The Ogden standard. [volume] (Ogden City, Utah) 1902-1910, 1909-07-19
An Equitable Adjustment Of Tax on Circu=
latlon May Protect nited States Bonds
From SeriouS Depreciation

Washington, July 19.-How to pro-
tect from serious depreciation out
standing United States bonds, Is the
intricate problem which confronts con.
Gress, In connection with the authori-
zat1on of new Issue. and it is thought
Its solution can only be effected
through some equitable adjustment OF
the tax on circulation, According TO
present plans, the secretary of the
treasury will be authorized to issue
from time to time, additional Panama
Canal bonds, up to $500, $4,000 bearing
not 10 exceed three per cent interest
The governments interest bearing
debt at this time aggregates approxl-
mately $4,000, 600. of which nearly
S73l 100000 is In two per cent bonds.
OF this total, the national banks Of
the country have no deposit in the
treasury securities for circulation of
about S6+0,000,0O0. Four.hfths oil the
entire national debt. therefore. is in
these two classes Of two per cent
bonds
Under existing laws, national bank
notes. when secured b. per cent
bonds, are subject 10 tax of one-half
Of one per cent per annum, while cir
culatlon, based on bonds bearing a
higher rate of interest, pays a tax Of
l per cent 1t has been estimated
that, at the present market prices of
both two per cent consols and Paua-
mas. there already has been, on the
whole amount outstanding, a deprecia.
ton from the price, at which the gov
ernment holds them. OF about SIS 900,
0J0. and, it is believed in some quar-
ters, that to issue any considerable
portion OF the threes. which it Is pro-
posed 10 authorize. with circulation
privileges not materially inferior TO
those accorded the twos, probably
would result in the further depTecia.
tion Of the latter which might reach
a point even below par. thus impair
Ing the public credit. There are $64~
100000 in three per cent bonds and
approximately S1lS,000n00 in fours,
now outstanding. The latter. however.
are mostly held for the investment,
and are little used as a basis for cir
and therefore need not be
the subject of any special concern in
this connection. The threes, how.
ever. to the amount of S13,837S20. are |
on deposit in the treasury to secure
crease or decrease In the circulation |
accorded any class of bonds |
would have an important bearing on |
their market value.
The question, therefore, before con |
gress, is how not to discredit the |
-wo and three per cent bonds now
up for circulation and, at the same
line, make the proposed issue OF three !
Der cents attractive TO investors A
number of suggestions of possible so
utions OF the problem are known 10
,e under consideration. One OF them
S 10 reduce the circulation tax on two
'er cents to something below the half
er cent now collected under the eX-
sting law. Another proposition is TO
decrease the rate on twos, with or
Without increasing the rate on the
hrees, and still another Is 10 increase
he tax on threes, allowing the rate
n twoS TO remain as at present
1t is argued that the government
ould we'll afford 10 reduce the tax
n circulation In view of the fact that
he records of the treasury department
how that the banks have paid into
he treasury in taxes since the be- |
inning of the national banking sys.
I'm about 100000, 600 in excess of the
ost of the operation Of the currency
ureau. Another proposition ad-
anced is TO withhold from bonds Of ]
he proposed issue all circulation priv
eges and still another suggestion is
hat the law. levying a tax on bond
scured circulation, be wholly repeal
d. II is not believed. however, that
lese last Two suggestions will be tax
n into serious consideration. !