The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1894-10-27
A OPINION.

About two weeks ago the Journal
called attention TO an opinion of the
Solicitor of the Treasury as to whether
county bonds issued to be used as local
currency would be taxable under the
United States law. The law imposes a
tax of 10 per cent ION the notes Of any
person or of any corporation, State
bank or banking association or Of any
town, city or municipal corporation
used for circulation" A county in Geor-
gia proposed to issue bonds of small
denominations to be used as local cur
rency. and the Secretary of the Treas
ury referred the question to the Solicitor
of the Treasury as to whether such
bonds could be legally issued. He held
not only hat they could be legally
issued, but that they would not be tax
able on the ground that the word "coun-
ty" was not enumerated among the cor
porations which were prohibited from
issuing circulating notes. The Journal
expressed the opinion that this was not
good law, since counties are embraced
in the term municipal corporations"
and it was predicted that Secretary
SdIIlSle WoulQ not permit the OplIlou
of the Solicitor to go out in the form in
which 1t was rendered as the ruling of
the department. Subsequent events
show that this prediction was correct.
The Secretary referred the matter to
the Encouragement for his opinion,
ard he gave it as follows:
1 have yours of the 11th inst, in which
you request my opinion upoa the question
whether the proposed issue Of interest-bear-
ing bonds by the County Commissioners. of
Floyd county. Georgia,s will be in conflict
with the banking laws of the United
States. You include the opinion of the So
such issue, IL made, will not conflict with
the banking laws of the United States. and
for the reasons given by the Solicitor l
whether such bonds, IL issued, will be sub
jecI to taxation under Sections 10 and 20 of
the act OF February, 1915, does not arise
upon which my opinion is not asked, 1 ex-
press no opinion respecting 1T.
1t will be observed that the Attorney
general held that the proposed issue of
bonds would not be In violation of n
United States law, but he declined to
say whether they would be taxable or
not. and the phraseology indicates hat
he was requested to withhold an opin-
on on that point. A special dispatch
Of a later date shows that this was the
case. The dispatch says
1t appears that the opinion of Attorney
Ssnef issu 2lgey e on afs a%q bonds Of for the afg E
NAL opinion filed by that CAB
Treasury. The original opinion, ii transpired
to-day, was sent TO Secretary Carlisle last
Saturday night. 1t caused what little hair
fl.f rr.- 49, go -, &~n - hfa hnoA ~
rise to the perpendicular. The opinion not
only decided the question asked. but went
on In the same comprehensive fashion upon
several other questions bearing upon the
contemplated issues. Secretary Carlisle
hastened to the Attorney-general and very
nervously and earnestly asked him to at
once prepare another opinion, and TO please
confine IL to the question set forth In the
formal question The Announcement had.
in the original opinion, declared among
other things, that bonds issued by counties
and used for circulating purposes would
not be subject TO the 10 per cent. State
bank tax IL they bore interest, but If they
were Misunderstanding bonds they would.
OF course, be subject TO that tax. This
point Secretary Carlisle most "emphatically
did not want decided prior TO the election.
Mr.. Olney thereupon took back his opinion
and prepared q new one, which was given
TO the press yesterday.
Thus, for strictly party reasons, part
Of the opinion of the Acknowledgement
which overruled the Solicitor on the
point of the taxability of county bonds
issued and used as currency vas sup
pressed and only that part was used
which sustained the Solicitor in saying
that the issue itself of bonds for he
purpose of circulation would not be a
violation of law. So, for that matter,
any State bank may issue circulating
notes, but the law makes all such notes
taxable at the rate OF 10 per cent, as
1t plainly does also county bonds if
issued with a view of being used as
currency. The incident shows how
readily the administration lends itself
to legal jugglery for the purpose Of
shielding a vicious plank in the Chicago
platform, pending an election.