New-York tribune., 1910-01-27
BOND BILLS PUT TN
TO EQUALIZE TAX.
Secretary MacVeagh's Plan for
Maintaining Parity Of Issues.

Washington, Jan. 26-The administration
measures for modifying the law regarding
the issue of United States bonds and GER
tif1cates of indebtedness and for fixing the
TAX rate on national bank note circulation.
TO maintain the parity of the existing per
cent issue of bonds, We're submitted to Con-
sress to-day by Secretary MacVeagh.
They are designed to remedy conditions
about which there has been much public
discussion and numerous conferences at
the White House. The proposed circula-
tion tax act reads:
Be it enacted etc. That the rate of tax
on national bank circulation secured by
hondS of the United States hereafter de-
posted, bearing rates of interest greater
than per cent per annum, whether the
particular bonds have or have not hereto
tore been used to secure circulation, shall
secured by per cent bonds, fourth of
L per cent each half year for each and
every one.half of per cent excess over 2
per cent in the rate of interest borne by
such bonds.
The other proposed act intended to REM
edy defects in the law regarding United
States bond and certificate issues, follows:
Be it enacted. etc. That any bonds and
certificates of Indebtedness of the United
states hereafter issued shall be payable.
gold coin of the present standard of value.
and that any such bonds may be issued in
Such denominations as may be prescribed
by the Secretary of the Treasury.
That any certificates of Indebtedness
hereafter issued shall be exempt from all
taxes or duties of the United States. as
well as from taxation In any form by or
under state, municipal local authority:
and that sum not exceeding one-tenth
Gates of Indebtedness issued is hereby ap-
proprlated. out of any money in the Treas
ufy not otherwise appropriated, to pay the
expenses OF preparing, advertising and is
suing the same.
Both bills specify that "all acts or parts
of acts inconsistent with the provisions of
this act are hereby repealed" Secretary
MacVeagh in an accompanying letter says:
The tax on circulation now based on
per cent consols of 1890 and . per
cent Panama Canal bonds is at the rate
OF one-fourth of ! per cent each half
year upon the average amount of notes
in circllla ton. The tax on all other is
sues of United States bonds is at the
half year of the average amount of notes
In circulation.
These rates operate as a discrimination
per cent bonds. AS these bonds only
slightly above par, and as authority now
exists for the issue of bonds for the con-
struction of the Panama Canal to bear no
exceeding per cent interest, the issue Of
any considerable amount of such new
bonds which, under the existing law. would
be available as basis for crcula ton at
tax of only l per cent per annum, would
capse them to be considered a much more
desirable investment than the existing
per cent bonds and would doubtless cause
the 2 per cent bonds to decline in the
market probably below par.
It is exceedingly important that the mar
ket value of these per cent bonds should
be maintained at above par. since any de-
cline below par would probably oblige the
Controller OF the Currency to call on the
banks employing such bonds as a basis
for circulation to make good the de-
ficiency
Mr.. MacVeagh says the authority for
the Panama Canal bond issue prescribes
that they shall be issued in denominations
of 800, $500 and $1,000. There should
be added authority, he thinks. to issue the
bonds in denominations of $4,000 and
800 otherwise the labor of issuing
registered bonds in large amounts would
be greatly increased.
Provision is made for payment of the
interest on the Panama bonds in gold
coin, but no such provision is made for
the principal. This omission would render
the bonds liable to be paid in standard
silver dollars.
The authority TO issue certificates of
Indebtedness to meet public expenditures
does not contain the usual provision ex-
empting the certificates from taxation, and
there is no appropriation to meet the ex-
pense OF preparing and issuing the certf-