The question of taxing credits assumes great practical importance, when regarded in relation to the national debt of the United States. We will assume that debt to be three billion dollars ($3,000,000,000). This forms a lien or mortgage upon the national wealth, which the Secretary of the Treasury, in his report, December, 1865, estimates at a little over fourteen billions: for convenience, we will call it fifteen billions. In that case, the national debt will be equal to one-fifth of the national wealth. On this debt of three billions, the interest, at six per cent, will be one hundred and eighty millions. If we suppose that all other demands on the Treasury amount to one hundred and twenty millions annually, we have an aggregate of three hundred millions as the amount of taxation. The national debt, if included in the national valuation, would increase it twenty per cent, or from fifteen to eighteen billions. This would reduce the rate of taxation by one-sixth, or 162/3 per cent; that is, if only property was taxed, the rate would be two per cent; if property and national stocks, the rate would be 1.66.

Should the national debt be exempted from taxation, there will be one hundred and eighty millions of income that will go untaxed; and that, as can be readily seen, is a large share of the net income of the whole nation, or what the people save annually after suppling their necessary consumption. The subject, therefore, is one of surpassing interest to the country. Quite fortunately, however, the matter is wholly within the control of Congress, which can, as fast as the present bonds and other securities become due (and they may all be redeemed * within seven, and most of them within three years from 1865), convert them into bonds not exempted from general taxation.

* Except the twenty-year bonds, which mature in 1881.

Public faith should be kept inviolate, but public justice should also be secured as soon as possible. Better far to pay a high rate of interest, if need be, than have so large a share of individual income, and, consequently, of ability to pay taxes, escape its proper responsibilities. This is desirable, not only as a matter of policy in removing a prominent cause of popular dissatisfaction which may sooner or later endanger the security of the debt itself, but as an economical advantage to the country.

The effect of exempting the public debt from taxation may be illustrated as follows: A has an income of one thousand five hundred dollars, derived from a salary; B has an equal income, derived from coupons on the national stocks. A must pay taxes, and, of course, must economize accordingly: B pays no taxes, and consequently has no occasion to save on that score. Now, as all national capital comes from the savings of the people, it can be seen at once, that, if one-sixth part* (in amount) of the tax-payers are exempted from taxation, they are, to an equal extent, exempted from all necessity of saving.

* It is, doubtless, far more than one-sixth part of the net national income, probably at least one-fourth, or 26 per cent. A large share of the estimated fifteen billions of aggregate wealth is of a character to escape taxation.

We are aware that the holders of public stocks pay indirect taxes (customs, excise, &c), but so also does the man who has no interest in the funds. What we intend to say is, that so far as a man's wealth is invested in untaxed securities, in so far he has no motive to save arising from a taxation to which all others are liable. Looking, then, at its economical bearings merely, ought not all public securities to be included in the general schedule of taxation, both by the national government, and the States, cities, and towns in which the holders reside?