Government may the Funded Loan. As to all bonds and securities of the United States, except United States those of the Funded Loan, the exemption is only from taxa- tax bonds. tion by State or municipal authority, and not by the Federal Government; and the latter for many years did lay an income tax upon the interest received by its citizens on such securities, and has the right to do so again. But the bonds of the Funded Loan are by the express Except those of terms of the act of July 14, 1870, and by the language of the bonds themselves, "exempt from the payment of all taxes or duties of the United States, as well as from taxation in any form, by or under State, municipal, or local authority." This exemption is as extensive as the legislative power can make it, and entering into the original contract, by being incorporated into the act under which the bonds are issued and into the language of the bonds also, secures to the holders of the bonds of this loan, unlike those of any other loan ever issued by the Government, the full amount of interest thereon, without deduction by taxation in any form whatever, either by the States or the national Government itself. The policy to pay established. CHAPTER VII. ESTABLISHED POLICY OF THE COUNTRY, COEVAL WITH THE CON- The following extracts from the messages of Presidents off the debt, long of the United States, who for the time being generally represent the prevailing sentiment of the people who elect them, indicate the policy of the country adopted in the early days of the national Government, and ever since steadily pursued, for a period of nearly a century, to maintain faithfully the public credit, not only by prompt payment of the interest, but by the gradual extinguishment of the principal also of all national loans, whether contracted . under ordinary or extraordinary circumstances, or for usual and permanent or temporary and special purposes. Washington, 1790. 2. WASHINGTON'S SECOND ANNUAL MESSAGE TO CONGRESS, DECEM- "Allow me, moreover, to hope that it will be a favorite policy with you not merely to secure a payment of the interest of the debt funded, but as far and as fast as the growing resources of the country will permit,to exonerate it of the principal itself. The appropriations you have made of the western lands explain your disposition on this subject, and I am persuaded that the sooner that valuable fund can be made to contribute, along with other means, to the actual reduction of the public debt, the more salutary will the measure be to every public interest as well as the more satisfactory to our constituents." 3. WASHINGTON'S FOURTH ANNUAL MESSAGE, NOVEMBER 6, 1792. "I entertain a strong hope that the state of the national Washington, 1792. finances is now sufficiently matured to enable you to enter upon a systematic and effectual arrangement for the regular redemption and discharge of the public debt, according to the right which has been reserved to the Government. No measure can be more desirable, whether viewed with an eye to its intrinsic importance, or to the general sentiment and wish of the nation.' 4. WASHINGTON'S SIXTH ANNUAL MESSAGE, 1794. "The time which has elapsed since the commencement of Washington, 1794 our fiscal measures, has developed our pecuniary resources so as to open the way for a definitive plan for the redemption of the public debt. It is believed that the result is such as to encourage Congress to consummate this work without delay. Nothing can more promote the permanent welfare of the nation, and nothing would be more grateful to our constituents. Indeed, whatever is unfinished of our system of public credit, cannot be benefited by procrastination; and, as far as may be practicable, we ought to place that credit on grounds which cannot be disturbed, and to prevent that progressive accumulation of debt which must ultimately endanger all governments." 5. WASHINGTON'S SEVENTH ANNUAL MESSAGE, 1795. "Whether measures may not be advisable to reinforce the Washington, 1795. provision for the redemption of the public debt, will naturally engage your examination. Congress have demonstrated their sense to be, and it were superfluous to repeat mine, that whatsoever will tend to accelerate the honorable extinc tion of our public debt accords as much with the true interests of our country as with the general sense of our constituents." Washington, 1796. Washington, 1796. President John 6. WASHINGTON'S EIGHTH ANNUAL MESSAGE, 1796. "A reinforcement of the existing provisions for discharging our public debt was mentioned in my address at the opening of the last session. Some preliminary steps were taken toward it, the maturing of which will, no doubt, engage your zealous attention during the present session. I will only add, that it will afford me a heartfelt satisfaction to concur in such further measures as will ascertain to our country the prospect of a speedy extinguishment of the debt. Posterity may have cause to regret if from any motive intervals of tranquillity are left unimproved for accelerating this valuable end." 7. WASHINGTON'S FAREWELL ADDRESS. "As a very important source of strength and security, cherish public credit. One method of preserving it is to use it as sparingly as possible, avoiding occasions of expense by cultivating peace, but remembering, also, that timely disbursements to prepare for danger frequently prevent much greater disbursements to repel it; avoiding likewise the accumulation of debt, not only by shunning occasions of expense, but by vigorous exertions in time of peace to discharge the debts which unavoidable wars have occasioned, not ungenerously throwing upon posterity the burden which we ourselves ought to bear. 8. PRESIDENT JOHN ADAMS'S FIRST ANNUAL MESSAGE, 1797. "Since the decay of the feudal system, by which the public defense was provided for chiefly at the expense of individuals, the system of loans has been introduced; and as no nation can raise within the year by taxes sufficient sums for defense and for military operations in time of war, the sums loaned and debts contracted have necessarily become the subjects of what have been called funding systems. The consequences arising from the continued accumulation of public debts in other countries, ought to admonish us to be careful to prevent their growth in our own case. The national defense must be provided for as well as the support of Government, but both should be accomplished as much as possible by immediate taxes, and as little as possible by loans." 9. PRESIDENT JOHN QUINCY ADAMS'S THIRD ANNUAL MESSAGE, 1827. "The deep solicitude felt by our citizens of all classes President J. Q. throughout the Union for the total discharge of the public Adams, 1827. debt, will apologize for the earnestness with which I deem it my duty to urge this topic upon the consideration of Congress of recommending to them again the observance of the strictest economy in the public funds." 10. THE COUNTRY FREE FROM PUBLIC DEBT. "President Jackson, in his seventh annual message to President JackCongress, December, 1835, made the following announce- son, 1835. ment: 'Since my last annual communication all the remains The country free of the public debt have been redeemed, or money has been from debt. placed in deposit for this purpose, whenever the creditors choose to receive it. All the other pecuniary engagements of the Government have been honorably and promptly fulfilled, and there will be a balance in the Treasury at the close of the present year of about nineteen millions of dollars." the event. In 1834 and 1835 the country was entirely out of debt, Celebration of and in honor of the event a celebration was had in Washington on the 8th of January, 1835, the anniversary of the battle of New Orleans, at which were present about two hundred and fifty of the representative men of the country. Andrew Jackson, then President, was not himself present, but he sent the following sentiment: "The payment of the Public Debt: Let us commemorate it as an event which gives us increased power as a nation and reflects lustre on our Federal Union, of whose justice, fidelity, and wisdom, it is a glorious illustration." |