Chief-Justice Marshall, held that "a tax on Government stock is a tax on the power to borrow money on the credit of the United States." If, therefore, we except the borrower from taxation in the form of a decreased rate of interest, we grant him no special exemption or advantage, for his property, which is covered by the debt, has already in other forms been taxed, and the exemption will diffuse itself in the form of lower rate of interest, which will be the means of producing a higher price of labor, land, and personal property, until the exemption is completely diffused. Who will then be injured by taking the tax from money at interest? It is probable that he who now adds the tax to the rate of interest, and charges the borrower, and does not pay it to the State, may lose by the change. He will be obliged to enter the open money market and pay the market rate, as the purchasers of Government bonds now do, for evidences of debt that will be free from taxation in the hands of all persons; and the laws of trade will regulate his investment as they daily regulate the price of Government bonds, and will bring down his securities to a rate of interest not much above the rate paid by the national Government. The exemption applied to United States bonds, which is of no practical benefit to the present purchasers, in consequence of the increased price of the bonds, would be of no benefit if applied to the holder of other securities in an established and permanent system, except in freedom from the uncertainties and irregularities attending the exercise of arbitrary and irregular power. If the exemption is an exemption of everything of the same class, it is perfectly equal and fair, and its effect is diffused and equated; and the tax on another article, taxed in lieu of the exempted class of articles, is likewise equated and diffused, and if invisible and imponderable evidences of debt can not be taxed equally no injustice will arise if they are all free from primary taxation, and if the taxes of a permanent system are imposed on other things subject to positive and fixed rules of assessment. The daily price of United States bonds, therefore, is a constant lesson that an exemption of a security from taxation is an exemption of the borrower, and the same law of political economy will rule in respect to both private and public debts. Each State has, therefore, the power to put its borrowers on an equal footing with the General Government, and without injustice or inequality toward the borrower or the lender.
The Old and New Ideas in Taxation.—The first attempt made to tax money at interest was instigated against money lenders because they were Jews; but the Jew was sufficiently shrewd to charge the full tax over to the Christian borrower, including a percentage for annoyance and risk; and now most Christian countries, as the result of
