The record-union., 1898-09-17
Second Days Session Of Meeting
at San Francisco
We'll Attended, Only One or Two Ahsentees
Being Noted.

sive Paper Being Read by Lowell
| White of Sam Francisco on the
Subject-J. j. Valentine Re-
elected President.
SAN FRANCISCO, Sept. 16.-The
| second days session of the California
| Bankers Association was we'll attend
| ed only one or two absentees being
noted The principal subject under dis
cussion was the exemption of city
| bonds from taxation. Lowell White OF
the San Francisco Savings Union read
a comprehensive paper, and led the ar
| gument. Mr.. White said in part:
THE conventions of the California
| Bankers Association are attended by
| the members in a double capacity; that
| of bankers and that of citizens, and
| the questions to be discussed are those
of general interest as we'll as those that
relate especially to banking as voca-
| ton. Bankers prosper only when pros
| perity is general, and they suffer when
/ any branch of business suffers.
THE conditions of the prosperity Of
| a bank are that there shall be money
/ to deposit in the hands of the people,
! and that there shall be parties to bor-
/ row that money for legitimate use.
Bankers are not conspirators against
the people, but colaborers with them
| for the common good, and it is from
this standpoint, and not that OF selfish
ness, that the question of taxation of
| public securities is to be debated on
| this occasion.
Bonds of the United States of recent
issue bear per cent. as a rate of in
| terest and they now sell at a premium
| of . per cent. In giving them this de-
| gree of credit there are two factors,
| the one the confidence felt in the Gov
ernment and in the people behind that
Government, the other that nowhere in
this nation or under any circumstances
are the bonds taxable.
The rates quoted for the bonds of
towns in New England and the Middle
States average about 35s per Cent,
there being few quotations for Califor-
MIA, and those few at much higher
rates. One, and chief, reason why
the Eastern bonds enjoy the better
credit, is because there is home mar
ket for them, while California issues
are mainly sold abroad, the price of
bonds being determined by the estima-
ton in which they are held where best
known.
"The status of credit of merchant,
manufacturer or bank is determined
at home, and it is the same with that
of the political subdivisions of State;
local investors being practically denied
the privilege of purchasing our bonds,
the credit of California and of its
counties, cities, towns and of indiyid-
uals suffers.
Bonds cannot be taxed until they are
sold and they cannot be sold except
their terms and conditions, including
the net income they will yield, are sat
isfactory to purchasers. To make them
satisfactory there must be added TO a
fair rate Of interest the average rate of
taxation. or at least a good share of it ;
such rate of taxation being something
more than one and one-half per cent, it
may with safety be asserted that upon
all county and municipal bonds issued
since 1878 there has been and is now
paid at least / per cent. in excess of the
real need, or what would have sufficed,
had the bonds not been subject to taxa
ton.
enhanced rate of interest paid, while
large, is not the only evil, nor perhaps
the most considerable; the bonds being
held almost entirely by non-rAsidents,
the State is tributary to foreign credit
ors and the money paid for interest is
withdrawn from circulation here and is
lost to this community for all time And
not only this, but there is a deprecia-'
tion of credit and prestige, for the eff
feet is to enroll California as debtor
State. When money is from the OUT
side taken to a State for investment
in manner to give employment to
labor and to produce beneficial results
in the form of crops or manufactured
articles, it is a blessing, but when it
invades a State merely as Ioanable cap
ital. it is of doubtful benefit, if not a
positive injury, for in most cases it
takes the lions share of profits of the
enterprise in which it is employed.
Taxation of public securities is a.
discrimination against local capital. as
the foreign bondholder receives the
stipulated rate of interest without
abatement, while the local one must
content himself with two-thirds or
three-fourths of that rate.
Perhaps the greatest evil resulting
from the attempts at taxation of public
securities is the premium il offers for
the commission of the crime of perjury.
An individual may buy a county bond
for 81 GOO, keep it out of sight and
make or save (Which is the same thins)
So each year by simply omitting to re-
turn it to the Assessor in his list of tax
able assets.
'"rhe attempted taxation of public Sc
curities has for some of its effects: En-
hancing by / per cent or more the rate
of interest necessary to be paid en-
county and municipal bonds over and
above everything recovered in the form
of taxes; the enhanced rate of interest
is paid by the poorer counties and
school districts whose necessities COM
pei them to borrow, while the small
amounts recovered in taxes goes into
the treasury of one or two of the larg-
est cities. 1t makes the State and its
political subdivisions tributary to for
eign creditors, involving a loss from
circulation. semi-annually of several
hundred thousand dollars; it impairs
the credit not only of the State and its
subordinate municipalities, but of its
merchants and manufacturers by CIV
ing the impression that it is a debtor
State and that its people are necessar-
lily impoverished; it gives a preference