The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1924-02-21
ATTACK ON
SECURITIES
Is FAILURE
Complete and Well financed
Propaganda Is Not
Successful.
BY HERBERT QUICK

IL people the amendment TO the
~ Constitution fOrbidding tax ex-
empt securities-not yet. 1t is as.
tonishing that they refused. The at
tack on tax-exempt securities has had
back Of 1t the most complete and well.
financed propaganda of any idea for
many years. Hardly any one answered
the arguments. The President is
against tax-exempt securities, The
Secretary of the Treasury is against
them It seemed as though almost
every one has been against them. Yet
the attack on them fs4led.
Now that it has failed let me tell YOU
briefly the history of this attack on
the power Of States, cities, counties,
school districts and Federal Land
Banks to issue tax,exempt securities.
Loan Act Starts Fight
Ten years ago all the big men who
are back of this propaganda wee
strong for tax-exempt securities. It
was the Federal farm loan act, under
which farmers could. through the
banks they own, borrow cheap money
on tax.exempt securities. that started
the fight against them The Farm
Mortgage Bankers Association. which
a short time before had been lobbying
for tax exempt farm mortgages, began
the fight against them.
They wanted the bonds of the Fed.
eral Land Banks taxed. Tax those
bonds and the advantage Of the farm.
ers in borrowing money would be
gone. The power to tax is the power
Federal Land Banks where they could
destroy them through a subservient
adnipistrs
Big Money Interested
Then the men Of Big Money-the
very men whom Mellon and Coolidge
say are evading taxes by buying tax
exempt bonds-saw a chance to do
something big for Big Money by for
bidding taxsxempt bondsl The rail.
way interests were most active. They
wished TO get under the thumb of
Congress the States which were is
suing bonds for building good roads
,
peted with railways. The public util.
ity companies all came in--they knew
that II they could do away with tax
exempt bonds II would be the end Of
public ownership Of these public util-
ities-gas. electric railways. power
plants and the Ike.
The attack on tax-exempt bonds was
in short, an attack on public owner
! ship OF anything which governments.
state and local, could not pay for in
cash. 1t was meant TO be the end Of
! low interest rates for any public move
ment for the ownership OF anything
| by the public 1t was to be the end of
| low interest for farmers.
Destruction Sought
The power to tax is the power to
| destroy. The war on tax-exempt Sc
ourities was a war 10 put States.
cities. counties, school districts and
farmers' organizations in a position
in which Congress could destroy their
| financial operations by taxing their
| bonds.
It was not only the most powerful
attack on the rights OF the States
that has ever been made. but also on
| those OF local governments. II was
so powerful that / wonder it failed
The whole propaganda was false and
hypooritical. II was run by the very
men who were accused OF wanting
tax-exempt bonds. II was argued that
money went into tax.exempt bonds so
that borrowers without the power to
! isue them could not finance them
selves; but at the very time when Con.
gress voted on it. money on any good
industrial loans had not been so plenti.
full for years. Tho arguments were
false, as a. matter Of fact The rail
ways were the only great industry
which was having hard times to get
money, and the reason for their lack
Of credit (Which Is not so severe as a
year or so ago. was because Of the
underlying weakness Of the railway
position. Tax. exempt bonds had moth.
! ing TO do with Il.