate the technicdl objections
of certain members without wish ng or in
nal report. 1 voted at the time against tie
change, believing. as did, that much of
evil In future constructions of this provision
Mr.. President, that wish a clear and un-
equivocal construction of these terms to go
out from tn convention. then here in my
place and in the presence of the members Of
this body, declare as the Judgment of this
convention. as previously determined, that
those terms as used In this section are under
mean United States bonds and State stocks
This construction was put upon this
the construction of the convention. and it
was acquiesced in by every member of
the In XsT Of this
the effect and intention of the Constitu-
ton as to bonds that had already been is.
CLEARLY @ nT ntended That all bonds thereaftes mes
to be issued should be taxed. But the
reader of this record will discover some
question He will find that it was stated
in the debates by Mr.. Groesbeck and
others equally able and distinguished, and
mcnts, that an examination of the several
statutes under which the bonds then in exist
ence had been issued, disclosed the fact that
only two statutes authorizing such bonds
provided for their exempt on from taxation,
and they were the statutes of 1925 and 1888.
At page 282 vol. 2 of these debates, will be
found a statement dated February l5, 1845, by
John Brough, Auditor of State, from which
it appears that the bonds maturing in 1874
were all of them issued during the years
1895 81 ::ssS +339-40.
All the other bonds that were issued in 1879
were issued as per cents redeemable in 1851
and thesbonds issued redeemable in 1860 were
the only ones issued in pursuance of the act
of 1899, during that year; and hence t is that
the bonds that matured IN 1856 were none OF
them, bv the express terms of the statutes
under which they were issued, ever at any
time exempted from taxation.
1t is also. however, stated in the debates, and
by Judge Ranney and those who agreed with
him, that all these bonds, without regard to
whether they were expressly exempted from
and sold as exempt from taxation. 1t will
be further observed that amo st without q
single except on the convention was of the
opin on that whatever m ght be done as to
taxing bonds already in existence, the true
policy was to tax all bonds thereafter to be
! issued. It will also be found stated IN these
issue of 1925, had been sold at premium
ranging all the way from eight per cent
those opposed to the taxation of those al
ready so issued that this high premium in
dicated that the State had already been
from taxation. This is significant in view OF
| the statement of Mr. Noble in one of his
communications that the bonds sold in 1855
argues from tSe fact that they psa SroDshi such
When !:
ket than we had in 1856, and that
, our credit at that time was much higher
and better than it was from 1850 to 1850, wher
| these high premiums of from eight to twenty
| four per cent. were commanded. it woult
seem that we have in the low premium Of
! three and a half per cent. at least very valua
| Bile, If not conclusive evidence that the
capitalist who took the bonds understood
! and appreciated the fact that a new Constitu
| tion had been adopted under which it wal
impossible to issue a non taxable bond, ever
f., though the Legislature might choose and try
/ to do SO.
Mr. Noble has also called attention to the
act of 1856, under which the bonds he speak.
| for were issued, and claims that the issuing
| of those bonds was simply in the nature of
| renewal of the pre-existing debt, and con
! tends that because the original evidences Of
I this debt were exempt from taxation sc
| must be these new securities. The statute
| bears on its face conclusive evidence thai
no such transaction as a renewal was in
tended. Its provision is that the COmmis
| soners of the Sinking Fund shall issue Ger
| tifcates and sell them in the markets, an(
that the proceeds shall be appl ed as fol
| lows: .Sec. 3. The monies arising from the
| sale of the certificates authorized by this ac
| shall be applied by the Commissioners Of
the S mixing Fund to the REDEEM ptiOn OF
! the certificates of the funded debt of tn,